MLI hosted a debate earlier this week about whether Canadians should worry about income inequality. One of the common economic fallacies that found its way into the debate was the idea that people low down the income scale spend all their income and therefore stimulate the economy, whereas the rich can only consume a part of their income and therefore the potential economic activity that cvould be generated by the unspent income is somehow vapourised.
Au contraire!
The excess not consumed must be invested. That’s why saving is a particularly useful and powerful sort of spending. In the hands of the One Percent such capital accumulation has driven many innovations in technology, space travel, corporate management and much much more. That’s pretty much the summary of the Globe column the debate inspired me to write for the ROB’s Economy Lab.
Took the Occupy Movement et al about 5 minutes after the column appeared to launch a Twitter campaign accusing me of everything but eating babies (but then the day is young!). Just spell my name right, folks….
