Trickle Down Economics is Misunderstood and Straw-Manned

[Generation55]

Many people like to laugh at the idea of trickle down economics and claim that "it doesn't work because it makes the rich richer and the poor poorer. Nothing ended up trickling down to the poor." I will show how this is wrong.

The 1st idea of trickle down economics was giving tax breaks to the corporations because they the ones who create the jobs. They have the capital to start the company and the money to pay employees, thus giving people jobs. If people didn't open companies, where would people work? Not every person has capital to just open up a business. People depend on corporations for their livelihoods. They get money, health benefits, and retirement from the corporations. If a corporation closes up, people get angry that they are out of a job. It is logical that we need the corporations to exist in order to make money and have a career. People like to say "the rich are pissing all over us," but how? By offering you a career and retirement packages and health benefits? Stuff you wouldn't have if all the companies closed down? What's the reason for the hatred of the corporations?

Have you guys ever walked into a supermarket or a Walmart type store? Do you see how many items in that store are available for cheap prices? These cheap prices means the poor people can afford the things they need to live a comfortable life. This was the 2nd idea behind trickle down economics: That mass producing cheap items in bulk and fully stocking stores will lower prices and make things more available for poor people for cheap prices. Anyone who walks around inside of a Walmart should be amazed at the amount of choices of products we have available for us right there in front of us. Nobody should be condemning this as "capitalist greed and not helping the poor one bit." Anyone can go to Walmart and see poor people stocking multiple carts full of stuff that they need for their lives. How does this not help them?

Anyone want to prove this wrong? i feel like nobody understand this about trickle down economics and thinks that it was supposed to lead to the poor becoming rich or something. That was never the intention. The intention was make the poor people's lives as best as possible while being poor.

How can anyone disagree and say this goal wasn't accomplished? Please show how trickle down economics was a failure.

 

[Canard DuJour]

I don't think anyone disputes that corporations produce stuff and employ people. The 'trickle-down' argument was that tax cuts etc would motivate them to produce more stuff and employ more people.

The empirical evidence, which was in dispute for a long time, is now clear-cut. Decades of such policies in places like the US or UK have, unsurprisingly, made the rich much richer. Contrary to the predictions of trickle down theory, the result has been to reduce, rather than increase, the productivity and dynamism of the economy. The combination of slower growth and increased inequality implies, as a matter of arithmetic, that most people are worse off than they'd otherwise have been.

 

[Jarhyn]

I don't think anyone disputes that corporations produce stuff and employ people. The 'trickle-down' argument was that tax cuts etc would motivate them to produce more stuff and employ more people.

The empirical evidence, which was in dispute for a long time, is now clear-cut. Decades of such policies in places like the US or UK have, unsurprisingly, made the rich much richer. Contrary to the predictions of trickle down theory, the result has been to reduce, rather than increase, the productivity and dynamism of the economy. The combination of slower growth and increased inequality implies, as a matter of arithmetic, that most people are worse off than they'd otherwise have been.

But don't let the fact that the hypothesis does not see the mechanism of it's action bear out into actual theory stop you from believing it. That's not a problem with the hypothesis, NO, it's just uh... LIBERTY!

*Throws smoke bomb*

*Coughs a bit, obscured lightly by a thin powder*

I totally vanished like a ninja you all saw me, just pretend like you didn't see that

</Libertarian>

 

[Swammerdami]

I was going to post something similar to Canard DuJour but he beat me to it, so I just clicked Like instead.

OP is just standard boiler-plate for why "trickle-down" MIGHT work. Those arguments are all obvious. As Mr. DuJour points out, it's actual EVIDENCE that is relevant.


I just read that Elon Musk is worth 250 Big Ones. That's a Quarter-Trillion Dollars. With a T. Wasn't it just 2 or 3 years ago that the first individual joined the $100+ Billion club?

 

[funinspace]

Many people like to laugh at the idea of trickle down economics and claim that "it doesn't work because it makes the rich richer and the poor poorer. Nothing ended up trickling down to the poor." I will show how this is wrong.

The 1st idea of trickle down economics was giving tax breaks to the corporations because they the ones who create the jobs. They have the capital to start the company and the money to pay employees, thus giving people jobs. If people didn't open companies, where would people work? Not every person has capital to just open up a business. People depend on corporations for their livelihoods. They get money, health benefits, and retirement from the corporations. If a corporation closes up, people get angry that they are out of a job. It is logical that we need the corporations to exist in order to make money and have a career. People like to say "the rich are pissing all over us," but how? By offering you a career and retirement packages and health benefits? Stuff you wouldn't have if all the companies closed down? What's the reason for the hatred of the corporations?

