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


Message 286 of 404 (660338)
04-24-2012 7:13 PM
Reply to: Message 224 by Percy
04-20-2012 8:43 PM


Re: Real Current Example - UK Economic Policy
That is a cop-out.
I want to verify that we are talking about the same economic policies. I am not interested in verifying that we are reading the same Wiki articles.
Can you give specific examples of policies that have been implemented that you consider to be examples of "trickle down economics"...?
I have already given examples of recent UK policies. Do you agree that the examples I have provided constitute "trickle down economics" in action...?
We wouldn't want to leave anyone the opportunity to slice their terms so narrowly (or widely) that discussion becomes meaningless.....Would we?

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


Message 287 of 404 (660340)
04-24-2012 7:27 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....
So - Just to be clear - You think that any growth in the economy at all is attributable to cutting taxes for the rich and the resultant increased productivity of the rich?
The average US worker has increased productivity 100% and received an income increase of 20% but he should count him/her self lucky that the rich have trickled down the benefits of increased productivity?
CS - How much of the increased productivity over the last 30+ years do you think is attributable to the top 5%...?
How much of that increased productivity have the top 5% pocketed?
What has trickled down?

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New Cat's Eye
Inactive Member


Message 288 of 404 (660344)
04-24-2012 7:53 PM
Reply to: Message 285 by Straggler
04-24-2012 6:12 PM


Re: There was a rising tide. But it didn't lift all boats.
Yet the evidence conclusively shows that it is the wealthiest rather than anyone else who have benefited most significantly from that increased productivity.
The more money you got, the more money you can make.
If the wealthiest have benefited from increases in national productivity in a way that is deeply disproportionate to their contribution to that increased national productivity - Then what exactly is it that has trickled down?
How are you measuring their contribution?
If you increase your productivity by 100% and receive a 20% increase in income do you:
A) Thank the wealthy for trickling down their wealth to you?
I'd thank the guy let me borrow the money that I needed to double my productivity. Especially if he could've been all: no thanks, the extra income I'm making of that loan is taxed too much to be worth it for me.
In that case, how much "contribution" would he've provided in going ahead and letting you have it?
Can you see how that action of an increase in your income by using his wealth could be called "trickling down"?
If he's got loans all over town, he could be making a disproportionate amount than the people who are providing your true contributions.
Trickle Down Economics, in this simplistic hypothetical, would be lowering his tax rate so that he loans out more money thereby boosting the economy and making everyone better off.
Asking if its working would basically be asking 'how's the economy doing?'.
I put it to you that in terms of increased productivity Vs increased benefit the situation over the last 30 years or so is trickle up rather than trickle down. That's what the data shows.
What data? The charts that were posted in this thread? Howda they show that?
ABE: I just saw that other post to me but I gotta go
Edited by Catholic Scientist, : No reason given.

This message is a reply to:
 Message 285 by Straggler, posted 04-24-2012 6:12 PM Straggler has replied

Replies to this message:
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 Message 328 by Straggler, posted 04-26-2012 9:30 AM New Cat's Eye has replied

  
crashfrog
Member (Idle past 1466 days)
Posts: 19762
From: Silver Spring, MD
Joined: 03-20-2003


Message 289 of 404 (660347)
04-24-2012 8:45 PM
Reply to: Message 256 by Percy
04-23-2012 8:59 AM


Re: Correcting Misapprehensions about the Rich
It seems to me that the only meaningful criteria is whether a reduction in taxes for the rich would benefit or hurt the economy.
I asked you before, and I understand if it got lost in the shuffle - what counts as a "benefit"? When we say the economy "improves", what does that mean? Just from an ethical perspective we have to understand that a benefit that is not broadly distributed is really no benefit at all, and really isn't a policy aim.
Ask yourself where the increasing income of the rich came from after the Reagan tax cuts as shown on Straggler's graph:
The diversion of broad increases in productivity by the American workforce from their rightful earners to themselves. The graph makes that plainly clear.
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.
You asserted that before but it doesn't seem to be the case. This growth is simply too large in magnitude to merely be the result of moving money out of tax dodges because the coast is clear, and the institution of the Alternative Minimum Tax makes that highly unlikely in any case. The increase in income among the top 5% incomes represents a real increase in their wealth, not just a greater exposure of it. Wealth actually has moved from the middle income quintiles up to the top.
Are you actually arguing that investment and borrowing is bad for the economy?
I'm saying you can't ground an economy on just moving money around in leaky buckets, and that's not how wealth is created. That's economics 101. Businesses are supported by spending, not by investment.

