As the Economy Grows, the Rich get Richer, and That’s a Good Thing

As the Economy Grows, the Rich get Richer, and That’s a Good Thing

There is nothing wrong with rich people getting richer; their investments bring us all along for the ride.

Much is made about income inequality in the press these days, as if it was the disease that keeps the haves separated from the have-nots.  And as the US economy has been growing at a steady rate for the past year, the gap between the richest and the poorest seems to be getting even wider, causing even more alarm.

But the argument over the disparity between incomes makes no sense, when you realize there is no bucket of money from which the greedy rich are taking more than their share, while the poor only find the bucket empty when their turn to withdraw comes up.

There are those who would have you believe the evil rich are sitting on bags of gold coins in a vault underground somewhere. Instead, the rich are using their money to create more wealth, by investing in stocks, companies, and other money-making ventures, and it does not take anything away from those everyday Americans we like to call the middle class.

The truth is the economy grows because people who have money spend the money, and it does the economy no harm if the spending of money results in making even more money.  Millionaires don’t take any of my wealth when they invest in a new company, or provide capital for an existing company to expand or modernize.

In fact, that process provides indirectly to me even more wealth.  Without investors and capital, the company for which I work would fall behind its competition and possibly be forced out of business by similar companies who have the investment backers to improve their products.  So, without the evil rich spending their money, I could quite possibly lose my job.

It even works on a small scale.  Let’s say the new tax cuts for 2018 result in my household having an additional $100 per month.  That additional influx of cash may prompt me to purchase something new for the house, or take a vacation trip, or maybe just go out to dinner once or twice a month more than I had been doing.

If I choose to buy a new bedroom suite, the furniture store makes money by selling it to me.  The sales clerk makes money as well, as does the furniture supplier to the store, the workers who made the furniture, and the suppliers of the products from which the furniture was made.

If enough of us decide to purchase new furniture, the store may even expand its inventory, hire additional sales personnel or support staff, thereby creating new jobs and more purchasers in the local economy.  The furniture maker may make enough profits to expand their operation as well, and hire more employees, adding to the economy of another part of the country.  The same could happen to the firms that supply wood, metals and textiles to the furniture maker, making their profits larger, and perhaps leading to expansion in other parts of the world.

If I decide to go on a vacation trip, the money I spend for travel, hotels, eating out, sightseeing and all other associated activities work the same way as the furniture expense, providing income for all who provide those services.

Eating out provides income for restaurants, waiters, cooks, busboys, food providers, those who transport food to the restaurants, and even construction workers who build and remodel restaurant buildings.  And all of those groups spend their additional money to do the same thing.

All that from an additional $100 per month.  Imagine the impact of the investment of several million dollars from the evil rich.

Yes, the rich get richer, and it’s a win for everyone.

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