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Originally Posted by bahbahmickey
Consumption is of course good for the economy as the company receiving that money is now able to spend more money (invest in plant and equipment, hire more people, pay a dividend to grandma, etc).
Yea, and the return to shareholders is a small fraction of the price tag.
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I'm not sure what your point is in the second paragraph about people leaving their job and then being replaced. Can you explain please?
It's an example of how things "trickle down". If you're hiring a worker for $20/h to work on a new luxury car he's not $20/h better off. If he was paid $18/h at the old company doing the same thing he's $2/h better off. And the guy who replaced him was probably given a very minor promotion to fill that role, and a guy was given a minor promotion to fill HIS role, and when you add all if it up - it's going to be a fraction of the cost of labor. And in fact in industries that have competitive labor markets it's going to be a very small fraction.
So if you have to spend $25,000 on labor to build a $100,000 car, you might only see an associated benefit to the tune of $5,000 delivered to workers. Then you have land, capital, resources... all of which exhibit a similar situation where the landlord or the people who mine the resources are seeing a small profit per unit sold, but only a small fraction of it's cost.
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Why do you believe an extra dollar is better off in the hands of a poor person than a rich person? To date the avg. rich person has helped the economy more than the avg. poor person - why do you think that extra dollar will change this?
Better off in terms of what? In terms of accumulation of wealth it may very well be better off in the hands of a wealthy person since they'll spend less invest more. But the value of those dollars is very different to different people. That's not an argument for making things exactly equal, but there're certain depths of poverty that pretty much every modern society agrees is unacceptable.
Last edited by Abbaddabba; 05-22-2017 at 02:29 PM.