This message is a reply to:
 Message 256 by Percy, posted 04-23-2012 8:59 AM Percy has replied

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


(2)
Message 290 of 404 (660348)
04-24-2012 8:47 PM
Reply to: Message 272 by Percy
04-24-2012 9:56 AM


Putting it kindly ...
Hi Percy,
Why don't you just straightforwardly state the point you're trying to make?
That the "investment" in the rich would need to be in the billions of dollars for the 1% poor to see a dime -- if trickle down even works -- and a dime per year is not a significant change in economic fortunes.
That once you get past average income, there as much or more forces that cause trickle-back-up and that these act to dampen and negate the effect of trickle down to the poorest 1%. This should be obvious to anyone that considers the probability of each transaction in a series to trickle up or trickle down.
That "trickle-down economics" is a fraudulently false hoax perpetuated on the economically ignorant populations of the US.
Putting it kindly.
Enjoy

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


Message 291 of 404 (660349)
04-24-2012 8:48 PM
Reply to: Message 282 by hooah212002
04-24-2012 4:37 PM


Re: There was a rising tide. But it didn't lift all boats.
Hi Hooah,
The evidence showing unemployment plummeting and GDP rising in the early 1980's after the Reagan tax cuts is consistent with trickle down economics working, but it doesn't conclusively prove it. There are too many variables.
I don't believe cutting the top marginal tax rates today when they're 35% instead of 70% would have the same effect.
We know trickle down happens (and as I said before, trickle up and trickle sideways) because that is the nature of an economy. Only if the rich spent no money at all could no money trickle down.
--Percy

This message is a reply to:
 Message 282 by hooah212002, posted 04-24-2012 4:37 PM hooah212002 has replied

Replies to this message:
 Message 294 by hooah212002, posted 04-24-2012 9:08 PM Percy has replied

  
crashfrog
Member (Idle past 1466 days)
Posts: 19762
From: Silver Spring, MD
Joined: 03-20-2003


(1)
Message 292 of 404 (660350)
04-24-2012 8:49 PM
Reply to: Message 288 by New Cat's Eye
04-24-2012 7:53 PM


Re: There was a rising tide. But it didn't lift all boats.
I'd thank the guy let me borrow the money that I needed to double my productivity.
Your productivity is bullshit unless someone actually paid you for it - your employer or your customers. Spending, not investment, is what supports businesses. That's what productivity is - spending.
The more money you got, the more money you can make.
Really? Does that make sense to you, that you can enrich yourself by going into debt? You don't have to be Suzy Orman to know it doesn't work like that.
The capacity of the rich to lend makes economies liquid; it doesn't make them grow. Of course, illiquidity can be a drag on growth. Availability of capital is a necessary but not sufficient condition for economic growth. Just ask anybody with maxed out credit cards.

This message is a reply to:
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RAZD
Member (Idle past 1404 days)
Posts: 20714
From: the other end of the sidewalk
Joined: 03-14-2004


(2)
Message 293 of 404 (660356)
04-24-2012 9:07 PM
Reply to: Message 292 by crashfrog
04-24-2012 8:49 PM


another view of the question at hand ...
Hi everyone
Why Rich People Don't Deserve Their Wealth. (That's Right, I Said It.) - Upworthy
quote:
Why Rich People Don't Deserve Their Wealth. (That's Right, I Said It.)
This quote is from the short article, The Self-Attribution Fallacy, by George Monbiot. ...
From Monbiot's original article: "I am now going to bombard you with figures. I’m sorry about that, but these numbers need to be tattooed on our minds.
Between 1947 and 1979, productivity in the US rose by 119%, while the income of the bottom fifth of the population rose by 122%.
Between 1979 and 2009, productivity rose by 80% , while the income of the bottom fifth fell by 4%.
In roughly the same period, the income of the top 1% rose by 270%.
[This] is to suggest that the economy has been rewarding the wrong skills. [CEOs] are no more deserving of the share of wealth they’ve captured than oil sheikhs."
Speaks volumes.
Enjoy