Have you guys ever walked into a supermarket or a Walmart type store? Do you see how many items in that store are available for cheap prices? These cheap prices means the poor people can afford the things they need to live a comfortable life. This was the 2nd idea behind trickle down economics: That mass producing cheap items in bulk and fully stocking stores will lower prices and make things more available for poor people for cheap prices. Anyone who walks around inside of a Walmart should be amazed at the amount of choices of products we have available for us right there in front of us. Nobody should be condemning this as "capitalist greed and not helping the poor one bit." Anyone can go to Walmart and see poor people stocking multiple carts full of stuff that they need for their lives. How does this not help them?

Anyone want to prove this wrong? i feel like nobody understand this about trickle down economics and thinks that it was supposed to lead to the poor becoming rich or something. That was never the intention. The intention was make the poor people's lives as best as possible while being poor.

How can anyone disagree and say this goal wasn't accomplished? Please show how trickle down economics was a failure.

Article written by Jill Mislinski via Doug Short's site, not exactly bleeding heart librals...

U.S. Household Incomes: A 50-Year Perspective

By Jill Mislinski Last week, the Census Bureau released its annual report on household income data for 2016.

seekingalpha.com

To give us a better idea of the underlying trends in household incomes, we've also prepared a chart of the real percentage growth since 1967. Note, in particular, the growing spread between the top quintile (and especially the top 5%) and the other four quintiles. The growth spread began in the mid-1980s during the Reagan administration, the era of Supply Side Economics (aka "Reaganomics" and Trickle-Down Economics). As this chart illustrates, tax and other policy changes to benefit the wealthier households didn't have the heavily promoted trickle-down effect.

 

[ZiprHead]

Many people like to laugh at the idea of trickle down economics and claim that "it doesn't work because it makes the rich richer and the poor poorer. Nothing ended up trickling down to the poor." I will show how this is wrong.

The 1st idea of trickle down economics was giving tax breaks to the corporations because they the ones who create the jobs. They have the capital to start the company and the money to pay employees, thus giving people jobs. If people didn't open companies, where would people work? Not every person has capital to just open up a business. People depend on corporations for their livelihoods. They get money, health benefits, and retirement from the corporations. If a corporation closes up, people get angry that they are out of a job. It is logical that we need the corporations to exist in order to make money and have a career. People like to say "the rich are pissing all over us," but how? By offering you a career and retirement packages and health benefits? Stuff you wouldn't have if all the companies closed down? What's the reason for the hatred of the corporations?

Have you guys ever walked into a supermarket or a Walmart type store? Do you see how many items in that store are available for cheap prices? These cheap prices means the poor people can afford the things they need to live a comfortable life. This was the 2nd idea behind trickle down economics: That mass producing cheap items in bulk and fully stocking stores will lower prices and make things more available for poor people for cheap prices. Anyone who walks around inside of a Walmart should be amazed at the amount of choices of products we have available for us right there in front of us. Nobody should be condemning this as "capitalist greed and not helping the poor one bit." Anyone can go to Walmart and see poor people stocking multiple carts full of stuff that they need for their lives. How does this not help them?

Anyone want to prove this wrong? i feel like nobody understand this about trickle down economics and thinks that it was supposed to lead to the poor becoming rich or something. That was never the intention. The intention was make the poor people's lives as best as possible while being poor.

How can anyone disagree and say this goal wasn't accomplished? Please show how trickle down economics was a failure.

Article written by Jill Mislinski via Doug Short's site, not exactly bleeding heart librals...

U.S. Household Incomes: A 50-Year Perspective

By Jill Mislinski Last week, the Census Bureau released its annual report on household income data for 2016.

seekingalpha.com

To give us a better idea of the underlying trends in household incomes, we've also prepared a chart of the real percentage growth since 1967. Note, in particular, the growing spread between the top quintile (and especially the top 5%) and the other four quintiles. The growth spread began in the mid-1980s during the Reagan administration, the era of Supply Side Economics (aka "Reaganomics" and Trickle-Down Economics). As this chart illustrates, tax and other policy changes to benefit the wealthier households didn't have the heavily promoted trickle-down effect.

View attachment 36157

 

[TV and credit cards]

So how did it work out? Reagan started lowering corporate tax rates. Bush lowered corporate tax rates. Trump lowered corporate tax rates. Hell's bells. Money should be raining down like manna from heaven upon us all by now. Shouldn't it? Well, shouldn't it?!

