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Author Topic:   Trickle Down Economics - Does It Work?
Straggler
Member
Posts: 10333
From: London England
Joined: 09-30-2006


(2)
Message 211 of 404 (660055)
04-20-2012 2:26 PM
Reply to: Message 174 by New Cat's Eye
04-19-2012 2:50 PM


Re: Whan the rich get warm we all get warm....
CS writes:
Well then just what would be a result of something trickling down? If its not the bottom going up when the top goes up then what is it?
It would be when the top going up causes the bottom to go up. Obviously.
CS writes:
The parts that caused everyone else to rise along with them.
The wealth of the whole nation rose. The incomes of the rich rose considerably (the richer the faster). The incomes of the rest not so much (the poorer the less and the very poorest on minimum wage went backwards). That is what the graph shows.
So what exactly has trickled down?
CS writes:
I don't see how that represent anything since not everyone increased their product by 100%.
Do you think the productivity of the rich outstripped that of everybody else to the same extent that their income did? What exactly do you think has trickled down?
CS writes:
You come up with an analogy that shows a trickle down effect.
Dr A's analogy was intended to highlight the stupidity of you assuming that everything rising = some sort of validation for trickle down economics. You seem to be assuming that the rich rising causes the other rises. Do you think that is the case?
CS writes:
You come up with an analogy that shows a trickle down effect.
Why don't you show me where the trickle down effect is in the economic data we have?

This message is a reply to:
 Message 174 by New Cat's Eye, posted 04-19-2012 2:50 PM New Cat's Eye has replied

Replies to this message:
 Message 213 by New Cat's Eye, posted 04-20-2012 2:52 PM Straggler has replied

  
Straggler
Member
Posts: 10333
From: London England
Joined: 09-30-2006


(1)
Message 212 of 404 (660057)
04-20-2012 2:35 PM
Reply to: Message 187 by Percy
04-19-2012 9:00 PM


Re: Real Current Example - UK Economic Policy
Just to make sure that we are now talking the same language can you answer the following:
1) What do you think the term "trickle down economics" refers to in terms of the sort of policies it incorporates?
2) What claims do the proponents of trickle down economics make about the benefits of the policies they advocate?
3) How do you think we can measure the success or failure of any economic policy in the absence of duplicate economies on which we can conduct randomised double blind trials to show definitively which economic policies work and which don't (which obviously is not an option available to us)?
I'm happy to answer these questions myself. And I think they are key to deciding both whether it is possible to answer the question of whether or not trickle down economics works and whether we can, on the data available, answer that question.

This message is a reply to:
 Message 187 by Percy, posted 04-19-2012 9:00 PM Percy has replied

Replies to this message:
 Message 216 by RAZD, posted 04-20-2012 3:07 PM Straggler has not replied
 Message 224 by Percy, posted 04-20-2012 8:43 PM Straggler has replied

  
New Cat's Eye
Inactive Member


Message 213 of 404 (660063)
04-20-2012 2:52 PM
Reply to: Message 211 by Straggler
04-20-2012 2:26 PM


Re: Whan the rich get warm we all get warm....
It would be when the top going up causes the bottom to go up. Obviously.
How would you show that causation in a graph like this one?
Assuming that TDE did work, wouldn't you expect the graph to show the median going up along with the top?
Dr A's analogy was intended to highlight the stupidity of you assuming that everything rising = some sort of validation for trickle down economics. You seem to be assuming that the rich rising causes the other rises. Do you think that is the case?
I don't know, I don't think you can show causation in a graph like this. Its funny tho, that when everyone is towing the line and using the graph against TDE then its all good. But if you use the graph in an argument for TDE then "ZOMG! POST HOC ERGO PROPTER HOC!!1!" Real fair, guys.
Why don't you show me where the trickle down effect is in the economic data we have?
The median income has risen over the years during TDE policies.
So what exactly has trickled down?
Uh, money? Income? I'm not sure what you're asking.
The wealth of the whole nation rose. The incomes of the rich rose considerably (the richer the faster). The incomes of the rest not so much (the poorer the less and the very poorest on minimum wage went backwards). That is what the graph shows.
Not exactly. Minimum Wage The Poor
We only have data for the income of two groups. The top 5% and the median. It doesn't show that the poorer the less. And we should expect the rich to rise more than the rest: the more money you got, the more money you can make.

