SOC 102 Lecture Notes - Lecture 14: Financialization, Financial Transaction, Gini Coefficient
Document Summary
Siglitz argued that inequality provides incenives (a good thing), but that too much inequality results in bad things. In this chapter, he further deines what those bad things are. If you give money to people at the top, they save 15-25% of it. People with lower incomes spend it all. When money moves too much to the top, lower income people spend less. Reduced spending by the lower classes slows the economy and leads to unemployment. Ex: if people aren"t buying things, they won"t be sold. If things aren"t being sold, they don"t need to be manufactured. If things don"t need to be manufactured, people get laid of. This unemployment should have happened in the 90"s due to the increase in economic inequality that was acceleraing at that ime. The economy and unemployment were ariicially propped up by two bubbles . Bubble situaion in which an element of economy is over-valued and over-priced.