All the cheap goods in Walmart will last you how long? Everything has a shorter and shorter lifespan so you keep buying the same cheap shit over and over. I would submit that manufacturers of similar products intentionally feed each other customers buy making poor products and services, like bouncing between AT&T and Verizon, trying to find which one sucks less. Delta and Moen making substandard faucets. Samsung and LG making glitchy televisions. And so on.

Are America's poor wealthier than in other countries? Well, they're not starving. They're morbidly obese from being hooked on unhealthy food. A revenue stream for our for profit healthcare industry. See how that works?

Did the job creators create jobs in the USA when Trump cut taxes? No. They bought back their own stock. They will not build in the USA without across the board tax breaks right down to the local level.

No company is going to hire people just to hire people. No company is going to pay their employees more just because they can. When jobs are scarce, employers will push down wages and benefits. Will even force loyal employees to train their replacements. When jobs are plentiful it is the employees duty to push wages and benefits up.

The people's chance to screw back are few and far between. As long as we are forced to live in this capitalism run amok system, it is our duty to play our role as best we can. Loyalty? Fuck you. Pay me more. Don't like it? Fuck you. Hire and train someone else.

 

[Rhea]

Moreover, the trickle down promise was targeted not at “corporations” but at MEGA corporations.

Small business *do* trickle down, but all of the legislation for those promising “trickle down” harmed small businesses in favor of … you guessed it, the ultra wealthy.

Increase Community Economic Health
Local businesses tend to support other local businesses. An area eatery may need cleaning services, legal assistance, or an accountant to reconcile bills and process payroll. Many times, a localized company will deliberately patronize other local businesses to create a thriving local economy. Bolstering sales of their friends and neighbors creates strong community bonds and keeps money in the community, instead of sending it to corporate shareholders.
Shopping local also means creating more jobs in the community. These local workers will spend their money in town, promoting the economic cycle. Additionally, employees of small businesses tend to be happier ―70% of small business employees reported their happiness level to be a 5 or higher on a scale of 1 to 10.

 

[funinspace]

On the inflation front by David Goldman, another non-bleeding libral:

The shape of a potential US-China deal - Asia Times

After Presidents Joe Biden and Xi Jinping struck a constructive – if not conciliatory – tone at Monday’s virtual meeting, China’s Vice President Wang Qishan told a Singapore conference by video last week that “China cannot develop in isolation of the world and nor can the world develop without...

asiatimes.com

This would reduce the price of the $600 billion per year of goods that Americans buy from China. Import prices are “the secret sauce of low inflation these past 25 years,” the consulting firm TS Lombard wrote in a November 18 note to clients, and a big part of America’s inflation problem is that the Fed has lost control of import prices.

A more detailed analysis of inflation drivers and imports:

https://www.newyorkfed.org/medialibrary/media/research/staff_reports/sr817.pdf?la=en

Trickle what?

 

[laughing dog]

The OP is correct.  Trickle-down_economics is misunderstood, and the OP is just another example of that misunderstanding.

 

[TomC]

The OP is correct. T rickle-down_economics is misunderstood, and the OP is just another example of that misunderstanding.

It really is.
One huge misunderstanding is that the world has changed so much in the last few decades that what was workable in the 50's is now naively destructive to the USA.
Trickle Down, as practiced now, is nearly the opposite of what it was prior to the globalization of the economy. Trickle Down is now obsolete.

One of the more bizarrely naive bits from the OP is the premise that Walmart is is a trickle down success story. Walmart is among the biggest exporters of American jobs in the U.S.
It is irrational for a Walmart shopper to both complain about the flat wages in American manufacturing, while pushing a cart full of imported products down the aisle.
But there you have it. Americans aren't particularly rational when it comes to consumption patterns.
Tom

 

[Loren Pechtel]

I consider this a goalpost type argument.

Of course lowering taxes creates jobs. The important factor is what the ratio is.

The promise of trickle-down is that the job creation will grow the economy enough to cover the costs of the tax breaks. The reality is that we get nothing like that much economic growth, trickle-down policies end up either cutting government services or moving the tax bite down the income range. It's been an abject failure every time it's been tried.

One of the standard definitions of insanity is doing the same thing again and expecting a different result. That's where trickle-down economics is by now. (Of course, they're not actually insane, but rather it's a cover for what they really want--lower taxes with no regard for the consequences.)

