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Author Topic:   Trickle Down Economics - Does It Work?
Percy
Member
Posts: 22390
From: New Hampshire
Joined: 12-23-2000
Member Rating: 5.2


Message 256 of 404 (660272)
04-23-2012 8:59 AM
Reply to: Message 248 by crashfrog
04-22-2012 9:14 AM


Re: Correcting Misapprehensions about the Rich
crashfrog writes:
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.
Now you're returning to the question of whether trickle-down works. If the criteria is that it must make some people rich who weren't already rich then it is an undoubted success, since that number is greater than zero, but I understand you were just engaging in hyperbole. It seems to me that the only meaningful criteria is whether a reduction in taxes for the rich would benefit or hurt the economy. This is a function of the effective tax rates. For example, reducing the top marginal rates from 70% to 30% should cause the rich to put more of their money to work in productive ways instead of tax avoidance, and it should encourage investment because the value of each dollar of return is much greater when much less of it is being taxed away. This is the story of the Reagan tax cuts.
But if we're talking about reducing the top marginal rates from 35% to 30%, that seems to me to be just welfare for the rich. They're already not paying their fair share.
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...
Trickle-down is about consumption *and* investment. Ask yourself where the increasing income of the rich came from after the Reagan tax cuts as shown on Straggler's graph:
Reduced tax rates do not increase income in any direct way. The increasing income of the top 5% came from moving income from categories not actually considered income by the tax codes back into taxable income categories, and from the income from increased business activity and investment engaged in because of the greater value of each marginal dollar.
Invested money is a significant contributor to economic activity.
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.
Are you actually arguing that investment and borrowing is bad for the economy?
--Percy
Edited by Percy, : Typo.

This message is a reply to:
 Message 248 by crashfrog, posted 04-22-2012 9:14 AM crashfrog has replied

Replies to this message:
 Message 289 by crashfrog, posted 04-24-2012 8:45 PM Percy has replied
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hooah212002
Member (Idle past 801 days)
Posts: 3193
Joined: 08-12-2009


(1)
Message 257 of 404 (660273)
04-23-2012 9:18 AM
Reply to: Message 255 by Percy
04-23-2012 8:39 AM


Re: There was a rising tide. But it didn't lift all boats.
The recession information was offered because you were arguing that since the Reagan tax cuts the economy has performed worse
I don't believe I did say or imply that. I simply said that there has been one major boom and one major bust. Equating a fluctuating economy with recessions (as I've already said a number of times) cheapens the term, unless I am incorrect in what a recession is.
To the extent that "only one boom since the Reagan tax cuts" was a factor is drawing your conclusions, they must now be reconsidered.
I remain unconvinced that natural ebb and flow of an economy can be labeled "booms and recessions" if those terms are to have any meaning. It would be like me saying I'm rich the day I get paid, then poor after all my bills are paid. Wile perhaps technically true, it serves no value for those terms. What we can see, however, is that since that time, the rich have increased their wealth over the poor at an astoundingly alarming rate.
Here is a chart that shows unemployment rates. It appears to have been relatively stagnant until 2008, even through all these so called "recessions" (well, until the real recession of 2008 anyways). Oh and whats that? The "dot com boom" had relatively lower rates than all the other times?
other than that Hooah had his data wrong.
Nope, pretty sure I didn't. Hell, I didn't even introduce any data until now. I offered opinion and repeatedly stated that I am a layperson. But now that you want to call me out on shit I didn't say, there you go.

"Science is interesting, and if you don't agree you can fuck off." -Dawkins

This message is a reply to:
 Message 255 by Percy, posted 04-23-2012 8:39 AM Percy has replied

Replies to this message:
 Message 258 by Percy, posted 04-23-2012 2:46 PM hooah212002 has replied

  
Percy
Member
Posts: 22390
From: New Hampshire
Joined: 12-23-2000
Member Rating: 5.2


Message 258 of 404 (660281)
04-23-2012 2:46 PM
Reply to: Message 257 by hooah212002
04-23-2012 9:18 AM


