How Rich People Save Money
From Brad DeLong
, I see this excerpt of an Economist article
Tax cuts aimed at low earners are more likely to be spent than handouts to the rich, for they save more...
I've seen quotes just like this all over the place, and most of the time it's just left as obvious that no good can come from rich people saving money. I'm no fan of the tax cuts, and I'm certainly no economist, but I do know this: Rich people do not stuff money into mattresses. I am not rich, but if the government were to send me a check for a couple of thousand dollars, I'd most likely invest it in the stock market -- I expect that the top 1% would do this as well. Potentially, they could also invest in funds and venture capital that I have no access to given my comparatively paltry funds. The net effect is that we would expect a rise in the stock market since there is now more demand for stock with the excess unspent (or "saved") capital in the hands of the rich.
Now, I'm not saying that this will lead to job creation or growth, but it's not the "no effect" that is usually implied by saying the rich just save their money.
I'd like to hear a serious analysis from the left on what they think the net effect of that would be.