Summations Only

In what sense? I've seen you say this, but can't say that I've seen it explained how it is actually happening. I would ask: if it is happening, why are there still so many companies laying off workers? What is actually trickling down? Cuz it sure isn't jobs. Or wealth.If you've already explained, I apologize and request to be pointed at the appropriate post.Edited by hooah212002, : No reason given.

I think this thread mostly reflects longstanding frustration with persistently poor economic conditions, but the reality is that trickle-down economics has received very little attention since the Reagan years. Since Reagan the Democrats have controlled the White House for 12 years, and the Republicans for 12. I don't think current tax policy has much to do with trickle-down economics.But what evidence has been presented in this thread does indicate that the incomes of the rich are soaring while those of the rest of us not so much. What's going on? This blog article from the Wall Street Journal provides some good information: Why the Rich Pay 40% of Taxes. Here's a brief excerpt: So there you go. As much taxes as the rich pay, it hasn't kept up with the rocket-like growth in their incomes.So how do you fix this? One might think that raising taxes on the very, very rich wouldn't reduce their incomes, but it would, just not in any obvious way. The higher their taxes, the more the rich will be motivated to move their incomes into categories that aren't recognized as income by current tax policy. These are called loopholes. We could move to close the loopholes, but new ones will emerge.And what if we're successful and are actually able to tax significant amounts of money away from the rich? What would be the effect on the economy? I don't have the answers. There are people out there who will claim they have the answers, and they could certainly paint a wonderful picture of repairing and enhancing our infrastructure, putting social security on a stable basis, balancing the budget and so forth, but in reality we don't know what would happen.--PercyEdited by Percy, : Grammar.Edited by Percy, : Grammar.

Well, if the government had that money it could do those things.So the only thing we have to worry about is if the economy is so dependent on wealth trickling down from the rich that an adjustment in the top tax rate would cause the economy to collapse leaving everyone with less money, including the government.But according to your own post, this has never happened before. In previous decades we have managed to get by without the rich being so rich as they are now. Contemplating this possibility is empirically on a par with worrying if the next time I blow my nose I'll be eaten by a tiger. "In reality we don't know what would happen", you write. OK, but on the strength of the evidence before us we can make a fair guess.

Well, we know that the minimum wage has gone down in real terms. Have the prices of food and electricity gone down faster? If so, then something has gone up even faster than that, since inflation is calculated on the basis of a "shopping basket" of commonly-bought items.As for college, I said that it was harder for the middle classes to send their children to college. And so it is, in fact it's all but impossible. Hence student debt.You didn't even bother to argue with me about healthcare.

Hi Dr Adequate,My main concern is about those who are so certain they know what action would cause what effect in an economy, and how economies would react to specific policy changes. I guess I would call attention to what we often tell creationists about those who are most certain of what they think they know. It is still argued whether it was really New Deal policies that brought the US out of the Depression, and today's economies are much more complex and interdependent.Good managers must make decisions in the face of incomplete information, and in economics incomplete information combined with only a murky understanding of the tangle of causes and effects is always the case. We do have to decide what to do and take action, but we must also be ready to react in case it doesn't work. And I think solutions that don't work are far more likely than those that do simply because of the current stage of world economics and population growth.Ultimately the wealth of the world is a function of how much wealth we can extract from the Earth itself divided by the number of people. As Earth's resources diminish and world population grows global wealth will at some point begin to decline. And because more and more countries are exiting third world status and beginning to compete with the western democracies for world resources we're already beginning to see some of these effects, effects which are already causing world-wide economic frustration of the type displayed in this thread. In terms of wealth per person we may have already reached our peak. In the absence of remarkable technological breakthroughs it may only get worse from here, and this may not be something that is within our ability to control.--PercyEdited by Percy, : Grammar.

