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Nominal growth continues and will continue to support asset prices over time.

To the extent there is not a sufficient desire to spend income, the government has the options to either cut taxes to increase private spending and/or increase government spending with a bid for those idle resources.

Government deficits are slowly rising worldwide, as these ‘automatic stabilizers’ function to reduce slack and restore growth.

However, the widening income distribution also serves to move the output toward goods and services for those with spending power.

And none of the candidates seem to be directly addressing this fundamental issue.

World’s richest got even richer last year


by Joseph A. Giannone

NEW YORK (Reuters) The old saying holds true: The rich do get richer.

Even as world financial markets broke down last year, personal wealth around the world grew 5 percent to $109.5 trillion, according to a global wealth report released on Thursday by Boston Consulting Group.

It was the sixth consecutive year of expanding wealth. The fastest growth was among households in developing regions, such as China and the Gulf States and among families who were already rich.

That wealth also is increasingly concentrated among the richest.

The top 1 percent of all households owned 35 percent of the world’s wealth last year. Meanwhile, the top 0.001 percent, ultra-rich households holding at least $5 million in assets, commanded $21 trillion — a fifth of the world’s wealth.

The planet also continues to mint new millionaires rapidly. The biggest jumps in 2007 came from emerging countries in Asia and Latin America. Overall, the number of millionaire households grew 11 percent to 10.7 million last year.


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2 Responses

  1. Besides offering government jobs at a fixed wage to the unemployed what would suggest to stop the growth of this gap?

    Does Obama’s plan to cut payroll taxes for the middle and lower incomes and raise income taxes on the top 5% of earners address this issue? What would be a more direct way?

  2. I haven’t gone over the numbers recently, but in 2003 my proposal was to eliminate the payroll taxes which at the time would have put the deficit up to maybe 5% of gdp.

    To adjust demand I would reduce payroll taxes as needed until they go away.

    It’s hard for me to see demand being too high and a tax increase on anyone needed to reduce it.

    I focus more on the distribution of consumption rather than the distribution of income. So I’ve proposed luxury taxes on items that consume inordinate amounts of resources high enough to cut that consumption. The success of a luxury tax is in how little of the tax is collected, not how much, as the point is to reduce consumption, not raise revenue.

    Much of this is in ‘soft currency economics’ for more info.

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