Yes, but the goods it can buy on the next round of division still don't come from the spendthrift vagabond, and if his way of life is incentivized while the producers' is disincentivized by this redistribution, then that circulation won't continue so innocuously.
...and if you incentivized the producers (which is also redistribution) while disincentivized the spendthrift you will not be left with much of a population to keep redistributing from. Ultimately this is bad for the producers, I am not sure why they don't realize it. Short-term thinking and greed, maybe?
Increasing inequality does in fact encourage deflation. Redistribution in forms of common services and education (for um.. jobs) is very necessary.
I wouldn't disagree with you, but I think you're reading something into the quote which isn't there. The moral is that redistribution won't bring prosperity - not that it's good in some cases and bad in others. At the risk of adding more complexity to the parable than its pithiness merits for the sake of explanation (as I understand it): the spendthrift wholly consumes whatever he produces, and wants more. The producer generates a surplus. He may well consume an overall greater amount than the spendthrift, but he's still net positive. The "division" however, will only benefit the spendthrift, because producing is chosen for the sake of consumption, but consumption for its own sake.
I know it's still a gross oversimplification, but I think the general truth encoded in the parable should be appreciated for its own sake in general terms.
> The moral is that redistribution won't bring prosperity
Except that it does - up to a certain point.
That's one of the few repeatable, tested, and validated economical principle from the XX century. Counter intuitive as it is, there's just no point denying it.
If prosperity is "having wealth", then redistributing wealth does bring prosperity. But then you could also say that stealing brings prosperity. Could you not?
You could, but you should be aware that "stealing" is not an act per se, but a moral qualification of some other act. Namely, the redistribution of goods.
The only difference between theft and charity is your personal moral inflection.
Well, the first theory is by Keynes, it's on his book.
It's been revised and remodeled several hundreds of times, if you want to search Google Schoolar or something like that, look for "demand side" theories, or crisis of "aggregated demand". Also, if you search for NGDP, the biggest share of the papers will be about this.
There are many other terms that will lead to less results. It's a really widespread concept.
An obtuse mischaracterization of the poor; a more typical "sin" would be failure to hop over the ever-rising bar that denotes the ability to secure money by threatening to withhold labor.
Circulation goes both ways and it isn't the ability of producers to secure profits that seems to be most endangered at the moment.
> Why do you think it's a characterization of the poor at all?
Because they're the ones who the type of policy we are discussing would actually be intended to benefit. Voicing that side of the argument through a "spendthrift vagabond" is disingenuous at best.
> The working poor are themselves producers.
I was using the term with my tongue firmly planted in my cheek, I thought it would be clear enough from context that I was referring to capital-holders.
>>Because they're the ones who the type of policy we are discussing would actually be intended to benefit.
No. To be a spendthrift is a symptom of many problems. One of which means lack of respect for money or the effort required to earn it. Other wise one wouldn't be throwing it away.
Value and efficiency can disappear though. I could spend 100 dollars on something that falls apart in a month, or spend 1000 for a functionally equivalently something that will last 3 generations. One of these choices is wasteful and hurts economic efficiency, one isn't.
Speculative (and unregulated) financial dealings by banks with your cash, leading to ruinous effects on the global economy, ruining much of the middle class in the process?
So it would seem. But I see a root cause for both of these: the centralized pyramid user hierarchy which is inherent in any paper based information system.
"It is part of the age-old habit of using new means for old purposes instead of discovering what are the new goals contained in the new means."