07 July 2015

The Whole is Less Than Its Parts

Perhaps anon there'll be more here on the subject. Not sure, yet. But this paper (rather dense econo-speak) makes a by-the-way observation from the data:
In the baseline simulation, the consumption share of the top quintile (capital owners) rises by less than either their pre-tax or after-tax income share. The top quintile consumption share in the model tracks reasonably well with data from the Consumer Expenditure Survey (CES) for the period 1980 to 2010.

In other words: as wealth and income have concentrated, consumption doesn't keep up. In still other words, in due time capital will earn less and less return. The shift to fiduciary investment, rather then physical investment, is the reaction, since actual output isn't, well, actual. Just ephemera, for which any price can be charged. It's the WhatsApp problem.

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