Re: There was a rising tide. But it didn't lift all boats.
hooah212002 writes:
Equating a fluctuating economy with recessions (as I've already said a number of times) cheapens the term, unless I am incorrect in what a recession is.
In the United States there's a group whose determinations about when recessions begin and end are generally accepted. This is from the Wikipedia article of Recessions
Wikipedia writes:
In the United States, the Business Cycle Dating Committee of the National Bureau of Economic Research (NBER) is generally seen as the authority for dating US recessions. The NBER defines an economic recession as: "a significant decline in economic activity spread across the economy, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales." Almost universally, academics, economists, policy makers, and businesses defer to the determination by the NBER for the precise dating of a recession's onset and end.
The shaded regions in those charts are not just the slower periods of a normally fluctuating economy. Those regions are actual recessions.
There is no doubt that the recent recession is the worst since the great depression. It began in December of 2007 and ended in June 2009. The subsequent recovery has been anemic. It has cause a great deal of pain worldwide, and many are still feeling the negative effects. But there were no trickle-down economic policies implemented in the year or two before this severe recession, and so it could not have been caused by trickle-down economic policies. It was caused by severe problems in the financial markets.
Here's a chart of the unemployment rate with more recent data (the figures in your link only went up to 2010). Recessions are shown as gray shaded regions. Notice the rapid drop in unemployment after the Reagan tax cuts in 1982:
The point I'm trying to make in this thread is that you can't hoist one chart up the flagpole, see that a lot of people are saluting it, and then conclude everyone must be right. Maybe trickle-down economics works, maybe it doesn't. I'm not claiming to have evidence either way. But I am presenting evidence inconsistent with the claim that trickle-down economics does not work, and I believe the claim that evidence has been presented in this thread showing it doesn't work is false.
Economics is complicated. There's a reason it's called the dismal science. Unequivocally demonstrating almost anything in economics is impossibly difficult.
--Percy

This message is a reply to:
 Message 257 by hooah212002, posted 04-23-2012 9:18 AM hooah212002 has replied

Replies to this message:
 Message 259 by Rahvin, posted 04-23-2012 3:03 PM Percy has replied
 Message 265 by hooah212002, posted 04-23-2012 4:56 PM Percy has replied

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


(1)
Message 259 of 404 (660282)
04-23-2012 3:03 PM
Reply to: Message 258 by Percy
04-23-2012 2:46 PM


Re: There was a rising tide. But it didn't lift all boats.
But there were no trickle-down economic policies implemented in the year or two before this severe recession, and so it could not have been caused by trickle-down economic policies.
...so only policies enacted a year or two prior to a recession could possibly have a causal relationship with that recession?
Really?
That seems to be a rather odd stance. The Great Recession had many causes, and not all of them were policies put in place after 2005. Financial industry deregulation has been happening since the 80s and continued through the Bush administration.
And yes, the deregulation of the financial sector is an example of trickle-down policy: the argument is that allowing large investment banks to be more free to use their money for profit will create greater prosperity for all. "Trickle-down economics" is not limited exclusively to relative taxation by income bracket (ie, regressive taxation, where proportional tax rate is lowered at higher income levels, as opposed to progressive taxation, where a higher tax percentage is taken from those who make more money and thus have more ability to pay).
Which, of course, didn't exactly work out right. The deregulation of the financial sector, granting more freedom to the super-wealthy investment class under the hypothesis that the lwoer income classes would receive better employment and higher wages and generally a better quality of life turned out to be a total bust.
And, in fact, who suffered the most? The banks got bailouts. The wealthy received scads of money to cover their risky investments while the lower income classes received foreclosure notices. Once again the wealthy were given money instead of the poor and middle-class...and new jobs did not appear. Creditors remain anxious about giving new loans; businesses remain cautious in hiring new employees, and have still not replaced those who were laid off in the initial crash.
And why? Because it's hard to make a profit when all the people who buy your products are unemployed. All the investment and government bailouts and tax incentives in the world won't help Spacely's Sprockets sell more sprockets if all their customers are broke, unemployed, and in foreclosure.
It's interesting that you think that trickle-down theory had nothing to do with this.

