Here’s an unsettling fact: the world economy becomes stronger as more people reside below the poverty level. Sounds like nonsense, right? Remember that capitalism is a young system — and a broken one, many would argue — and that we have yet to fully understand how to run it to the benefit of all. That’s why the growing wealth income disparities exist. But why is our economy stronger when the majority of people are poor?
It’s simple. A strong economy requires two things: production and consumption, and preferably in nearly equal parts. The workers produce, they are paid for that labor, and then they buy what other workers produce. It’s a cycle. But the cycle doesn’t work well when laborers produce, are paid, and then don’t consume (i.e. make purchases). That’s why a strong economy can’t sustain itself without the poor — because the poor are much more likely to spend every cent they earn.
The middle class and ultra-rich, though? They don’t spend. They save more than they earn, taking money out of the cycle and preventing the economy from becoming more robust. If that system sounds less than ideal, well, that’s capitalism. Take it or leave it.
Many of our legislative bodies have yet to figure out who resides at the top of the food chain: is it the individuals who produce and consume the most, or is it the ultra-rich business owners who provide some jobs for those who produce and consume the most?
Pat Devaney is secretary treasurer for the Illinois AFL-CIO. He said, “I would suggest that our experiences, observations and frustration caused by the inadequate investment in IDES should be an illustration on why we should invest in our state agencies.”
This comes as Democrats and Republicans argue over whether to implement fail-safe measures to help either individuals or organizations. Neither party seems willing to do both — even though compromise might be the most beneficial thing for the economy.