 

[Derec]

I just read that Elon Musk is worth 250 Big Ones. That's a Quarter-Trillion Dollars. With a T. Wasn't it just 2 or 3 years ago that the first individual joined the $100+ Billion club?

But only on the short scale. He is not worth anything close to a real quarter-trillion dollars (that would be a 250,000 of the short trillions).

Seriously though, the billions he made with Paypal enabled Musk to start Tesla and SpaceX. Tesla has done a lot to push other carmakers into developing their own EVs, and by doing that has done more for climate than all the pontificating by politicians in places like Rio or Kyoto or Copenhagen or Glasgow has done in the last 30 years.

Tesla and SpaceX employ 1000s of people and contribute to the dynamism of US economy.

 

[Toni]

I consider this a goalpost type argument.

Of course lowering taxes creates jobs. The important factor is what the ratio is.

The promise of trickle-down is that the job creation will grow the economy enough to cover the costs of the tax breaks. The reality is that we get nothing like that much economic growth, trickle-down policies end up either cutting government services or moving the tax bite down the income range. It's been an abject failure every time it's been tried.

One of the standard definitions of insanity is doing the same thing again and expecting a different result. That's where trickle-down economics is by now. (Of course, they're not actually insane, but rather it's a cover for what they really want--lower taxes with no regard for the consequences.)

Lowering corporate taxes has created billionaires who are looking to stake out their territory in space and develop their monopoly even further there.

 

[Toni]

I just read that Elon Musk is worth 250 Big Ones. That's a Quarter-Trillion Dollars. With a T. Wasn't it just 2 or 3 years ago that the first individual joined the $100+ Billion club?

But only on the short scale. He is not worth anything close to a real quarter-trillion dollars (that would be a 250,000 of the short trillions).

Seriously though, the billions he made with Paypal enabled Musk to start Tesla and SpaceX. Tesla has done a lot to push other carmakers into developing their own EVs, and by doing that has done more for climate than all the pontificating by politicians in places like Rio or Kyoto or Copenhagen or Glasgow has done in the last 30 years.

Tesla and SpaceX employ 1000s of people and contribute to the dynamism of US economy.

Cool. But space should not be monetized and that's exactly what Musk, Bezos and Branson have in mind.

 

[Toni]

The OP is correct. T rickle-down_economics is misunderstood, and the OP is just another example of that misunderstanding.

It really is.
One huge misunderstanding is that the world has changed so much in the last few decades that what was workable in the 50's is now naively destructive to the USA.
Trickle Down, as practiced now, is nearly the opposite of what it was prior to the globalization of the economy. Trickle Down is now obsolete.

One of the more bizarrely naive bits from the OP is the premise that Walmart is is a trickle down success story. Walmart is among the biggest exporters of American jobs in the U.S.
It is irrational for a Walmart shopper to both complain about the flat wages in American manufacturing, while pushing a cart full of imported products down the aisle.
But there you have it. Americans aren't particularly rational when it comes to consumption patterns.
Tom

Trickle down wasn't 'invented' in the 50's when the corporate tax rate was much higher than it is now. Typical Walmart shoppers are after a bargain, and whether or not they like or can even afford to think about the origins of their goods is a different story altogether. I'm lucky. I can afford to ignore the Walmart in my town and shop local but most of the people in the town where I live cannot.

 

[Generation55]

I consider this a goalpost type argument.

Of course lowering taxes creates jobs. The important factor is what the ratio is.

The promise of trickle-down is that the job creation will grow the economy enough to cover the costs of the tax breaks. The reality is that we get nothing like that much economic growth, trickle-down policies end up either cutting government services or moving the tax bite down the income range. It's been an abject failure every time it's been tried.

One of the standard definitions of insanity is doing the same thing again and expecting a different result. That's where trickle-down economics is by now. (Of course, they're not actually insane, but rather it's a cover for what they really want--lower taxes with no regard for the consequences.)

Lowering corporate taxes has created billionaires who are looking to stake out their territory in space and develop their monopoly even further there.

You are looking at it backwards. Pretty soon, civilians will be able to go to space for a reasonable fee. It will become very common in a decade or two. Wouldn't have happened without rich people having the capital to start it. Trickle down.

 

[Generation55]

I was going to post something similar to Canard DuJour but he beat me to it, so I just clicked Like instead.

OP is just standard boiler-plate for why "trickle-down" MIGHT work. Those arguments are all obvious. As Mr. DuJour points out, it's actual EVIDENCE that is relevant.