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 258 by Percy, posted 04-23-2012 2:46 PM Percy has replied

Replies to this message:
 Message 260 by Percy, posted 04-23-2012 3:38 PM Rahvin has replied
 Message 262 by dronestar, posted 04-23-2012 4:22 PM Rahvin has replied

  
Percy
Member
Posts: 22390
From: New Hampshire
Joined: 12-23-2000
Member Rating: 5.2


Message 260 of 404 (660283)
04-23-2012 3:38 PM
Reply to: Message 259 by Rahvin
04-23-2012 3:03 PM


Re: There was a rising tide. But it didn't lift all boats.
Hi Rahvin,
That's an interesting way of defining trickle-down economics. It sort of lumps everything that is claimed to be stimulative under one roof. I try to stick to generally accepted definitions.
If was the subprime mortgage crisis (click for Wikipedia article) that caused the recent recession. Financial regulations did play a role, but I thought it was absence of regulatory coverage for the types of financial institutions that were involved in this new type of security, not because existing regulations were removed. But whichever way it actually was, it wasn't trickle-down economics.
--Percy

This message is a reply to:
 Message 259 by Rahvin, posted 04-23-2012 3:03 PM Rahvin has replied

Replies to this message:
 Message 261 by Rahvin, posted 04-23-2012 4:06 PM Percy has replied

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


Message 261 of 404 (660285)
04-23-2012 4:06 PM
Reply to: Message 260 by Percy
04-23-2012 3:38 PM


Re: There was a rising tide. But it didn't lift all boats.
not because existing regulations were removed.
That's absolutely wrong. The regulatory rules that were put in place after the Great Depression were systematically rolled back over the past few decades. For instance, it was previously illegal for a consumer bank (like Bank of America) to engage in securities investments (like, say Goldman Sachs). That regulation was removed in 1999:
quote:
The Banking Act of 1933 (Pub.L. 73-66, 48 Stat. 162, enacted June 16, 1933) was a law that established the Federal Deposit Insurance Corporation (FDIC) in the United States and imposed banking reforms, several of which were intended to control speculation.[1] It is often referred to as the Glass—Steagall Act, after its Congressional sponsors, Senator Carter Glass (D) of Virginia, and Representative Henry B. Steagall (D) of Alabama.
The term Glass-Steagall Act, however, is most often used to refer to four provisions of the Banking Act of 1933 that limited commercial bank securities activities and affiliations between commercial banks and securities firms.[2] Starting in the early 1960s federal banking regulators interpreted these provisions to permit commercial banks and especially commercial bank affiliates to engage in an expanding list and volume of securities activities.[3] By the time the affiliation restrictions in the Glass-Steagall Act were repealed through the Gramm-Leach-Bliley Act in 1999 by President Bill Clinton, many commentators argued Glass-Steagall was already dead.[4] Most notably, Citibank’s 1998 affiliation with Salomon Smith Barney, one of the largest US securities firms, was permitted under the Federal Reserve Board’s then existing interpretation of the Glass-Steagall Act.
Just one example.
That's an interesting way of defining trickle-down economics. It sort of lumps everything that is claimed to be stimulative under one roof.
Only because the most of the stimulus plans ever offered are top-down. If the only regulations that are proposed to fix problem y in Congress are x, that doesn't mean that all solutions to fix problem y are of type x. It just means Congress isn't putting forward other potential solutions...or more accurately in reality, the other policies just aren't grabbing your attention.
In this case, the stimulus policies mostly affected the top, the investor level, via things like gigantic bank bailouts using taxpayer money.
Other stimulus policies, like increased funding to so-called "shovel-ready" public works projects (highway/bridge construction and repair, new light and high-speed rail projects, etc) were intended to be more direct and could be considered a bottom-up approach: ignore the middleman of wealthy investors, give funding directly to projects that will hire more workers so that those workers will have more money to spend, etc. My employer is still benefiting from that stimulus...though unfortunately most of the "shovel-ready" projects weren't actually ready, many of them wound up requiring significantly more money than originally projected, and the States were significantly less able to pay their share with their own dwindling budgets, and the Federal stimulus funding proved insufficient for some of the more grandiose plans (like high-speed rail).
I think it's pretty clear what "trickle-down" theory actually entails, and I see no reason at all beyond your bare assertion supported solely by a Wikipedia article to limit the definition of trickle-down economics to trickle-down tax policy. You're trying to focus the discussion on an extremely limited subset of a wider economic theory - that lowered taxation, increased subsidies, deregulation and other economic policies that favor the wealthy investment-class will trickle down and eventually benefit the lower classes with higher employment and more wealth.
But more absurd than your limitation of the discussion to an arbitrary subset of economic policy is your assertion that only policies enacted one or two years previous to a recession can have a causal relationship with that recession.
But there were no trickle-down economic policies implemented in the year or two before this severe recession, and so it could not have been caused by trickle-down economic policies.
This is absurd and false on its face. Whether there were any new trickle-down policies implemented in the year or two prior to the Great Recession is irrelevant - your statement requires that only policies enacted int eh previous one or two years can have a causal relationship. That's just not so. The housing bubble took more than one or two years to grow, just as the dot-com boom took more than one or two years to build up until it crashed. The sub-prime lending, the fraudulent loan applications, the use of arcane investment derivatives, these were all happening prior to 2005. Clearly the policies that allowed them must have existed more than 1-2 years prior to the collapse since they were happening before that!
Once again you're arbitrarily limiting the argument to a tiny subset - not only can we only look at taxation policy according to you, but now we can only look at policies enacted within a tiny arbitrary window of time prior to an economic event, as if policies and laws somehow expire after two years and so cannot ever have any effect beyond that time. Apparently Congress must rewrite all economic laws every two years, or else they'd all wear off and stop having any effect!

