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I'm differentiating consumption from wealth and this is a really important distinction you keep ignoring so I'll go into detail. Consumption is more directly related to the actual output of the economy and better takes into account things like inflation. If the wealthy were spending their share of production on competing with the poor for consumption it would spike inflation up and actually have impacts on how the poor live. If they instead reinvest it in building out more capital capacity then it raises the total supply of things to consume produced by the economy reducing the cost of living for the workers.
Imagine a Dickens sweatshop owner that reinvests the profits of the garments his workers produce in sewing machines vs uses it to buy the clothing produced. In the 'buying the output' case his employees have less clothing to go around for themselves, in the reinvesting case not only is the owner not bidding up cost of the output but actively growing the output through capital investment so there are more clothes to go around for everyone.
The rich are not meaningfully consuming enough beef that their differential wealth has any impact on the worker's ability to buy beef for themselves, same for housing, same for most of the expenses the poor must deal with.
I think it'd be great if the poor could own more stocks, we have several government programs like IRAs and 401ks to give them some tax advantage towards this goal. But consumption wise we should be basically indifferent to who is holding on to the bits of paper.
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If they can't increase the price any further without losing the margin and the rich and middle class will not pay more then they will reduce scope of business. This is the option they have that you consistently miss and it's very important. You don't seem to be willing to recognize that the pie could just actually shrink. Amazon does not have some fat margin on delivery. They already almost certainly lose money on many rural delivery routes.
I asked before to define terms here, what percentage of people are "the rich", which percentage are "the poor"? It just does not parse as true to me that poor people don't go to the gym unless you defining the poor as like a very specific group of rural people who don't go to the gym for reasons other than cost savings.
Lifetime fitness may not go out of business but that's hardly the only gym company. There are many lower margin and local gyms that run much leaner margins. Restrict labor supply and the marginal leaner gyms, the type the poorer people use, goes under first.
My argument has never been that wages don't rise, it's that they're not the whole picture. Wages may rise for some subset of workers, another subset gets laid off and the pie shrinks. After the 1920s wages rose AND the economy went through massive restructuring due to mechanization AND inequality increased AND it ended in the great depression. You can't just isolate the one measure of wages from the whole rest of the economy.
Under your theory this shouldn't cause a recession, it should cause wages to go down, not production which should increase. But production decreased sharply. It doesn't fit your model any way you turn it. Yes, restricting supply of labor in the short term, before the consequences play out, increases the wages of labor. But firms quickly find equilibrium, they retract from less profitable markets and cut number of employees. These employees find themselves back in the labor market reducing the demand squeeze and then wages fall again. Maybe the wage line remains higher than before the squeeze, maybe it doesn't. But total production shrinks so the total amount of stuff in the economy to consume decreases and on average the workers get to consume less stuff.
As I already pointed out, covid, by forcing many to stay home from work, greatly restricted the supply of labor. The result was a massive amount of job loss and inflation.
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