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)

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


(1)
Message 294 of 404 (660358)
04-24-2012 9:08 PM
Reply to: Message 291 by Percy
04-24-2012 8:48 PM


Re: There was a rising tide. But it didn't lift all boats.
We know trickle down happens
Crikey Mate! How many times you gonna assert this with no explanation or evidence? Now you are saying that ALL economy is trickle down, eh? ALL economy is dependant on the rich making money? WHAT is trickling down since you repeatedly claim that it IS happening? I see fuck all trickling down and a shit load trickling UP, what with the disparity in wealth.

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

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 Message 291 by Percy, posted 04-24-2012 8:48 PM Percy has replied

Replies to this message:
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Percy
Member
Posts: 22391
From: New Hampshire
Joined: 12-23-2000
Member Rating: 5.2


Message 295 of 404 (660361)
04-24-2012 9:14 PM
Reply to: Message 283 by Rahvin
04-24-2012 5:22 PM


Re: There was a rising tide. But it didn't lift all boats.
Rahvin writes:
If the economy is too complicated to determine cause and effect with any reasonable certainty, where precisely does your certainty regarding the occurrence of "trickle-down" come from, I wonder?
As I just said again to Hooah, we know trickle down happens because that is the nature of an economy. Everyone spends money, the money trickles everywhere in all directions, everyone benefits.
The question that is unanswered is whether trickle down economics works. I define trickle down economics working when a cut in top marginal tax rates results in an improvement in the economy. The Reagan tax cuts in the early 1980s caused a turnabout in the declining GDP and a dramatic decline in unemployment, and this evidence is consistent with trickle down economics working. It isn't conclusive evidence because there are too many variables.
All currently active policies should be considered. Just because a given law is old doesn't mean it isn't still having an effect.
This is true, of course, but it's being applied selectively. One can't reasonably claim the Reagan tax cuts played a role in some things and not others, in the 2007 financial crisis but not in the economic boom of the late 1990s. Personally I don't see much of a connection to either one.
--Percy
Edited by Percy, : Clarify my second paragraph.

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


Message 296 of 404 (660362)
04-24-2012 9:28 PM
Reply to: Message 294 by hooah212002
04-24-2012 9:08 PM


Re: There was a rising tide. But it didn't lift all boats.
Hi Hooah,
Sorry, I was drawing the same distinction between "trickle down" versus "trickle down economics" that I was drawing with Straggler. Maybe I didn't make the distinction clear in my replies to you.
"Trickle down," as in money flowing from the rich to the rest of the economy, obviously happens because the rich spend money.
"Trickle down economics," as in cutting top marginal tax rates to increase the amount of "trickle down" in the economy, does not obviously happen. There is a great deal of debate about it.
--Percy

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Replies to this message:
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Percy
Member
Posts: 22391
From: New Hampshire
Joined: 12-23-2000
Member Rating: 5.2


Message 297 of 404 (660364)
04-24-2012 9:49 PM
Reply to: Message 289 by crashfrog
04-24-2012 8:45 PM


Re: Correcting Misapprehensions about the Rich
crashfrog writes:
I asked you before, and I understand if it got lost in the shuffle - what counts as a "benefit"? When we say the economy "improves", what does that mean? Just from an ethical perspective we have to understand that a benefit that is not broadly distributed is really no benefit at all, and really isn't a policy aim.
What I said to Straggler at one point was that it seemed like he wanted to include the distribution of benefit as part of the criteria, and I said that sounded fine to me. I thought we were going to work toward some common ground regarding the criteria for deciding whether trickle down economics works, but somehow it got dropped.
Ask yourself where the increasing income of the rich came from after the Reagan tax cuts as shown on Straggler's graph:
The diversion of broad increases in productivity by the American workforce from their rightful earners to themselves. The graph makes that plainly clear.
I don't believe a graph showing productivity has been presented, so here's one:
Nothing remarkable happened to productivity after the Reagan tax cuts. Care to guess again where the money came from?
This growth is simply too large in magnitude to merely be the result of moving money out of tax dodges because the coast is clear,...
Not just tax dodges, but also a greater motivation to invest because of the greater value of each dollar earned.
...and the institution of the Alternative Minimum Tax makes that highly unlikely in any case.
The maximum AMT during the 1980's was 21%. Care to guess again?
The increase in income among the top 5% incomes represents a real increase in their wealth, not just a greater exposure of it. Wealth actually has moved from the middle income quintiles up to the top.
But we've seen the money didn't come from productivity gains, and it didn't come from AMT, so would you care to try again? Where did this money come from?
I'm saying you can't ground an economy on just moving money around in leaky buckets, and that's not how wealth is created. That's economics 101. Businesses are supported by spending, not by investment.
If businesses funded growth solely from their revenue streams our economy would be far more anemic. Economically it would resemble countries that disallow lending like Afghanistan and Iran. Investment is an essential funding component for business growth.
--Percy
Edited by Percy, : Clarify.
Edited by Percy, : Typo.

