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First off, most Americans are already in a borderline financial crisis, and you're saying that it's better they stay this way than get more money to "increase consumption"? http://www.cbsnews.com/news/most-americans-cant-handle-a-500... Obviously if you have more money, you will increase consumption, but the more money you make, there will be diminishing consumption. It's not like people making $30 million a year spend 95% of it at Walmart. The more money you make the more you either invest or save (as a percentage of your income), even if the total consumption increases as well. In other words, having more people with more money is not a "bad thing" for the economy (or their personal lives). Quite the opposite. Second, if there's a stronger middle class, it means the money paid to businesses will be much more distributed. When people have little money, then they can only afford to spend on "necessities", which by default shrinks the market to a handful of business categories, which means only a few will be able to get "richer". It's also likely that only the biggest such businesses will survive thanks to better economies of scale and people's price sensitivity due to the very low incomes, which means there will be higher inequality and less competition in the market. When more people have more money, they buy all sorts of stuff, giving life to all sorts of new businesses and because consumers aren't as price sensitive, competition will be higher as well. |