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 260 by Percy, posted 04-23-2012 3:38 PM Percy has replied

Replies to this message:
 Message 266 by Percy, posted 04-24-2012 8:22 AM Rahvin has not replied

  
dronestar
Member
Posts: 1407
From: usa
Joined: 11-19-2008


Message 262 of 404 (660287)
04-23-2012 4:22 PM
Reply to: Message 259 by Rahvin
04-23-2012 3:03 PM


Re: There was a rising tide. But it didn't lift all boats.
Rahvin writes:
And yes, the deregulation of the financial sector is an example of trickle-down policy
Well, if deregulation of the financial sector is an example of trickle-down policy, then I think trickle down economics can also be applied to many other actions. From the Reagan administration openly facilitating illegal labor practices. To Clinton who pushed NAFTA. To Obama who successfully pushed through three Free Trade Agreements (FTAs) with South Korea, Colombia, and Panama (originally negotiated by Bush Jr. in 2007). Like Bush, Clinton, and the immoral-simpleton Jr., Obama cited false data from corporate lobbyists claiming these deals create jobs. However evidence has shown that NAFTA have cost hundreds of thousands, if not millions of jobs. These policies continue to guarantee that the middle and lower class's wages would stagnate despite record profits for the rich.
quote:
Rep. Michael Michaud (D-Maine), a long-time critic of the trade deals, bluntly blamed Obama for caving into what he called Washington elites."
"Panama simply isn't a significant market opportunity for U.S. exports, and this FTA won't do anything to reduce our 9 percent unemployment," he said of the Panama free trade agreement. "But the big companies and the big banks want it, so President Obama is going to give in to the Washington elites, once again."
http://thehill.com/...es-colombia-fta-with-scant-dem-support

This message is a reply to:
 Message 259 by Rahvin, posted 04-23-2012 3:03 PM Rahvin has replied

Replies to this message:
 Message 263 by Rahvin, posted 04-23-2012 4:34 PM dronestar has replied

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


Message 263 of 404 (660288)
04-23-2012 4:34 PM
Reply to: Message 262 by dronestar
04-23-2012 4:22 PM


Re: There was a rising tide. But it didn't lift all boats.
Without looking into the details of every specific policy you've mentioned, I'll just note that I never claimed that trickle-down policies were solely supported by a specific political party.
Both the Democrats and Republicans are extremely friendly to the wealthiest citizens and the largest businesses. After all, they pay the campaign bills. I think that successful lobbying by the wealthy and large businesses is the real cause behind the policies, and that "trickle-down" is simply the post-hoc rationalization used to sell those policies to the rest of us.
"Trickle-down" economic theory as it's presented is just a marketing tool. The real goal is simply to make the wealthy more wealthy, regardless of other consequences.

