No. of Recommendations: 11
1) Politics professes that rich people get rich at the expense of poor people, all other things being equal.
2) Economics professes that a productive economy will benefit everybody in it, all other things being equal.
I think the history of the western world gives much more support to 2) than to 1), especially including the failure of systems that were set up specifically to correct the ills of a world where 1) is more correct.
False narrative. Economists never "profess" such view.
We know that productivity is not the same across the entire economy. Some sectors are highly productive, while others are not. If you allow people in the highly productive sectors to keep all their gains from increased productivity (i.e., through low taxation), those in the less productive sectors will become worse off. If there are more people in these less productive sectors than in the highly productive ones (and this, in fact, is what the U.S. looks like - most Americans work in the less productive service industry), the population will be worse off overall.
Highly productive sectors will pay higher wages, which forces the less productive sectors to raise wages in response. However, higher wages do not lead to better productivity in these less productive sectors. This would result in either higher labor inputs, stagnant employment, or more expensive goods from the less productive sectors. The problem would be compounded if only the rich benefit from the productivity gains, as this would mean the rest of the population would experience cost increases in the less productive sectors far outpacing the small income gains for people working in those sectors.
