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« Robert Lucas on Economics | Main | The Best Paragraph I've Read in Awhile »


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I like your example of the two pockets, but I would add that the net effect of the redistribution of wealth has more to do with the size of the hole at the bottom of two pockets which represents the rate at which each pocket releases money into the economy. Without any evidence, my guess would be that poorer people tend to spend rather than save leading to a larger boost in the economy in the short run. If they are not able to keep that pocket full the long term effect of the larger hole is not good. I am not sure the hole in the business owner’s pocket changes in size relative to the amount of cash in the pocket. The business owner is likely to find another pocket to put it in if it gets too full.


I don't have the numbers either, but my sense is that lower income folks may spend more but business people invest more. If so, this offsets the higher spending of lower income folks in the short run and harms the economy in the long run.

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