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 262 by dronestar, posted 04-23-2012 4:22 PM dronestar has replied

Replies to this message:
 Message 264 by dronestar, posted 04-23-2012 4:41 PM Rahvin has not replied

  
dronestar
Member
Posts: 1407
From: usa
Joined: 11-19-2008


Message 264 of 404 (660289)
04-23-2012 4:41 PM
Reply to: Message 263 by Rahvin
04-23-2012 4:34 PM


Re: There was a rising tide. But it didn't lift all boats.
Rahvin writes:
I'll just note that I never claimed that trickle-down policies were solely supported by a specific political party.
I don't believe I stated that you did.
Rahvin writes:
and that "trickle-down" is simply the post-hoc rationalization used to sell those policies to the rest of us.
Indeed. And you must admit, the sales pitch has worked and worked and worked beyond their greatest imagination. Many (MANY) americans continue to vote against their best interests, yes?

This message is a reply to:
 Message 263 by Rahvin, posted 04-23-2012 4:34 PM Rahvin has not replied

  
hooah212002
Member (Idle past 801 days)
Posts: 3193
Joined: 08-12-2009


(2)
Message 265 of 404 (660290)
04-23-2012 4:56 PM
Reply to: Message 258 by Percy
04-23-2012 2:46 PM


Re: There was a rising tide. But it didn't lift all boats.
In the United States there's a group whose determinations about when recessions begin and end are generally accepted. This is from the Wikipedia article of Recessions
Ok, I suppose I could concede point. However, I will say that now the word recession is wholly meaningless as opposed to potentially meaningless.
But there were no trickle-down economic policies implemented in the year or two before this severe recession, and so it could not have been caused by trickle-down economic policies. It was caused by severe problems in the financial markets.
Rahvin's response to this is better than I could have said. I probably would have just called it stupid or something.
The point I'm trying to make in this thread is that you can't hoist one chart up the flagpole, see that a lot of people are saluting it, and then conclude everyone must be right.
Who has been doing that? Pretty sure the only usage of a chart/graph from me has been an attempt to strengthen an argument I have made, not to have been the argument itself.
Maybe trickle-down economics works, maybe it doesn't. I'm not claiming to have evidence either way. But I am presenting evidence inconsistent with the claim that trickle-down economics does not work, and I believe the claim that evidence has been presented in this thread showing it doesn't work is false.
Apparently we have lost site of what trickle-down ecomics actually is (aside from a buzz-word. Catchy isn't it?) in all these graphs and charts. I thought it was: give rich people money or tax breaks and everyone else gets better. What we have shown and what we can see is that it hasn't quite worked out that way, what with all the tax breaks the rich have had and how shitty everyone else is doing and how their wealth is still growing and our economy is still tanking. We've shown at least that much, don't you agree? It's not like the "reagan tax cuts" were actually tax increases and that they were repealed in order to fix this mess and now all our problems are alleviated. We've shown that the uber wealthy have had low taxes for quite some time and that unemployment numbers, the number of jobs going overseas and the number of people just plain out of work are rising. This, all in light of the disparity between rich motherfuckers and everyone else. It's almost as if they do better the worse everyone else does.
Edited by hooah212002, : fixed grammar

"Science is interesting, and if you don't agree you can fuck off." -Dawkins

This message is a reply to:
 Message 258 by Percy, posted 04-23-2012 2:46 PM Percy has replied

Replies to this message:
 Message 267 by Percy, posted 04-24-2012 8:42 AM hooah212002 has replied

  
Percy
Member
Posts: 22390
From: New Hampshire
Joined: 12-23-2000
Member Rating: 5.2


