Guest post: People becoming too rich is a symptom of a sick economy

Originally a comment by Bruce Gorton on Easier than persuading the laws of physics to change their minds.

You can in fact have both a growing economy and good environmental standards.

The thing about the economy that a lot of people miss is that a strong economy is basically everyone, not just the richest chunk of it. If you have to pay people to properly maintain your factory – that money isn’t vanishing into a void, it is going into their pockets where it will then be spent on the stuff that they need.

Not only that but regulation creates those jobs, and creates sub-industries which otherwise wouldn’t exist. For example, with mining, what happens when the mine runs out? Well in a well regulated country the mine has to fund land recovery – which requires people to do it.

Which means that in an area where a mine has run out of whatever was being mined environmental regulation provides for at least some continued employment – generally at a cost to people who would otherwise not spend the money as effectively.

The main motive for investment is to turn a profit. If you have a situation where there is no redistribution of wealth from the rich to the poor, over time the demand for goods will drop as the money pools in the hands of the rich (Because there is only a certain amount of stuff one person can want), which means you will get a corporate emphasis on cost cutting rather than growth because there is no room for that growth.

Which in turn means that there will be even less demand for goods as people lose their jobs and supply is constrained to cut those costs further, which in turn means that all of the investment the American right talks about isn’t going to happen because there is no demand, and thus the best potential for growth is – sticking your money in a bank account.

The net cost to the economy for regulation is pretty much nothing, and generally it works out at a profit. The net cost for de-regulation however?

That is when you end up with money going stagnant, essentially taken out of the system. Not only that, but a lot of regulation is basically designed to reduce cross contagion from bad business practices.

One business going under can have a domino effect where multiple industries collapse, bankruptcies screw the supplied and the supplier, and what causes bankruptcies in America?

Health issues mostly – and those are made much worse by poor environmental regulations. Hurricanes and fires are also not good.

The very basis of Republican economic thought is a complete clusterfuck which undermines economic growth, in favour of growing the bank accounts of the rich. Having people becoming too rich is a symptom of a sick economy, because that means money is going stagnant.

Money needs to constantly change hands for the economy to grow, at least if what you care about is the actual economy rather than the bank accounts of like eight people. Regulation is thus largely a good thing on a macro-economic level.

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