Closing the Gap

Closing the Gap

It is not the redistribution of wealth, but rather the redistribution of money that is the solution to the inequality. 
How do I know?  It happened before.


Caveat:  This is an Economics lesson. Focus on the Economics only.

Mr. Widget will not hire one additional widget maker until he has an order for one (1) widget more than he can produce when operating at maximum capacity and optimal efficiency.

As with the Government.

There are two (2) ways to increase revenue:

1. Increase taxes.
2. Increase the number of tax payers.

So too, by way of metaphor, there are two (2) ways to close the inequality gap.

1. Redistribute wealth.
2. Redistribute money.

Wealth is what you have.
Money is what you make.

To continue the metaphor in plain speaking:

When Widget raises wages Employees make more money.

People who make more money buy more stuff.

People who sell stuff, buy more stuff from manufacturers.

When manufacturers sell more stuff, they make more stuff.

To make more stuff, they need more widgets.

Mr. Widget hires more widget makers.

More workers: More buyers.


This brings us back to the Government.

More workers making more wages:

1. Increase Government revenue without increasing taxes.
2. Need less Government spending--because they are working--decreasing the Government need for revenue.


Mr. Widget makes more profits by selling more widgets, not by raising widget prices.


The result?

We redistribute the money, closing the gap between the rich and the poor.
Provide Government with more "discretionary revenue" to spend on [infrastructure]  because more people working means fewer people shackled to poverty by being kept shackled to poverty programmes.

The same paradigm applies to Emerging Nations to help one (1) Billion People living on less that one ($1) dollar a day.


Regards,

Slim.

Slimfairview@yahoo.com

Copyright (c) 2016. Bob Asken
All rights reserved.