Question about Supply Side Economics/Trickle Down Economics/Horse and Sparrow theory

[BananaStand]

Let's say friendly aliens come to earth and either a) give a gram of gold to 1000 poor people or b) give a kilo of gold to one rich guy, the economy at the bare minimum would not be worse off in scenario a), and quite likely would be better off, would you agree?

Completely disagree. Cuz of inflation. It's why the government doesn't just print a whole bunch of cash to pay off the national debt. The aliens are just diluting the value of gold. I don't see how anyone is better off.

When Reagan introduced "trickle down", inflation was like...12%.

The economy would likely be far better off if the aliens gave the kilo of gold to the rich guy. Of course, it doesn't help if the rich guy just buries the gold in the ground and doesn't tell anyone about it. But then again, it doesn't really hurt anyone either.

Assuming he does something with the gold, it's probably best to give it to him.

People with small sums of money, spend it. People with large sums of money invest it.

Spending helps, but not as much as investing. When you spend, your money supports the supply chain that delivered a good or service to you. But it ends there. When you invest, usually the idea is that the investment will continue to generate returns in perpetuity.

If the aliens gave the gold to the rich guy, and he uses it to open a business. And that business is profitable. ANd those profits go to expand employment an increase wages, all the while not consuming the original kilo of gold, then surely that's better for everybody in town.

Now I know what you're gonna say,

Maybe he doesn't expand employment, or increase wages. Maybe he keeps the gold for himself. Isn't that bad?

Again, it's only bad if he buries it in the ground and doesn't tell anyone about it. If he invests it in another business, or a stock, or a mutual fund, or a savings account, then the money goes right back into the economy, generating more jobs, and increasing wages.

I don't know why folks are so miffed at the existence of an income gap. In a healthy economy, investments grow faster than wages. That's just a fact of life. If the opposite were true, and wages grew as fast as investments, then you'd likely have a world with rampant unemployment. Try living in that world and tell me how you like it.

So yes, when the economy booms, the rich get richer. But they aren't doing so at the expense of the poor. That's a key element of this discussion that seems to into one of Jimmy's ears and out the other.

Income equality is overrated. Income mobility is what matters. I'm quite sure we've discussed this before. In America, the vast majority of folks in the bottom fifth of earners have kids who rise above, and often far above, that bottom fifth. At the same time, a fair amount of folks in the top fifth, have kids who fall all the way to the bottom.

Income mobility. I really don't know what else a citizen could ask for.

If a guy like Jimmy wants more money, there are plenty of opportunities out there for him to do so. You can't blame the rich because you're lazy.