I was a bit surprised to read this article about the wealthy this morning. Seems many rich working in the financial sector do not save money, or save very little. Economically this helps the economy, creating jobs. And as the article points out, does make one wonder if taxing them more would help, or do the opposite and more likely hurt the economy.
"The End of Responsibility"
http://blogs.the-american-interest.com/ ... nsibility/
snippet from the article:
Quote:
In times of great uncertainty, with the economy recovery still wobbly and unemployment still at over 8%, the struggling rich are juicy targets for writers looking to score some easy points. Who can read about the exotic vacations and the lavish summer homes, $17,000-a-year dogs named Zelda and Duke and the $30,000-a-year adult study groups, and not feel even a twinge of schadenfreude as the lower half of the 1% is forced to cut back?
But beneath all the schadenfreude and finger-pointing is a deeper truth worth noting:
Richard Scheiner, 58, a real-estate investor and hedge-fund manager, said most people on Wall Street don’t save. “When their means are cut, they’re stuck,” said Scheiner, whose New York-based hedge fund, Lane Gate Partners LLC, was down about 15 percent last year.
Definitive statistics on savings rates of the very wealthy are hard to find. The Consumer Expenditure Survey and the Survey of Consumer Finances break down the income spectrum in 20% and 10% increments, respectively, and are therefore not granular enough to tell us much. But as this New York Times article from 2006 calculates (citing a Moody’s economist), the ultra-wealthy don’t seem to save very much at all, and are at the vanguard of the consumption society that has transformed America.
On the one hand, this should give leftie economists pause. From a Keynesian point of view, if the rich really are spending every dime, then raising their taxes will slow economic growth by reducing consumption. Shifting income from wealthy fat cats to poorer folks is supposed to stimulate the economy because the poor (allegedly) are less likely to save their income. But if the rich are already spending it all, nothing economically is gained by redistributing it....
02 Mar 2012, 3:54 pm
