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Does a Rising Tide Lift All Boats?

Posted By Washingtons Blog On September 5, 2011 @ 1:00 am In Think Tank | Comments Disabled

When the Rich Get Richer, It DOESN’T Raise All Boats … It SINKS The Standard of Living For Everyone Else [1]

I’ve repeatedly noted [2] that rampant inequality destabilizes the economy as a whole, and actually causes depressions … but that government policy is increasing inequality.

I’ve also pointed out that no one – liberal or conservative [3] – likes runaway inequality.

Now, Jeffrey P. Thompson (Assistant Research Professor at the Political Economy Research Institute of the University of Massachusetts, Amherst) and Elias Leight (Assistant Analyst Tax Analysis Division of the Congressional Budget Office) have demonstrated that when the wealthiest Americans get richer, everyone else becomes poorer [4].

For example, they demonstrate that when the wealthiest Americans get 10% richer, middle income Americans get 2% poorer.


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URL to article: http://www.ritholtz.com/blog/2011/09/does-a-rising-tide-lift-all-boats/

URLs in this post:

[1] When the Rich Get Richer, It DOESN’T Raise All Boats … It SINKS The Standard of Living For Everyone Else: http://www.washingtonsblog.com/2011/09/when-rich-get-richer-it-doesnt-raise.html

[2] noted: http://www.washingtonsblog.com/2011/07/economy-cannot-recover-as-long-as.html

[3] or conservative: http://www.washingtonsblog.com/2011/02/its-myth-that-conservatives-accept.html

[4] when the wealthiest Americans get richer, everyone else becomes poorer: http://www.peri.umass.edu/fileadmin/pdf/working_papers/working_papers_251-300/WP258.pdf

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