Message 266 of 404 (660300)
04-24-2012 8:22 AM
Reply to: Message 261 by Rahvin
04-23-2012 4:06 PM


Re: There was a rising tide. But it didn't lift all boats.
Rahvin writes:
I think it's pretty clear what "trickle-down" theory actually entails, and I see no reason at all beyond your bare assertion supported solely by a Wikipedia article to limit the definition of trickle-down economics to trickle-down tax policy.
If we can't agree on a definition then what is there to talk about?
Rahvin writes:
Financial regulations did play a role, but I thought it was absence of regulatory coverage for the types of financial institutions that were involved in this new type of security, not because existing regulations were removed.
That's absolutely wrong.
Actually what I said appears to be correct. This is from the Wikipedia article on the Shadow Banking System, which means financial institutions like Bear Stearns and Lehman Brothers:
Wikipedia writes:
Shadow institutions are not subject to the same prudential regulations as depository banks, so that they do not have to keep as high financial reserves relative to their exposure.
Reducing the top marginal tax rates from 90% to 70% (Kennedy) and then to 30% (Reagan) were good ideas because the higher rates tied up capital in unproductive tax avoidance activities and reduced incentives to make productive use of capital, and these tax rate reductions on higher incomes served as a spur to the economy. In an environment of prohibitively high marginal tax rates trickle-down economics works. But we're not in that kind of environment now and haven't been for 30 years.
--Percy

This message is a reply to:
 Message 261 by Rahvin, posted 04-23-2012 4:06 PM Rahvin has not replied

Replies to this message:
 Message 268 by RAZD, posted 04-24-2012 8:51 AM Percy has replied

  
Percy
Member
Posts: 22390
From: New Hampshire
Joined: 12-23-2000
Member Rating: 5.2


Message 267 of 404 (660305)
04-24-2012 8:42 AM
Reply to: Message 265 by hooah212002
04-23-2012 4:56 PM


Re: There was a rising tide. But it didn't lift all boats.
hooah212002 writes:
Rahvin's response to this is better than I could have said.
Rahvin attempted to redefine trickle down economics to include financial deregulation so that he could indict it for missteps by financial regulatory agencies and Congress.
Apparently we have lost site of what trickle-down ecomics actually is...
I agree that some here do not have a good grasp of what trickle down economics means.
In my early posts in this thread I wrote a great deal about the ability of the rich to influence legislation for their own benefit. We can talk about raising taxes on the rich, but it's not going to work because they will shoot the legislation full of holes (as in loopholes) before it's passed. I'm not guessing about this, I'm just assuming that what's happened before will happen again.
I don't know how we're going to extract ourselves from this mess, but anyone making blanket statements like "trickle down economics doesn't work" is wrong. When marginal tax rates are 70% and above then trickle down economics can clearly work as it did in the 1980s, but that's not the situation now.
Anyone who's been sold on current tax policy on high incomes because the benefit will trickle down has been sold a bill of goods, but blame gullibility, not trickle down economics. It would be like blaming the paper that counterfeit money is printed on for what the counterfeiter did.
--Percy

This message is a reply to:
 Message 265 by hooah212002, posted 04-23-2012 4:56 PM hooah212002 has replied

Replies to this message:
 Message 271 by hooah212002, posted 04-24-2012 9:41 AM Percy has replied
 Message 276 by dronestar, posted 04-24-2012 10:33 AM Percy has replied
 Message 280 by Dr Jack, posted 04-24-2012 1:48 PM Percy has replied

  
RAZD
Member (Idle past 1404 days)
Posts: 20714
From: the other end of the sidewalk
Joined: 03-14-2004


Message 268 of 404 (660308)
04-24-2012 8:51 AM
Reply to: Message 266 by Percy
04-24-2012 8:22 AM


