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Context : OnInequality

Quora Answer : Winston Churchill said. "You don't make the poor rich by making the rich poorer." What do you think?

Nov 3, 2019

I think he's just plain wrong.

Imagine a very simple economy with a lot of goods and services.

But only 10 dollars of money.

Joe Rich has 9 of those dollars. And Tiny Tim Penniless has the last one.

There are only $10 in the economy. In other words the total value of all the goods and services in the economy is $10. And Joe Rich has money equal to a claim on 9/10 of that economy. While Tim Penniless has a claim on 1/10.

Now a computer glitch manages to wipe out 5 of Joe's dollars from the bank. It didn't redistribute them. It just managed to totally lose them.

They've effectively evaporated from the economy.

Now Joe (not so) Rich has $4 or a claim on 4/5 of the wealth in the economy.

And Tim Penniless has now doubled his claim on the world's goods and services to 1/5.

In other words by making the rich poorer we have, indeed, made the poor richer.


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