This message is a reply to:
 Message 211 by Straggler, posted 04-20-2012 2:26 PM Straggler has replied

Replies to this message:
 Message 215 by Straggler, posted 04-20-2012 3:03 PM New Cat's Eye has replied

  
Straggler
Member
Posts: 10333
From: London England
Joined: 09-30-2006


(1)
Message 214 of 404 (660068)
04-20-2012 3:02 PM
Reply to: Message 141 by Percy
04-18-2012 6:55 PM


Re: There was a rising tide. But it didn't lift all boats.
Percy writes:
What happened to earlier in the thread where the search was on for more data?
I found the UK data I raised in Message 61. I also found lots and lots and lots of verification of the US data shown in the main graph under discussion. Data which shows that the richer one is the more one has benefited from increased productivity and the poorer one is the less benefit has been accrued (to the point that the incomes of the very least wealthy have actually gone backwards despite economic growth).
All of which runs counter to the claims of trickle down economics.
I would absolutely love some data from other countries - But it isn't easy to find on the internet as far as I can see.
In general - I often start out in thread asking awkward questions of people I basically agree with on the subject in question. It is my way of (at least partially) ensuring I am not just engaging in blind confirmation bias. If those I agree with can competently answer the questions I think might scupper my own advocacy of the same position then I am on surer footing. If they can't - Well then maybe those questions should cause me to question my own position or at least research it further.
I know I can seem quite stubborn, strident, unrelenting, unforgiving etc, etc.etc. but I genuinely do use EvC as a method of challenging my own views and preconceptions. I wouldn't participate if it didn't serve that purpose....
Whether anyone believes that or not.

This message is a reply to:
 Message 141 by Percy, posted 04-18-2012 6:55 PM Percy has replied

Replies to this message:
 Message 225 by Percy, posted 04-20-2012 8:51 PM Straggler has replied

  
Straggler
Member
Posts: 10333
From: London England
Joined: 09-30-2006


Message 215 of 404 (660069)
04-20-2012 3:03 PM
Reply to: Message 213 by New Cat's Eye
04-20-2012 2:52 PM


Re: Whan the rich get warm we all get warm....
What do you think the main prediction of trickle down economics is?
If trickle down economics works then we should expect to see.......?
What? In your view.

This message is a reply to:
 Message 213 by New Cat's Eye, posted 04-20-2012 2:52 PM New Cat's Eye has replied

Replies to this message:
 Message 217 by New Cat's Eye, posted 04-20-2012 3:15 PM Straggler has replied

  
RAZD
Member (Idle past 1405 days)
Posts: 20714
From: the other end of the sidewalk
Joined: 03-14-2004


Message 216 of 404 (660071)
04-20-2012 3:07 PM
Reply to: Message 212 by Straggler
04-20-2012 2:35 PM


Re: Real Current Example - UK Economic Policy
Hi Straggler,
3) How do you think we can measure the success or failure of any economic policy in the absence of duplicate economies on which we can conduct randomised double blind trials to show definitively which economic policies work and which don't (which obviously is not an option available to us)?
We could try to eliminate as many variables as possible between governments implementing different economic policies.
For instance, if we look at state economies, where the federal policies are constant and the federal benefits are constant, and the federal regulation of the economy is constant, then we should be able to see different state economies reacting to state economic policies.
We have some 50 states to look at and see if there are other variables that need to be eliminated, and I would think we could build a trendency from several states.
Does Alaska, giving oil income dividends to everyone count as a bottom up policy?
Enjoy.