According to who? Where in my post do you see me name those makers of cars? I said new cars. Not really. The rich would still buy new cars, it's just they wouldn't be pumping as much money into the economy if they were taxed more. They would be fine, and you would be worse off. Maybe if they didn't tax the rich so much you would have a better paying job at some nice factory one of the rich peoples opened before the taxing came. More taxes, no trickle down. Heheh. Not really. If they didn't tax the rich, you might have a nicer car because of it because you might be working at that new factory.

People spending money is what makes the economy go, and the rich spend more of it than anyone else.Say an average guy contracts to build a 6-room house for $200,000. The construction benefits foundation layers, framers, wallboarders, electricians, plumbers, roofers, lumber yards, loggers, McDonald's and even banks.Now say a rich buy contracts to build a 20-room mansion for $20,000,000. The construction benefits all the same types of people and businesses as the building of the 6-room house, only a lot more of them.Hypothetically one might imagine a choice between higher taxes and home building. The government could raise taxes on the rich, causing the rich guy to decide not to build the $20,000,000 mansion, and maybe some of the revenue from the tax increase will flow to you through government programs. Or taxes could stay the same and the rich guy could build the house, and you could have a wallboarding job. And because of other people building houses, both rich people and the people benefiting from building houses for rich people, more money is flowing in the economy and there is increased competition for construction labor, and so your wallboarding salary doubles.There's a flip side (there's always a flip side). Inflation increases, the cost of living rises 10% in your area, and your landlord raises your rent.--Percy

Hi NoNukes. I'm glad I could draw you out of lurking mode to "have a little fun" with my post. I'm honored to have had you read one of my posts several times. Huh? The people that buy used cars who arent rich have jobs don't they? Those jobs created my the rich help them to afford the cars also bought by the rich. That's trickle down. That's one side of trickle down, sure. It is if you have a job because of the rich people forwarding the country pumping money into it by means of business, labor, jobs that they created and you get to also buy the news cars they don't want anymore instead of a winter beater. It's all trickle down. No no...the rich are smarter with money than the no so rich. That's how most of them got to where they are. They know how to take money and make more money with it, while at the same time, spread it around so the country is better off for it.Giving the not so rich person a bunch of money and it's "me me me me me". Giving it to the rich (or not taking it from them in taxes) benefits everyone instead of just individuals for a certain period of time. Less tax on the rich, more stimulus. More tax on the rich, less stimulus.

Their spending drives the economy: Untrue. The middle class - defined broadly as the middle three income quintiles - spend 60% more than the rich in absolute terms. Taken as a percentage of income, the disparity is even higher; the rich spend less as a portion of their income than anyone else in basically every category. That's by defining "rich" as the top income quintile, but defining the rich more narrowly as "the 1%" the disparity is even sharper.People should understand this very intuitively; if the rich spent all of their money, they wouldn't be rich. And there's only so many hours in the day to engage in consumption (spending.) The rich actually earn far in excess of their consumption, their ability to spend, and despite finance that money is completely wasted, in economic terms. The economy functions better when money is in the hands of the middle class, not the rich - because in the hands of the middle class, it gets spent. In the hands of the rich it gets lent. How many more? One hundred times more? Not likely; economies of scale and simple volumetric math mean that it doesn't take a hundred times the effort to build a house with a hundred times the space or a hundred times the sale price. Building one hundred $200,000 employs a lot more layers, framers, wallboarders, electricians, plumbers, roofers, and other people than does building a single $20,000,000 McMansion.The spending of the rich simply can't drive our economy - there's not enough of them and they don't spend enough.The rich create jobs: Untrue. The rich don't create jobs.It's important to understand the difference between hiring that is the result of expansion and hiring that is the result of employee turnover; if Don retires, Phil is promoted to take his place, and the firm hires new graduate Tony to step into Phil's vacant position, no job has been created; that's just hiring that is the result of turnover. Businesses actually create jobs when they expand into new fields or new markets, and the businesses owned by the rich aren't the ones doing that. Small businesses and new businesses are the ones that expand; existing mega-corporations are about as big as they're ever going to get. And small businesses are primarily owned by people firmly in the middle class; the average annual small business income to proprietors/owners in the United States is under 60k. And, of course, the vast majority of next year's new jobs will come from businesses that don't yet exist - new business hiring is the predominant source of new employment.

