27 June 2007

Understanding

I have always thought that the saying "Rich are getting richer, poor are getting poorer " is always a short term malady.

Think of it, when the rich get richer, where will the money they have be ? They have to spend it and it has to come back to the economy right ? (I am taking into account all the money hoarding that they would do and then spend whatever remains ;-)).

Isn't this quite similar to the situation that, when high tide occurs, a boat moored on the pier does not sink, but in fact, rises with the tide ? Of course, the boat rising with the tide is a slow, but a sure process.

May be, the Singapore return Economist Macchan can shed some light on this.

K.Shyam

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Posted by Shyam Krishnaswamy at 8:23 PM

3 Comments

  1. Blogger Balaji posted at Wednesday, June 27, 2007 at 10:06:00 PM GMT+5:30  
    I think your assertion is only partly true. Rich people tend to consume stuff which are hardly produced by poor people. In anycase spending driven economies are bubbles waiting to burst with enormous socio economic repercussions.
  2. Blogger sathish posted at Thursday, June 28, 2007 at 8:56:00 PM GMT+5:30  
    Consider this.
    When the rich man goes to restaurant he tips the waiters Rs.100/- say. Now, apart from ths how much do these waiters earn. The profits from the food bills goes to whom.
    When the rich man buys an imported car who gets the profits?? Even when he buys a high class Indian car who gets the profit. How much percentage of the profits actually translates in terms of salary to the real "Working People"??

    There are many more instances like this. So, when the rich get richer, they help other rich people get more richer and do nothing else.
  3. Blogger K.Shyam posted at Friday, June 29, 2007 at 1:34:00 AM GMT+5:30  
    Balaji: I am not sure about that spending driven economies stuff.

    Sathish: What about the salaries for the Waiters ? Take Shiok for example.
    I am not sure about the imported car stuff, but when you buy a car in the showroom, you have to pay for everything in that showroom. Electricity, building construction, employee wages e.t.c., e.t.c., and so on and so forth. My point here is that as long as spending is there, the money will eventually come back into the economy in some format.
    K.Shyam

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