As an investor, when you invest your money you want more – more than you have at the moment, more than competing investments, more in the future, but generally more is good. When the sentiment is translated to many people, more often flows in inequality because some make more than others. Most of believe somehow overtime there is a net benefit – some will lose money, some will make money and some with stay about even.
In an article by Marc Jones of Reuters, the central bank to the world’s central banks is called the Bank of International Settlements (BIS) and it recently released a study about wealth inequality.
The BIS examined 182 recessions over 70 countries and came to the conclusion after a downturn in the economy the income share of the bottom 50% remained at 0.3% below the prerecession level on average, for those in the top10% it was 0.7% higher.
Economies that are more unequal go through deeper recessions which it turns further increases inequality.
The solution for the BIS is for central banks to try to keep inflation in check and that governments use stabilization policies such as subsidies or support payments that help poorer people.
Linking to dividend paying stocks, when you buy a stock you are expecting the company to stay profitable and pay dividends over a long period of time. That is a good thing and then you have choices what to do with the increases in wealth. For most of us, one of the choices is not to give more to the government, but we can choice to give to our particular choices.
There are more questions than answers, till the next time – to raising questions.