re: #324 Dark_Falcon

How so?

I’ve explained this to you before. I’ll do so again, but please put some effort into actually remembering it.

The economic power of the United States comes from three sources: One is our capability to produce goods and services. Despite what you’ve heard our capacity to produce goods is higher than its ever been— manufacturing in the US has not shrunk. The second is our financial sector, the capital in capitalism. This, however, is tricky because it is highly multinational, and carries enormous risk, as we’ve seen with the fiscal meltdown. The final, and most important part of our economic power, is the purchasing power of the average American worker.

That purchasing power, that gigantic market, is why it is relatively easy to start businesses in the US— people have the money to buy things. It is why other countries want to please us— so that we’ll allow them access to our markets. It is what drives applied technology— that people want more and better ways of doing things, newer gadgets, etc. It is the fuel of the economy, it is the velocity of the money.

As our income disparity increases, that velocity slows. The highest tier of incomes do not spend their incomes. They do not drive the economy. The true job creators in the US are the average citizen going out to buy something, because that exchange of money is what creates the job. As those people have less and less to spend— and as more and more of it is spend on food, housing, and medical care— the power of our domestic economy shrinks and shrinks, other countries begin to turn away from us and towards China, Europe, Japan, and innovation and small business begin to stagnate and fail.

The vivacity and excellence of capitalism comes not from massive corporations growing ever-bigger, finding out new ways to exploit markets, but from the competition and turblent semi-Darwinian selection of it. That energy is only available if there are people willing to spend money on the products and services of those young companies.

And that is just the primary effects, it’s not even the secondary effects of education slipping away as fewer and fewer people can afford it, of costs to the government increasing as fewer and fewer people can pay for things like heating oil themselves.