Economics, Management, and Financial Markets
Banking, Investment, Finance, Income distribution, Wealth distribution, Capital acquisition, Growth, Development, Macroeconomics, Monetary economics
In this article, to enhance the earning capacity of poor and middle class people (who in recent years have suffered a substantial decline in their share of national income), we propose a new loan which facilitates acquisition of financial capital with the future earnings of financial capital acquired and we discuss some possible strengths and weaknesses of such an approach. According to our analysis, there is an undeveloped market for the broader distribution of future capital income in which the price (cost) paid for acquisition of securities to realize such future capital income plays a crucial role. More specifically, we show that increasingly elastic demand for future capital income raises consumption (and therefore production) for the entire economy and, under certain conditions, for both high and low income earners. Additionally, we describe suggestions proposed by past researchers regarding how such loans may be instituted in countries with well-functioning financial markets and monetary systems, at acquisition costs lower than average historical returns in security markets.
© 2016 Robert Ashford and Demetri Kantarelis
Ashford, Robert, and Demetri Kantarelis (2016), “Enhancing Poor and Middle Class Earning Capacity with Stock Acquisition Mortgage Loans,” Economics, Management, and Financial Markets 11(2): 11–26.