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This message is a reply to:
 Message 212 by Straggler, posted 04-20-2012 2:35 PM Straggler has not replied

Replies to this message:
 Message 218 by Rahvin, posted 04-20-2012 3:24 PM RAZD has seen this message but not replied

  
New Cat's Eye
Inactive Member


Message 217 of 404 (660073)
04-20-2012 3:15 PM
Reply to: Message 215 by Straggler
04-20-2012 3:03 PM


Re: Whan the rich get warm we all get warm....
What do you think the main prediction of trickle down economics is?
Relieving taxes at the upper end promotes improvement to the economy.
If trickle down economics works then we should expect to see.......?
Improvement to the economy.

This message is a reply to:
 Message 215 by Straggler, posted 04-20-2012 3:03 PM Straggler has replied

Replies to this message:
 Message 219 by Rahvin, posted 04-20-2012 3:31 PM New Cat's Eye has replied
 Message 287 by Straggler, posted 04-24-2012 7:27 PM New Cat's Eye has not replied

  
Rahvin
Member
Posts: 4032
Joined: 07-01-2005
Member Rating: 9.2


Message 218 of 404 (660074)
04-20-2012 3:24 PM
Reply to: Message 216 by RAZD
04-20-2012 3:07 PM


Re: Real Current Example - UK Economic Policy
Does Alaska, giving oil income dividends to everyone count as a bottom up policy?
Difficult to say. The dividends are universal, so they are given to the wealthy too...but on the pure basis that $x is a greater percentage gain for a median income than it is for an income in the top 5%, and the fact that lower income brackets actually spend a far larger percentage of their income, such a policy should be expected to benefit the poor and lower-middle-class significantly more than higher income brackets. I could see the argument being made.
Honestly, though...I think that the simple observation that lower income brackets spend a far larger percentage of their income than the wealthier classes (including investment as "spending," and leaving aside debates on whether $x spent purchasing actual goods and services are identical in economic benefit to $x invested) conclusively sets the prior expectation that trickle-down policies are less efficient than policies which would give tax breaks or income increases to the lower classes.
I have yet to see any evidence presented at all that challenges that expectation to a significant degree.

The human understanding when it has once adopted an opinion (either as being the received opinion or as being agreeable to itself) draws all things else to support and agree with it.
- Francis Bacon
"There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs." - John Rogers
A world that can be explained even with bad reasons is a familiar world. But, on the other hand, in a universe suddenly divested of illusions and lights, man feels an alien, a stranger. His exile is without remedy since he is deprived of the memory of a lost home or the hope of a promised land. This divorce between man and his life, the actor and his setting, is properly the feeling of absurdity. — Albert Camus

This message is a reply to:
 Message 216 by RAZD, posted 04-20-2012 3:07 PM RAZD has seen this message but not replied

  
Rahvin
Member
Posts: 4032
Joined: 07-01-2005
Member Rating: 9.2


Message 219 of 404 (660075)
04-20-2012 3:31 PM
Reply to: Message 217 by New Cat's Eye
04-20-2012 3:15 PM


Re: Whan the rich get warm we all get warm....
Relieving taxes at the upper end promotes improvement to the economy.
"Improvement to the economy" is rather vague. When you say it, I still have no real idea of what specific metrics you might be talking about; given an economy over time, I would not be able to tell whether you think that economy has "improved" or not.
Do you mean lower unemployment? Increased GDP? Increased median income? Increased consumer spending? A higher stock market average? Something else? Some aggregate of all of the above? Can you weight each metric such that I can tell whether a .01% increase in employment is better, worse, or equivalent to a .01% increase in GDP?

