[clarkmoody]

You misunderstand the fundamental mechanism for improving standard of living: productivity gains. Consumer spending does not improve productivity. Rather, investment in capital goods (by those rich hoarders) leads to productivity growth.

[sergiosgc]

That's a fairly basic liberal view, profoundly flawed. Consumer spending improves productivity as a second order effect. Consumer spending improves the demand side of the economic cycle, prompting opportunities for investing in efficiently supplying that demand.

The disruption of the demand side of the economic cycle is the reason behind the loss of competitiveness of economies with high inequality. You get capital accumulation that finds no outlet for investment, other than riding economic bubbles.

This open lecture by LSE, although focused on the UK, touches most important points about inequality: http://www.lse.ac.uk/Events/2018/07/20180717t1830vOT/peak-in...

[jaggederest]

If you're considering "investment" as included in GDP, it's not just "saving money", it's "business spending on depreciable assets", essentially. Owning a share of Apple doesn't make you "an investor" in the GDP sense, but Apple does a lot of investment.

I'm not sure that "rich hoarders" have an appreciable positive impact on business investment in depreciable assets. Most capital assets are purchased to produce goods and services to meet demand, which might be stimulated more by redistribution.

[undergrowth54]

But those productivity gains need to be directed efficiently, which requires some mechanism for the market to know the needs of a broad swath of the population. People get to vote on what problems need solving and that directs productivity growth as capitalists chase revenue.

However, if income is too highly concentrated, then folks with serious problems don't get many votes on what problems need solving and the folks who do get those votes are disconnected from those with more dire problems.