Josh
Mowles
ECON122
Dr.
Kassens
July
26, 2013
Critique of “The
Problem With Too Many Millionaires”
In this article, the author talks
about how the rich are getting richer, and the middle class is
disappearing. She gives several examples
of how the already rich and well known entrepreneurs are creating products that
they are the only seller but there are many, many buyers. Something else she mentions was how
productivity has gone up by 85% since 1980.
Wages have only gone up by 35% during that same span. (Freeland, 2013)
She uses all this information to show the problem with too many
millionaires.
If the author of the article is
correct and the middle class is hollowing, then this will begin to affect the
real gross domestic product (RGDP). What
I mean by this is that if the lower class keeps getting bigger than the
consumption will begin to lower. If more
people have less money to spend than this will affect the economy in negative
way. Most people think that the more
rich people make, the better the economy is because that will create a lot of
new jobs. This isn’t necessarily true if
you look at the production v. wage problem as mentioned before.
Something
else we learned in class is that in Milton Friedman’s Permanent Income
Hypothesis. In this hypothesis, Freidman
states that consumption is based on people’s lifetime average income rather than
the deviation from that income.
Consumption has the biggest influence on RGDP being that it makes up of
70% of it. So if there are many more
people making much less over their lifetime then this will inevitably affect
RGDP in a negative way.
Emily
did an excellent job of using the information from the article to show the
effect of the top 1% is having on the economy.
She also did a wonderful job in making her blog entry very easy to read
as well as adding a bunch of material which made her blog entry very
informative. She used a lot of stats
which made her brought a lot of validity to her blog entry. I also really liked the fact that she used
very credible sources in her blog entry.
One of the sources is a professor of economics at Harvard University.
And the other source is the chairman of President Barack Obama’s Council of
Economic Advisers.
Works Cited
Freeland, C. (2013, June 20). The Problem With Too
Many Millionaires. Retrieved from The New York Times:
http://www.nytimes.com/2013/06/21/us/21iht-letter21.html?ref=economics&_r=0
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