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PROSPERITY: Economic Policy | May 23, 1993


An Unpublished Letter to Los Angeles Times

The economic facts of life are simple.

Fact: Approximately two-thirds of the Gross Domestic Product is generated by Personal Consumption Expenditures, by households.

Fact: Moderate- and low-income households spend more than they save, whereas high-income households save more than they spend.

Fact: During the last decade, as more and more of the national wealth has been concentrating in fewer and fewer, high-income households, business activity has been stagnating, standards of living have been dropping, and debts -- both private and public -- have been increasing.

Conclusion: To revive business -- and, thus, enrich the households and government dependent upon it for generating revenues -- we must make the tax system more "progressive" -- taking more from high-income households -- and put that money back into circulation, via productive public investments.

The Alternative: A return to the Dark Ages, when trade was stymied and everyone -- rich and poor (There was no middle class to speak of) -- suffered.

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