I happen to be writing something on this very question, so while I can't speak for Dean, I do think his claim is essentially (though not necessarily) correct. To the extent that stock gains are realized, these realizations tend to generate an upward redistribution of income because: (1) insiders can cash out more freely and with better timing than small investors (e.g. Enron) (2) insiders get sweet deals on IPOs etc (e.g the NASD investigation of Salomon for spinning IPOs) (3) insiders have better information on the "true" value of a company (e.g Global Crossing, Qwest, WorldCom, etc, etc) (4) insiders are always richer than small investors to start with. Also, even if there were no middle-class investors with 401k accounts to steal from, it would still be true that stock gains would be realized at the expense of lower income folks. To the extent that an individual realizes gains and thus increases his income at a rate exceeding the growth of income generally, some redistribution must occur. Most likely, those flush with realized stock wealth will bid up the prices of scarce goods with few substitutes (housing, health care, education), making these less available those in the lower ends of the income distribution. After all, if Ken Lay's income increased by 300% in 2001, while GDP rose by 3%, then someone went without, right?
Ellen those gains, when spent, will [EMAIL PROTECTED] writes: >It seems like this would follow straight-fowardly: > >1. redistributing wealth tends to concentrate >2. trades of stock concentrate wealth because beneficiaries of trades >(recipients of capital gains) tend to have higher wealth on average >3. more trading =>> more concentration >4. variability, volatility ==>> more trading >5. bubbles ==>> greater volatility and variability >6. bubbles ==>> greater concentration of wealth, more redistribution > >I'm not certain all of these points are true, but they seem >to hang together, and they sound good. > >Ergo finance is inherently parasitic, entirely apart from the real >assets to which financial assets are connected. > >mbs > >