The human understanding when it has once adopted an opinion (either as being the received opinion or as being agreeable to itself) draws all things else to support and agree with it.
- Francis Bacon
"There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs." - John Rogers
A world that can be explained even with bad reasons is a familiar world. But, on the other hand, in a universe suddenly divested of illusions and lights, man feels an alien, a stranger. His exile is without remedy since he is deprived of the memory of a lost home or the hope of a promised land. This divorce between man and his life, the actor and his setting, is properly the feeling of absurdity. — Albert Camus

This message is a reply to:
 Message 217 by New Cat's Eye, posted 04-20-2012 3:15 PM New Cat's Eye has replied

Replies to this message:
 Message 220 by New Cat's Eye, posted 04-20-2012 3:37 PM Rahvin has replied

  
New Cat's Eye
Inactive Member


Message 220 of 404 (660076)
04-20-2012 3:37 PM
Reply to: Message 219 by Rahvin
04-20-2012 3:31 PM


Re: Whan the rich get warm we all get warm....
"Improvement to the economy" is rather vague. When you say it, I still have no real idea of what specific metrics you might be talking about; given an economy over time, I would not be able to tell whether you think that economy has "improved" or not.
Do you mean lower unemployment? Increased GDP? Increased median income? Increased consumer spending? A higher stock market average? Something else? Some aggregate of all of the above? Can you weight each metric such that I can tell whether a .01% increase in employment is better, worse, or equivalent to a .01% increase in GDP?
Yeah, I don't know. Working with what we've got, it seems to me that the rise in the median wage show an improving economy.

This message is a reply to:
 Message 219 by Rahvin, posted 04-20-2012 3:31 PM Rahvin has replied

Replies to this message:
 Message 221 by Rahvin, posted 04-20-2012 4:15 PM New Cat's Eye has not replied

  
Rahvin
Member
Posts: 4032
Joined: 07-01-2005
Member Rating: 9.2


(1)
Message 221 of 404 (660078)
04-20-2012 4:15 PM
Reply to: Message 220 by New Cat's Eye
04-20-2012 3:37 PM


Re: Whan the rich get warm we all get warm....
Yeah, I don't know. Working with what we've got, it seems to me that the rise in the median wage show an improving economy.
I think "the economy" is as practically useless a term as "the world;" If someone says that either "the economy" or "the world" has improved in the past decade, I would have little idea of the basis for such a claim. The terms are simply too vague.
And indeed, the vagueness of the term when used to justify various economic policies seems suspiciously convenient to me; under a given policy, it's entirely feasible that one segment of "the economy" could receive a boon, while another segment could be affected adversely. In fact, this seems to be almost universally the case with any policy that comes to my mind.
When discussing "trickle-down" economic policy, we seem to be talking about an economic theory that predicts that relaxing taxation and/or regulation on the wealthy will eventually cause improvement for the non-wealthy...but this improvement is never quite specified. Will the minimum wage eventually be raised so that the very poorest working people will benefit? Will unemployment benefits be increased so that the jobless can benefit? Will the income of the average family increase, or will their unavoidable monthly expenditures like healthcare, housing, or other costs be reduced? Will employment in general rise?
We're never actually quite told what to look for in the years after a prospective policy is enacted to confirm whether that policy is actually achieving its never-quite-stated goals. We can;t compare competing policies to see which would be the most effective, because there doesn;t seem to be any metrics we can ever use.
In the media and on the political circuit, "the economy" seems to be tied almost exclusively to Wall Street, with token lip service given to employment when sufficient people become unemployed as to signal a crisis. Even unemployment is gauged on uncertain metrics - virtually the only number ever thrown around is the number of new unemployment insurance claims, which of course don't consider those who have run out of their unemployment benefits, or those who never applied for them in the first place (my fiance falls into the latter category).
What economic segment, specifically, should see a benefit from trickle-down policies, and what should that benefit look like?
The way it's sold, you would think that everyone is supposed to benefit at some point, by giving the "job creators" (such an offensive classification for the rich) a tax break. Yet I would wager that nobody on the street could tell you how they, themselves, have benefited from trickle-down economics over the last three decades, even if they think that trickle-down policies "work" somehow.
I'm not an economist, and perhaps that's the real reason I don't know where to look to find metrics that would actually let me measure the results of specific policies.
I do know that my wages, year after year, tend to go down in real numbers, as my healthcare and other costs continue to rise, and as my employer gives infrequent raises that never quite cover the cost of those same increases (that's right...my employer will give me a 3% raise, but then increase my share of my healthcare benefits by 5% of my total wage in a single year, and that's when I GET a raise...). I'm a lot closer to the "median" income than the "wealthy," and I can only imagine the pain felt by those for whom a $.10 increase in fuel costs constitutes more than their monthly disposable income.
I also know that unemployment is still at crisis levels, and that some industries like new home construction have nearly collapsed...yet I don't know if this is a result of trickle-down policies, or a failure of trickle-down policies, or something else entirely...because I can't quite put my finger on what, precisely, trickle-down economic policies are supposed to cause other than allowing the wealthy to become yet more wealthy.
If neither of us can actually, clearly state what the real goals of such policies are, nor provide real metrics by which those goals can be evaluated for success or failure or comparison to other alternative policies...
...how can we possibly know whether trickle-down economic policies actually work?
I strongly suspect that even the strongest proponents of such policies and the politicians who actually enact them into law do not actually have a significantly more clear view than you or I do on the matter.
And that suggests to me that the real goal of such policies has nothing to do with whether or not they will actually result in any measurable improvements for anyone else...but rather that the goal is simply to allow the wealthy to become more wealthy, and that's it, regardless of what other consequences may follow. And since the wealthy have a strong incentive to become more wealthy, and also have the means to lobby strongly toward that end...

