[Joojoobees]

Originally Posted by Bri

But here lies the problem. The middle class did not become their own boss. Instead they acted like the poor or the rich in your example. They either consumed the extra income, or saved/invested it but they did not start new companies. I wonder what the reason for that is.

I think you are missing my point. They didn't squander it, they never got their money in the first place. The national wealth has been pretty extensively documented to have been redirected to the ultra-rich.

Consider (source):

As of 2007, the top decile of American earners, Saez writes, pulled in 49.7 percent of total wages, a level that's "higher than any other year since 1917 and even surpasses 1928, the peak of stock market bubble in the 'roaring" 1920s.'"

Beginning in the economic expansion of the early 1990s, Saez argues, the economy began to favor the top tiers American earners, but much of the country missed was left behind. "The top 1 percent incomes captured half of the overall economic growth over the period 1993-2007," Saes writes.

BTW, according to this more recent article the same researcher (Saez) should have data using the same methodology covering 2008 by the end of the Summer, but the early data looks really "frightening".

Originally Posted by SaintessHeart

(Buffett) is one of the most eccentric rich people in the world, he earns money from the stock market just to give himself satisfaction, and he throws practically all the money back into the market again.

This is what I was trying to get at. So much of our wealth (certainly America's wealth, but probably true on a global scale, as well) is tied up in the ultra-rich that it has become a structural problem. When the majority of the wealth is owned by the majority of the population, it moves in economically useful ways. When the majority of the wealth is tied up in the hands of a few, it gets moved into economically unproductive vehicles (e.g. commodity and equity bubbles). According to this source the top 1% own 70% of all American financial assets.

Free market Capitalism is predicated upon a strong Middle Class. The Middle Class creates the small businesses that employ people, and that does the real productive work of a healthy economy. The ultra-rich can be tolerated as an aberration when they hold a minority share of the wealth in society. In our case concentration of wealth has become a pathological condition. The money that normally would have been used productively by the Middle Class has gone into financial speculation. Check this image out (source):


Anyways, longish post because I'm truly worried about the consequences of this situation. (Hello, aristocracy? )