Summations Only

Straggler asks:

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Does it work?

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The simple answer is: No.When it was originally presented back in the Reagan era, literally fewer than a dozen of the entire 18,000 membership of the American Economic Association thought it had any chance of working. It's why George Bush (the first) called it "voodoo economics" during the 1980 Republican primary (but notice how quickly he changed his tune once he became the VP candidate.)We have been stuck under the Reagan tax cuts for the past 30 years and our economy has been unable to recover. We had a brief respite in the 90s when Clinton raised tax rates, but then Bush came back, slashed rates, and as you can see, we have had a lost decade.And currently, we are dealing with a political party that wants to return tax rates to the Reagan levels as "socialist." That must make Nixon "French" and Eisenhower a god damend commie.

Hi Hooah,Our current world-wide economic dilemma began several years ago with major failures in the financial markets, not with the enacting of trickle-down economic policies. And the country has experienced both booms and busts in the quarter century after Reagan when trickle-down economic policies were originally enacted.--Percy

The graph that Straggler has been showing seems to indicate that the economy has done fine since the Reagan tax cuts as measured by GDP per capita growth (the green line): I think the major complaint in this thread is that the rich are hogging the majority of the benefit from the rising GDP.--Percy

You say that in a plural sense. Far as I can tell, we've had one "boom": the dot com boom, and one MAJOR bust: the '08 bust. The "rising" GDP has benefited only the rich. The "rising GDP" means fuck all to the rest of the nation since it isn't affecting us. What good is a rising GDP if the only people who reap the benefits are the rich?{abe}
Your graph even shows that it is only the top 5% that rise with the rising GDP.Again, I speak strictly from a laypersons perspective.Edited by hooah212002, : No reason given.

Hi Percy No, the major complaint is that the purported reason for giving a bunch of money to the money hogs would result in a better economy and more money for everyone.Both are false.The major complaint is that the claim of giving money to the money hogs (people who accumulate wealth) is the best way to stimulate the economy.This is patently false, as only a portion of the money they are given is returned to the economy, while those who do not hog money (people who are not able to accumulate wealth or choose not to accumulate wealth) would return 100% of the same stimulus money to the economy AND that they would increase spending which is what improves the economy.It is not that wealth accumulation occurs
It is not that trickle down occurs
It is that trickle down does not improve the economy across the board for all peopleYou even reach this conclusion yourself: Inescapable. In your post Message 205 you posted this graph from Wikipedia article on US Income Distribution: We have a 40 year record of a consistent change in average slope across the board EXCEPT for the top 5%In the absence of any other cause for this change between income brackets which is consistent regardless of market ups and downs in both periods, then it is logical to conclude that this is due to this irrational policy.If you don't think this shows the poor performance of the trickle down theory to accomplish it's purported gains then you need to show some other universal policy or factor that has affected the lower 95% but not the top 5%.In Message 223 you replied If other effects are eliminated: what's left?There are no other policies or programs I am aware of that have last over this same period, and there are only rather normal market variations from year to year, and there still remains a sudden change in slope that began with the trickle down implementation and that has continued to this day.If something has not been eliminated what is it? Here's another diagram that shows a sudden change in slope: It seems to me that a correlation between the effect of the tax cuts to the lowered slope for the lower 95% is just as strong as the correlation between varve layers and 14C values for age and depth.My argument to the creationists is the same: if something else causes this correlation then what is it?Enjoy.

The late 1990s were a period of very rapid GDP/capita growth, but so was the late 1980s, and whatever was happening in terms of trickle-down economics during those periods was also happening the rest of the time.Recessions indicated by gray shading are shown in this graph of the S&P since 1880. Note that beginning with the Reagan tax cuts in the 1980s the frequency of recessions declined: You're referring to Straggler's graph, and even that graph shows median household income rising, just not as fast as top 5% income. My graph more clearly shows rising incomes, just nowhere near as much as the rich: In real terms (meaning adjusted for inflation) all income groups have risen since the 1980s. The data can support a qualitative claim that trickle-down's impact is insufficient, but not that it isn't happening.--Percy