Re: There was a rising tide. But it didn't lift all boats.
Hi Percy
Rahvin writes:
I think it's pretty clear what "trickle-down" theory actually entails, and I see no reason at all beyond your bare assertion supported solely by a Wikipedia article to limit the definition of trickle-down economics to trickle-down tax policy.
If we can't agree on a definition then what is there to talk about?
How about
Trickle-down theory (or more correctly hypothesis) is based on the observations that (a) money spent on things transfers money from one person to the next, (b) that money spent by rich people transfers some money to people who are not as rich, and then makes the hypothetical conclusion that giving money to rich people benefits everyone else. An example of this hypothetical concept is to tax rich people at a lower rate than anyone else, and another example would be to bail out rich people when their investments go south, but not do the same for poor people.
Perhaps you would care to add some additional bits to this to actually make it a valid logical argument, but I think we can start there.
We can also say that both of these examples have been tried and that there is no discernible benefit to those at the bottom of the economic pyramid, that not everyone else has benefited, and that these indicate that this hypothetical conjecture is falsified.
We can also note that not every transaction involves everyone, so you have to invoke some kind of "ripple effect" - that a coin thrown in a pool causes ripples that reach all other parts of the pool. The problem here being that the pool is so large (311 million?) that the ripple of one transaction is pretty unmeasurable at the far edge ... less than any single coin.
We can also note that not all trickles are down, that as you move down the economic pyramid the trickle up becomes more and more likely, so that the effect on the lowest levels are damped or eradicated by the money moving back up.
It should be a fairly simple mathematical analysis to determine how much one would need to spend to guarantee that everyone received a benefit ...
Enjoy.
Edited by RAZD, : ...

we are limited in our ability to understand
by our ability to understand
Rebel American Zen Deist
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This message is a reply to:
 Message 266 by Percy, posted 04-24-2012 8:22 AM Percy has replied

Replies to this message:
 Message 269 by Percy, posted 04-24-2012 8:58 AM RAZD has replied

  
Percy
Member
Posts: 22390
From: New Hampshire
Joined: 12-23-2000
Member Rating: 5.2


Message 269 of 404 (660309)
04-24-2012 8:58 AM
Reply to: Message 268 by RAZD
04-24-2012 8:51 AM


Re: There was a rising tide. But it didn't lift all boats.
What's wrong with the Wikipedia description?
--Percy

This message is a reply to:
 Message 268 by RAZD, posted 04-24-2012 8:51 AM RAZD has replied

Replies to this message:
 Message 270 by RAZD, posted 04-24-2012 9:09 AM Percy has replied
 Message 274 by Rahvin, posted 04-24-2012 10:16 AM Percy has seen this message but not replied

  
RAZD
Member (Idle past 1404 days)
Posts: 20714
From: the other end of the sidewalk
Joined: 03-14-2004


(2)
Message 270 of 404 (660311)
04-24-2012 9:09 AM
Reply to: Message 269 by Percy
04-24-2012 8:58 AM


Re: There was a rising tide. But it didn't lift all boats.
Hi Percy
What's wrong with the Wikipedia description?
Well we could always edit it ... to clarify it a bit more ....
quote:
Trickle-down economics - Wikipedia
"Trickle-down economics" and "the trickle-down theory" are terms in United States politics often used by the American right to refer to the idea that tax breaks or other economic benefits provided by government to businesses and the wealthy will benefit poorer members of society by improving the economy as a whole.[2]
bold underline added.
Would you also agree that getting one penny would be the minimum benefit measurable, and that everyone benefiting would mean that 1 penny for the 99% of 311 million people would be $0.01 x 0.99 x 311,000,000 = $3,078,900 and this would be the theoretical absolute minimum -- that the transactions would be more of a skewed curve distribution centered towards the more wealthy end of the spectrum than the bottom and that you would need several times this amount for 1 penny to actually reach everyone?
Enjoy.
Edited by RAZD, : .....

we are limited in our ability to understand
by our ability to understand
Rebel American Zen Deist
... to learn ... to think ... to live ... to laugh ...
to share.


Join the effort to solve medical problems, AIDS/HIV, Cancer and more with Team EvC! (click)

This message is a reply to:
 Message 269 by Percy, posted 04-24-2012 8:58 AM Percy has replied

Replies to this message:
 Message 272 by Percy, posted 04-24-2012 9:56 AM RAZD has replied

  
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