You said that it "obviously IS happening" then go on to talk about construction. You do realize that new home construction is down, and has been so for quite some time. It looks to me like the rich have been hording their money, not spending it. It looks to me like the rich have been cutting jobs (and sending them to other countries), not creating them. So I still fail to see that anything except shit is trickling down.{abe}
To expound on what crash said about this: How many "20 room mansions" get built from the ground up compared to how many 200k (which is about average for new construction) are built, even in good times? Entire subdivisions of 200k homes get built, whereas someone who builds a 20 million dollar mansion builds....1? Also, who do you think gets that 20 mil? The whole crew? Nope, they still get their 10 bucks an hour regardless of how expensive the home is (and that 10 bucks an hour is for legal employees; the gophers that consist of a majority of the crew. No telling how many illegals work on a crew).Edited by hooah212002, : No reason given.Edited by hooah212002, : No reason given.

Hi Percy, People that do not accumulate any wealth spend 100% of their incomePeople that DO accumulate wealth spend less than 100% of their incomeSo IF we give the same total amount of dollars to those that do not accumulate wealth that trickle down advocates want to give those that DO accumulate wealth ...... THEN more of that money will be spent, AND they will also be sending it back into the economy more immediately than a system of investments that takes several transactions to get any money back into the economy.The other factor in the equation is that there are far fewer very rich than there are very poor so you cannot compare a single rich person to a single middle income or poor person, you have to compare the rich population to the middle income population and the poor population in order to judge the relative benefits. A better comparison would be 1 building at $20,000,000 versus 100 buildings at $200,000, so that we are talking about the same total expenditure versus benefit. AND because of the way things work (overhead, management, other fixed costs per building) there would be LESS benefits for the single house contract compared to the 100 house contracts.We are talking about benefit per dollar spent.Enjoy.

Hi Percy, Chuck77 and other trickle-down advocates If you want to stimulate the economy then you need to stimulate spending.If you want to use some tax funds for this purpose by distributing it to people ...People that do not accumulate any wealth spend 100% of their income, whilePeople that DO accumulate wealth spend less than 100% of their income,Therefore the most efficient stimulus system would be to distribute the funds to the people that do not accumulate wealth, as there is a 100% return on investment.This is why trickle down theory is a bad system of economic stimulus, not because trickle down does not occur, but because it is not as efficient as trickle up.If spending increases, then production will need to increase to meet the increased demand, and jobs will be created to meet that increased production.Giving money to people to increase production doesn't increase the spending nor the buying of the increased production -- instead it would tend to drive prices down, and then wages down without significant benefit to the economy.Enjoy.

But doesn't this assume that the people receiving this stimulus will continue living at the same means they are currently and the stimulus wouldn't serve to bring them out of the lower income bracket? Should we not, then, view the stimulus on the basis of it's ROI and instead of how much it will help those people?

Hi hooah212002 This is why you should send the stimulus to those that put all their earned income into the economy, those people that do not have an increase in wealth over the year versus those that do. This could happen to those at the margin, and those that don't have debts (delayed spending), but this would be a small fraction of the economic population in question, and the effect would be small for those that do cross over.Those that did cross over into a net accumulation of wealth would certainly realize a direct benefit from the stimulus, but they could also increase their spending compared to the previous year and end up at the same level.enjoy

So far as I know, everyone who uses the term "trickle down" and isn't you. Yes, but in fact rich people buy expensive new cars. No, the government would be. But that's a different question.My point is simply that I cannot afford to buy the cast-offs of the rich, because they are still too expensive for me.