Imagine a world in which those who work — or try to work— are given mere scraps. Imagine an economy that is driven purely by speculation by the wealthy, the gains of which are then spent in high-end stores, the source of employment for those lucky enough to have a job. Imagine economic institutions that puzzle over the slow growth experienced in this economy, uncertain as to the cause.
So record inflation adjusted entitlement spending is ‘mere scraps’?
The wealthy do contribute more, thus they are deserving of more. Economic policy should benefit the rich because they are the most important people of all. Since 2008, high income earners have been compensating for any middle class consumption weakness, as shown below:
According to the NYT, The top 5 percent of earners accounted for almost 40 percent of personal consumption expenditures in 2012, up from 27 percent in 1992. Largely driven by this increase, consumption among the top 20 percent grew to more than 60 percent over the same period.
In agreement with the Pareto Principle, the top 20% of income earners contribute 80% of personal consumption expenditures.
This is why we need pro-growth policy that will help the rich – such as tax cuts financed by raising the sales tax, so we can make inroads on the deficit and keep the economy growing as well. We more QE, 0% interest rates forever, an increase of the home mortgage interest deduction and tax cuts for the top 1% as well as entitlement reform. Low interest rates depress bond yields, creating an economic environment friendly for stock buybacks, merger and acquisitions, as well as making it easier to buy a home. Like their opposition to going to college, the left is opposed to home ownership and want everyone to rent, even though in today’s environment of low interest rates and rising home prices, buying is a better deal. By raising interest rates and taxes, the left seeks deflation so that asset prices fall and homeowners can no longer use their equity for consumption. The is part of the liberal war on the consumer, the 1% and homeowners.
There is no ‘rich people bubble’ or a stock market bubble. There is, however, a negativity bubble. For years, the doom and gloomers have insisted that the economy is weak, despite bring proven wrong year after year as profits & earnings and consumer spending keep making new highs. The left is fallaciously making an inference about the health of the overall economy by choosing the worst economic data such as the low labor force participation rate and ignoring the positive data like record high profits & earnings and exports. The left’s idea of economic ‘full potential’ impossibly high standard to meet, and an arbitrary one at that. As we wrote earlier, the economy is booming, but if the left can convince everyone the economy is still weak, they can justify more wasteful entitlement spending like extending unemployment for another 99 weeks. Sometimes, in a free market, you have to be patient and wait for the recovery to trickle down. Not everyone can participate in the recovery at once, or even at all. But that doesn’t mean wealth inequality is an urgent problem, that we’re in a bubble or that we need redistribution.