Trickle down economics is a sham?

Question

laurcar34 · Accepted Answer

Yes, in terms of overall economic growth, sustained public wealth, opportunity for the average person, etc. This whole idea began after some folks at the top of corporate America in the 1970's began to think that the rights and privileges gained by working people in the 1940's through 1960's were threatening to them. They started massive lobbying efforts and the system of think tanks that we know today. America's public wealth has diminished since the 1970's, moving from public to private hands. Since those private hands are multinational corporations, the wealth is no longer American. This movement has been much worse under Republican administrations, but it has happened under Democrats too, as they have moved to the right and become much more like Republicans over the years.
It's really pretty simple: If a guy who makes $500,000/yr. has some extra money, he's not going to change his behavior much. He may be frugal or a spendthrift; but he would be that regardless of small changes in the funds available to him. On the other hand, if a family that makes $60,000/yr. has an extra $500 per month, its behavior will be changed quite a lot. They may go out to see a movie that they wouldn't have gone to otherwise. This means more people in the movie theater, which means the movie theater has to hire another couple of people. Then those people have jobs and a little money, so they go spend it on weed. Then the weed dealer has more money, and he goes to spend it at J. C. Penney; then J. C. Penney has to hire some more people, who then have more money to spend. And so on. Multiply this process by all the millions of people in the United States, and you get a much stronger overall economy.
And get this! The wealthy will do better or as well in the long run also. They just may not quite do as well in the short term. And, because corporations report shareholder profits quarterly, they are pressed into caring for short-term rather than long-term gain.
I gave the example of a family having an extra $500 per month. Let's say that that's because they get public health with child care. That relieves them of an enormous burden, and allows them to develop and shape their lives in a way that is better for their children. It's also good for all of us simply because the children are the future. Having high-quality, readily-available child care increases the chances of our kids growing up to be good, conscientious, productive, innovative citizens; and that's good for everyone.
If you look at the historical tax rates, they have steadily gone down and down. Even Reagan and Milton Friedman would have thought the Trump reverse-Robinhood tax cuts were outrageous! Not to mention what Eisenhower would have thought of them!
Yes, trickle down economics is a sham! And it's time to move closer to the economic policies that made this country great through the middle of the 20th century!

Naydyonov · Accepted Answer

Unsure. By logic, when taxes are cut for the rich, they use this money in investment or consumption purposes. Indeed, this money must be used somewhere.
If it is held in banks, then this lowers interest rates and is used by consumers & investors. If it is used for consumption, this creates jobs. If it is used in investments, this creates jobs.
The only real questions are:
Are the investments made efficient?
Does the tax cut save more money for the rich than the extra amount produced by the private spending & investment made with these newly available funds?

For there to be no economic benefit, at the minimum, these must be true:
(1) Public spending of these funds is more efficient than private spending.
(2) Something differentiates the ultra-rich from the middle-upper classes.
I. e: if you cut tax for a $50k/year income earner, will this have economic benefits for both the $50k/year & sub-$50k/year income earners? If yes, then what makes a $500 million income an exception as compared to sub $500m/year incomes?

This all being said, it is my general position that taxes be viewed with skepticism regardless of income. However, because direct spending is always more efficient than non-direct spending, to most benefit the non-rich, it is best to lower taxes for them or lower taxes across the board.

Anonymous · Accepted Answer

Contrary to popular belief, Reagan wasn't the one who first implemented trickle down, Hoover did. I can't say for sure whether this policy was the cause of the great depression but I can say that FDR's Kenseyn economics didn't make anything better. The reason the economy make a comeback was because ww2 forced it back up.

What the Reagan admin did come up with is the Laffer curve which can be applied to taxes in general. Although I think it'd be better if we did away with the vast majority of taxes. The government doesn't need (nor does it deserve) anywhere near as much money as they do now.

tartaarsaus · Answer

These days, quite a lot of economic papers (thqt have also permeated mainstream economics as opposed to being fringe) suggests that a substantially higher income tax for the highest incomes (we’re talking 70-80%) is optimal for the economy.

So yes, it is nonsense

NamerOfStars · Answer

We had eight years of Reaganomics under Reagan, and eight more years of Reaganomics under Dubya. Yes, it's a sham, or at best, a badly plotted half-truth. Given the time frames, and the weirdly co-incident other political concerns at the time, you could say that trickle-down economics will work at the same time that Florida becomes underwater.

notwoke · Answer

No, USA standards of living are among the best in the world and have steadily increased over time. This is in contrast to every more socialistic economy in the world except for a few nations that have unusual wealth from things like large oil reserves. The poorest least capable and least productive people in the USA are much better off than they were just 30 years ago and much better off than any place with the "fair" laws that liberals crave, We weren't even really "poor" when I grew up but had much less than the poorest American have now.

Exterminatore · Answer

I think so. The wealthy stay that way by not wasting it. If I gave you $100 you probably wouldn’t go take that money and give it to 40 people poorer than you keeping say $30 for yourself.

This is probably the only thing I seriously disagreed with the Regan Administration about with the exception of the Iran Contra Scandal.

888theGreat · Answer

It works. It worked with Reagan (Republican) , then Bush Sr stopped it and we had a recession and Clinton won. Trump (Independent) had a version of it and we had only 3% unemployment. So, maybe you wish is didn't work or was a sham, but it has always worked. It also worked for Kennedy (Democrat) too. So, It worked for Democrats , Republicans, and Independents. You were a baby when Reagan the Great was President.

Wester1967 · Answer

David Stockman, Reagan's budget director, called it a BS destructive sham two years out of the gate. But the US ruling class loved it so much that they shoved it down our throats for 40 years at gunpoint.

007kingifrit · Answer

in general no its not a sham. if your boss makes more money he will have to expand and hire more people or open new programs. or he will spend that money on something like a new golf cart and that keeps people employed

it just means that everyone is happier when the money is flowing in an economy

exitseven · Answer

It never works the way it is supposed to. Probably because the rich grab everything before it has a chance to trickle anywhere.

msc545 · Answer

It's a fraud. That trickle you feel is the wealthy pissing on your head.

EnglishEuropean · Answer

It's a poorly understood concept. Did you think rich businessmen were going to give you handouts? That's not how it works.

By enabling private enterprise you (in theory) improve the quality of life for everyone. For instance, even poor people now have TV, internet and mobile phones, none of which was available to our ancestors.

DaveToo · Answer

It was a sham before the shit that led up to the great depression. It was a sham when Nixon, Reagan, both Bush boys, the entire Republican party, and the orange shitstain pushed it, to the detriment of the rank and file of the American people.

Jaysonava · Answer

It's bullshit uber capitalist think. What is worse is the people who think that the more popular companies produce the best products. Bloody USA capitalists.

bamesjond0069 · Answer

No. Its real. As a business owner when my business does well i pay employees better and buy more things so my money gets passed down the food chain. So seems legit.

Anonymous · Answer

Yes it is, supply does not create demand. This is how inflation has been controlled since Reagan's era.

OddBeMe · Answer

What! No scraps for the poor? Gotta just eat our children I guess. “Rye-Guy! Come here, bud!”

anylolone · Answer

Doesn't seem so. It's literally the thing responsible for modern prosperity.

noohair · Answer

Actually it it trickle up poverty.

Twalli · Answer

It's not a sham, it's a theory

ChiPaPa · Answer

Yup.

Razor8 · Answer

No it's not.

Trickle down economics is a sham?

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