I just read that Elon Musk is worth 250 Big Ones. That's a Quarter-Trillion Dollars. With a T. Wasn't it just 2 or 3 years ago that the first individual joined the $100+ Billion club?

But that isn't actually real money. It's just a number on a computer. His company Tesla is valued at 1.2 trillion. It's just a number on a computer. If the company disappeared tomorrow, the 1.2 trillion number would become 0. Elon doesn't actually have 250 billion dollars. A number on a computer says he's worth 250 billion. It could become 0 tomorrow.

A man could have a painting worth 1 million in his basement. But it is worthless just sitting there. He doesn't actually have 1 million dollars.

 

[bilby]

I was going to post something similar to Canard DuJour but he beat me to it, so I just clicked Like instead.

OP is just standard boiler-plate for why "trickle-down" MIGHT work. Those arguments are all obvious. As Mr. DuJour points out, it's actual EVIDENCE that is relevant.


I just read that Elon Musk is worth 250 Big Ones. That's a Quarter-Trillion Dollars. With a T. Wasn't it just 2 or 3 years ago that the first individual joined the $100+ Billion club?

But that isn't actually real money. It's just a number on a computer. His company Tesla is valued at 1.2 trillion. It's just a number on a computer. If the company disappeared tomorrow, the 1.2 trillion number would become 0. Elon doesn't actually have 250 billion dollars. A number on a computer says he's worth 250 billion. It could become 0 tomorrow.

A man could have a painting worth 1 million in his basement. But it is worthless just sitting there. He doesn't actually have 1 million dollars.

Sorry, but no.

He DOES actually have that money.

That it could disappear overnight is a characteristic of fiat money, and is equally true of all wealth; Wealth is a dimension, and is unit of measure is the dollar. It's not a commodity that sits around waiting to be counted or spent, it's a potential - the potential to command the resources of our society.

In every important way, Musk does have that money.

That you falsely imagine money to be sufficiently commodity-like as to render his wealth void because it is intangible is not a reason to deny that fact. It's just an error in your understanding of what wealth is.

If I have a painting in my basement worth a million dollars, then I can sell it for a million dollars. If I can't, then I don't have a painting worth a million dollars.

The argument that it's not worth anything is self refuting; We started by declaring its value.

If he has a painting worth $0, then he doesn't have a painting worth a million - which isn't an argument for anything other than that paintings don't all have the same value.

 

[Generation55]

I was going to post something similar to Canard DuJour but he beat me to it, so I just clicked Like instead.

OP is just standard boiler-plate for why "trickle-down" MIGHT work. Those arguments are all obvious. As Mr. DuJour points out, it's actual EVIDENCE that is relevant.


I just read that Elon Musk is worth 250 Big Ones. That's a Quarter-Trillion Dollars. With a T. Wasn't it just 2 or 3 years ago that the first individual joined the $100+ Billion club?

But that isn't actually real money. It's just a number on a computer. His company Tesla is valued at 1.2 trillion. It's just a number on a computer. If the company disappeared tomorrow, the 1.2 trillion number would become 0. Elon doesn't actually have 250 billion dollars. A number on a computer says he's worth 250 billion. It could become 0 tomorrow.

A man could have a painting worth 1 million in his basement. But it is worthless just sitting there. He doesn't actually have 1 million dollars.

Sorry, but no.

He DOES actually have that money.

That it could disappear overnight is a characteristic of fiat money, and is equally true of all wealth; Wealth is a dimension, and is unit of measure is the dollar. It's not a commodity that sits around waiting to be counted or spent, it's a potential - the potential to command the resources of our society.

In every important way, Musk does have that money.

That you falsely imagine money to be sufficiently commodity-like as to render his wealth void because it is intangible is not a reason to deny that fact. It's just an error in your understanding of what wealth is.

If I have a painting in my basement worth a million dollars, then I can sell it for a million dollars. If I can't, then I don't have a painting worth a million dollars.

The argument that it's not worth anything is self refuting; We started by declaring its value.

If he has a painting worth $0, then he doesn't have a painting worth a million - which isn't an argument for anything other than that paintings don't all have the same value.

He is worth 250 billion, but he doesn't have that money unless he decides to sell his shares and leave the company. Tesla (like the painting) is valued at 1.2 trillion. This doesn't mean they have 1.2 trillion in cash.

Also keep in mind that the top 1% pays 40% of federal taxes. The bottom 20% only pays 1% of federal taxes. We can conclude that if you are poor, you pay very little taxes. Trickle down.