----- Original Message ----- From: "Ellen Frank" <[EMAIL PROTECTED]> To: <[EMAIL PROTECTED]> Cc: <[EMAIL PROTECTED]>; <[EMAIL PROTECTED]> Sent: Monday, August 19, 2002 2:49 PM Subject: [PEN-L:29612] RE: Dean Baker on the SM's redistributional effects.
> 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 > > ================== Towards a taxonomy of securities trades that concentrate the wealth: http://www.wulaw.wustl.edu/WULQ/75-2/index.html See the papers by: TECHNOLOGY, TRANSACTIONS COSTS, AND INVESTOR WELFARE: IS A MOTLEY FOOL BORN EVERY MINUTE? Lynn A. Stout WHAT CAUSES NEW SECURITIES REGULATION?: 300 YEARS OF EVIDENCE Stuart Banner any problems with the link just holler Ian