I was making a general qualitative statement, but spending by the rich contributes to the economy far out of proportion to their numbers. Yes. Invested money is a significant contributor to economic activity. After the 2008 financial collapse the rich (and many others) changed their investment strategies from growth to capital preservation. The unavailability of investment funds acts as a restraint on economic growth, though it is only one factor.--Percy

Who cares? Proportionality is irrelevant. Tax cuts for the rich aren't going to make anybody rich who already isn't, by definition, since they apply only to the already rich. The question is whether the classical "trickle-down" policies - tax breaks for the wealthy meant to stimulate and increase their consumption by increasing their wealth - can work, and the abundant evidence is that they cannot, because you cannot increase the consumption of someone by increasing their wealth, if their wealth already far outstrips their ability to consume.Trickle-down by definition cannot work because the consumption of the rich is insensitive to their tax levels. Only in the near-term. No business succeeds until it attracts spending instead of just investment. Being in debt is not enriching, and the power of the rich to indebt us to them is not ultimately a force for growth among the middle class. It's actually quite the opposite.

1: Do you really think a good indication of the economy is to look at the stock market/Wall Street?2: Referring to all those periods as "recessions", don't you think that kind of cheapens the term? Perhaps Straggler first introduced it, but you used it and that is what I was responding to, not Stragglers use of it.

I chose the graph because it showed recessions further back in time than any other graph I found on the net. That the graph is of the S&P is irrelevant. Recessions were much more frequent before the Reagan tax cuts. Here's another graph, this one of private residential investment though not going back as far in time, showing that recessions were more frequent before the Reagan tax cuts: --PercyEdited by Percy, : Grammar.

Please do note that the frequency of recessions is not necessarily more important than the severity.As I understand, after the Reagan tax cuts (and other policies, we're not working in a vacuum here), while the frequency of recessions has gone down, their severity and length have both increased, culminating in the almost-a-depression Great Recession of 2008.Previously, bubbles would build as assets were overvalued, and then there would be a mild, short recession when the bubbles burst and the market corrected itself.Now, the same thing happens, but on a longer timescale. We see massive prosperity for long periods of time (long enough to think it's okay to start deregulating financial industries...), but the markets are still massively overinflated, to a worse degree than ever before. When those bubbles burst, the resulting recessions are deeper and longer, resulting in more unemployment and destroyed retirement accounts and foreclosures and so on than previously.I'm not so sure that can be looked on as a positive.

Why do you think that can be accredited to Reagan's tax cuts in particular? Especially given the radical changes in technology and global politics that occurred during that period?

(Source for figures: Bureau of Labor Statistics. I haven't checked, but I think the word "Non-Farm" should go somewhere in the caption.)

On the contrary. The fact that you are showing what the stock market does on any given day says nothing regarding people who don't invest in the stock market. I, personally, couldn't give two fucks what the stock market does (yes, yes, I am aware that much pricing is a result of what plays out on Wall Street). Again, don't you think that somewhat cheapens the word? Especially when you would also say that what happened in 2008 was also a recession? I had no idea we were talking about investing, other than the fact that your second and third graphs had investing related stuff.....(this is why I shouldn't talk economics?).If you want to talk about investing, you've lost me. People with money invest it. People that live paycheck to paycheck spend that money. Better yet: rich people invest, poor people spend. I would love to invest money so my money makes me more money, but sadly, I have bills to pay.

Hi Hooah,I wasn't trying to introduce the S&P or private residential investments into the discussion. I was trying to show the frequency of recessions, and that information most often appears on graphs of other data. The S&P data and the private residential data is completely irrelevant to any point I was trying to make. Here's a Google link to a page of charts showing recessions. The charts are about employment, unemployment, inflation, industrial production, etc. I could have chosen any one of them, but I chose the one that went back the furthest in time, which was the S&P.The recession information was offered because you were arguing that since the Reagan tax cuts the economy has performed worse with only one boom. But there were two solid booms, long periods of economic growth, and many fewer recessions. To the extent that "only one boom since the Reagan tax cuts" was a factor in drawing your conclusions, they must now be reconsidered.To others who responded about about the recessions, I wasn't trying to make any specific point about trickle-down or anything else other than that Hooah had his data wrong.--PercyEdited by Percy, : Typo.