The human understanding when it has once adopted an opinion (either as being the received opinion or as being agreeable to itself) draws all things else to support and agree with it.
- Francis Bacon
"There are two novels that can change a bookish fourteen-year old's life: The Lord of the Rings and Atlas Shrugged. One is a childish fantasy that often engenders a lifelong obsession with its unbelievable heroes, leading to an emotionally stunted, socially crippled adulthood, unable to deal with the real world. The other, of course, involves orcs." - John Rogers
A world that can be explained even with bad reasons is a familiar world. But, on the other hand, in a universe suddenly divested of illusions and lights, man feels an alien, a stranger. His exile is without remedy since he is deprived of the memory of a lost home or the hope of a promised land. This divorce between man and his life, the actor and his setting, is properly the feeling of absurdity. — Albert Camus
"...the pious hope that by combining numerous little turds of
variously tainted data, one can obtain a valuable result; but in fact, the
outcome is merely a larger than average pile of shit." Barash, David 1995.

This message is a reply to:
 Message 220 by New Cat's Eye, posted 04-20-2012 3:37 PM New Cat's Eye has not replied

  
Percy
Member
Posts: 22391
From: New Hampshire
Joined: 12-23-2000
Member Rating: 5.2


Message 222 of 404 (660087)
04-20-2012 8:22 PM
Reply to: Message 207 by RAZD
04-20-2012 1:56 PM


Re: annual income levels and return of earnings to the economy
RAZD writes:
Decreasing someone's taxes while not giving equal decreases to others is the same as giving them money.
Oh, I understand now. When you said "giving people money" you meant cutting their taxes. You're arguing that cutting the taxes for lower income categories would provide more benefit.
What trickle-down theory actually proposes is an increase in taxes on lower incomes to finance a stimulus program that is supposed to improve the overall economy.
No, trickle-down economics does not propose increasing taxes on the lower income brackets as a means of improving the economy.
And I'm pointing out that trickle-down theory is a poor method of stimulating the economy versus providing the exact same stimulus to the lower income brackets.
For the trickle-down theory you just misdescribed, I agree with you.
In return for interest, dividends and other charges that take back more than was invested, thus putting less than 100% of that investment into the economy.
You think there are investment vehicles out there paying "more than was invested"? Do you know that that's greater than 100%?
Jobs are created by entrepreneurs at all levels of the economy, and more jobs are created by people that hire workers than by people investing.
Many jobs are created by people who borrow the same money other people are investing.
We have had trickle-down tax cuts for years and there has yet to be a single piece of evidence that it has actually done anything.
I never claimed that there was. What I claimed was that no one has offered any evidence here that it doesn't work.
--Percy

