[net.politics] The idle money of the rich

rpk@mit-eddie.UUCP (Robert Krajewski) (04/11/84)

While the holdings of the rich may not themselves increase demand,
such holdings are usually not hidden under the bed, but put into
banks, invested in companies, or invested in more sophisticated ways
(like mutual funds and bonds).  This increases the pool of capital needed for
creation and expansion of businesses  -- and *that* results in a higher
demand.

I'm not saying that all the investment may be socially useful (or its
contrary), but the money has to go somewhere !
-- 
``Bob'' (Robert P. Krajewski)
ARPA:		RpK@MC
MIT Local:	RpK@OZ
UUCP:		genradbo!miteddie!rpk
	or	genradbo!miteddie!mitvax!rpk

notes@iuvax.UUCP (04/13/84)

#R:mit-eddi:-159500:iuvax:2000027:000:1681
iuvax!scsg    Apr 12 12:31:00 1984


Certainly there is a great need for savings to provide investments
for our future productivity.  However it is questionable whether
the current tax system really encourages such investments by the
middle class.  Currently the U.S. has a savings rate of only 
approximately 5%.  It may be a good idea to provide tax incentives
for the middle class to save and invest more.  One thing Gary Hart
suggests in his book "A New Democracy" which seems like a very good
idea is to free up Pension funds for investment in more Venture-capital
entrepreneurial enterprises.  As it is now many Pension funds are
almost forced to invest in blue-chip stocks to insure the Funds security
rather than venture capital funding for small startup companies.
Pension funds already control something like $500 billion in assets.
While it may be worthwhile to provide tax incentives for the middle class
and average income groups to save , I think there should be some sort of
cap on the tax deductions allowed for such investment.  Having a tax structure
which grossly favors investments by the rich (as we currently have) promotes
inequity and furthers the even greater wealth inequalities we have in this
country already.  I don't think it's a good idea to give the rich tax
breaks to control even more of the wealth of this country than they do
already.  Wealth is power and in the long run is even more important than
income.  Trying to promote a more rather than less equitable distribution of
wealth seems just as important as promoting a more equitable distribution
of income, though one never sees this issue addressed in the media.
tim sevener
Indiana University, Bloomington
pur-ee!iuvax!scsg

alle@ihuxb.UUCP (Allen England) (04/17/84)

+
 > Certainly there is a great need for savings to provide investments
 > for our future productivity.  However it is questionable whether
 > the current tax system really encourages such investments by the
 > middle class.  Currently the U.S. has a savings rate of only 
 > approximately 5%.  It may be a good idea to provide tax incentives
 > for the middle class to save and invest more.  

Tim, you are really slippery!  On one hand you want to tax away the
*idle savings* of the wealthy and on the other you want to give incentives
so that the wealthy will put more money into *idle savings*!

--> Allen <--
ihnp4!ihuxb!alle

tac@teldata.UUCP (Tom Condon) (04/17/84)

, (sop to the blank line eaters--consider it a religious sacrifice)

>>  From: notes@iuvax.UUCP
>>  Newsgroups: net.politics
>>  Subject: Re: The idle money of the rich - (nf)
>>  Organization: Indiana University
>>  
>>  Certainly there is a great need for savings to provide investments
>>  for our future productivity.  However it is questionable whether
>>  the current tax system really encourages such investments by the
>>  middle class.  Currently the U.S. has a savings rate of only 
>>  approximately 5%.  It may be a good idea to provide tax incentives
>>  for the middle class to save and invest more.  One thing Gary Hart
>>  suggests in his book "A New Democracy" which seems like a very good
>>  idea is to free up Pension funds for investment in more Venture-capital
>>  entrepreneurial enterprises.  As it is now many Pension funds are
>>  almost forced to invest in blue-chip stocks to insure the Funds security
>>  rather than venture capital funding for small startup companies.
>>  Pension funds already control something like $500 billion in assets.
>>  While it may be worthwhile to provide tax incentives for the middle class
>>  and average income groups to save , I think there should be some sort of
>>  cap on the tax deductions allowed for such investment.  Having a tax structure
>>  which grossly favors investments by the rich (as we currently have) promotes
>>  inequity and furthers the even greater wealth inequalities we have in this
>>  country already.  I don't think it's a good idea to give the rich tax
>>  breaks to control even more of the wealth of this country than they do
>>  already.  Wealth is power and in the long run is even more important than
>>  income.  Trying to promote a more rather than less equitable distribution of
>>  wealth seems just as important as promoting a more equitable distribution
>>  of income, though one never sees this issue addressed in the media.
>>  tim sevener
>>  Indiana University, Bloomington
>>  pur-ee!iuvax!scsg
>>  

  Finally a breath of non-party rhetoric air.  Actually, there is a lot of 
merrit in what tim has said.  The problem comes from trying to control a
free enterprise system.  Once you start it is not an FES any longer.  Many
of the problems we see in our economy come from attempts by the feds to
solve what they determined were problems.  

  I would like to read Hart's book before I comment to closely upon it, but
it sounds like he is proposing that we dispose of the Social Security System
(NO, he didn't say that, but that is the largest single "safe" pension system
that I can think of, and it is surely not invested in venture capital).  

  Tim, do you ever watch Monty Python?  While not an icon of political virtue,
they did a rather good job on one show about Dennis Moore (sp?) who was going
to play modern Robin Hood and found that there was "more to this redistribution
of the wealth business than meets the eye!"  Long before he was done the poor
and the rich all hated to see him coming.  I like to keep that message in mind
every time I get to thinking I know what would be good for somebody else. 
(Do not confuse this with knowing what is good for me--less government!)

	    From the Soapbox of
	    Tom Condon     {...!uw-beaver!teltone!teldata!tac}

	    A Radical A Day Keeps The Government At Bay.