This message is a reply to:
 Message 207 by RAZD, posted 04-20-2012 1:56 PM RAZD has seen this message but not replied

  
Percy
Member
Posts: 22391
From: New Hampshire
Joined: 12-23-2000
Member Rating: 5.2


Message 223 of 404 (660090)
04-20-2012 8:34 PM
Reply to: Message 209 by RAZD
04-20-2012 2:03 PM


Re: Graph of US Income Distribution
RAZD writes:
How would you go about establishing that this is not a causal relationship? By showing some other factor was involved that started at the same time and continues to this day.
So your argument is that if no one can show it isn't a causal relationship, therefore it's a causal relationship. This sounds very similar to arguments we see from creationists that if you can't show how something happened, God did it.
If you're looking for other significant factors to consider, try increasing energy prices, globalization, a shift from a manufacturing to a service economy, reductions in welfare programs, and I'm sure there are many more.
One thing to ask yourself: if you do the opposite of trickle-down economics and increase taxes on the rich, how is that going to shift money into your pockets?
I'm already on record as saying that I think the rich do not pay their fair share in taxes, but it's because of loopholes, not tax rates. But closing loopholes is very hard to do. As Bernanke recently said about regulating the financial markets, it's very difficult because they're are a lot of creative people out there, and as one area receives more regulatory attention money seeks out risky new opportunities.
--Percy
Edited by Percy, : Grammar.

This message is a reply to:
 Message 209 by RAZD, posted 04-20-2012 2:03 PM RAZD has seen this message but not replied

  
Percy
Member
Posts: 22391
From: New Hampshire
Joined: 12-23-2000
Member Rating: 5.2


Message 224 of 404 (660091)
04-20-2012 8:43 PM
Reply to: Message 212 by Straggler
04-20-2012 2:35 PM


Re: Real Current Example - UK Economic Policy
I think the Wikipedia article on trickle down economics defines it pretty well.
--Percy

This message is a reply to:
 Message 212 by Straggler, posted 04-20-2012 2:35 PM Straggler has replied

Replies to this message:
 Message 286 by Straggler, posted 04-24-2012 7:13 PM Percy has seen this message but not replied

  
Percy
Member
Posts: 22391
From: New Hampshire
Joined: 12-23-2000
Member Rating: 5.2


Message 225 of 404 (660093)
04-20-2012 8:51 PM
Reply to: Message 214 by Straggler
04-20-2012 3:02 PM


Re: There was a rising tide. But it didn't lift all boats.
Straggler writes:
I found the UK data I raised in Message 61. I also found lots and lots and lots of verification of the US data shown in the main graph under discussion. Data which shows that the richer one is the more one has benefited from increased productivity and the poorer one is the less benefit has been accrued (to the point that the incomes of the very least wealthy have actually gone backwards despite economic growth).
All of which runs counter to the claims of trickle down economics.
The benefit lessens as one moves down the income brackets that encompass more people, but the benefit is still there. This again comes back to the question of how you define trickle-down economics as working. Obviously trickle-down happens, but how much does it have to happen before you'd define it as working?
--Percy

This message is a reply to:
 Message 214 by Straggler, posted 04-20-2012 3:02 PM Straggler has replied

Replies to this message:
 Message 226 by hooah212002, posted 04-20-2012 9:01 PM Percy has replied
 Message 277 by Straggler, posted 04-24-2012 12:53 PM Percy has replied

  
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