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


Message 298 of 404 (660370)
04-24-2012 11:36 PM
Reply to: Message 296 by Percy
04-24-2012 9:28 PM


Re: There was a rising tide. But it didn't lift all boats.
"Trickle down," as in money flowing from the rich to the rest of the economy, obviously happens because the rich spend money.
In a discussion about trickle down economic policy, why would you bring in a term that does nothing but confuse? What it seems like you are saying is "money is spent, money is earned, ergo trickle something". Yes, money moves around in an economy. I'm pretty sure even I get that. But now you've introduced a term similar, only in verbiage, to what the topic is about, but has a whole different meaning. This could be construed as an attempt to mitigate the effectiveness of actual "trickle down policy".
Now that you've cleared up your terms, I'd like to point out the ridiculousness of the concept. Your idea that money does trickle down at all insinuates that the only money in an economy comes from the rich. I shall still ask "what is it that is trickling down?". What is it we pleebs, we "po' folk", are getting from the rich? Layoffs? Unemployment? Foreclosure? 'Cuz it sure is fuck isn't money that is trickling down.

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

This message is a reply to:
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Rrhain
Member
Posts: 6351
From: San Diego, CA, USA
Joined: 05-03-2003


Message 299 of 404 (660371)
04-25-2012 12:27 AM
Reply to: Message 247 by Percy
04-22-2012 8:15 AM


Percy writes:
quote:
spending by the rich contributes to the economy far out of proportion to their numbers.
No, it doesn't. That's another myth. There's only so much money a single person can spend. And what they spend it on doesn't contribute much to the economy.
quote:
Invested money is a significant contributor to economic activity.
But it doesn't contribute to the economy. That's why the derivatives market was valued at many times more than the entire value of the entire planet. Paper transactions, while "activity," do not contribute to the economy because only those with the money to play can enter into it. Money that only gets used to make more money doesn't contribute to the economy.
quote:
After the 2008 financial collapse the rich (and many others) changed their investment strategies from growth to capital preservation.
No, they didn't. Because Glass-Steagall hasn't been re-enacted, the derivatives market is back on.
quote:
The unavailability of investment funds acts as a restraint on economic growth
But that's just it. There isn't any "unavailability." The banks are sitting on piles of cash. They're refusing to lend it out.

Rrhain

Thank you for your submission to Science. Your paper was reviewed by a jury of seventh graders so that they could look for balance and to allow them to make up their own minds. We are sorry to say that they found your paper "bogus," specifically describing the section on the laboratory work "boring." We regret that we will be unable to publish your work at this time.

Minds are like parachutes. Just because you've lost yours doesn't mean you can use mine.

This message is a reply to:
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Rrhain
Member
Posts: 6351
From: San Diego, CA, USA
Joined: 05-03-2003


(2)
Message 300 of 404 (660372)
04-25-2012 12:36 AM
Reply to: Message 250 by Percy
04-22-2012 2:23 PM


Percy writes:
quote:
recessions were more frequent before the Reagan tax cuts
You're missing something: The Reagan tax cuts spurred a recession...and then he raised taxes (people seem to forget that) and the economy got better. Then Bush came in and cut taxes, the recession hit, and then he raised them and things got better.
This is exactly what happened in the Depression: The tax policy of Hoover killed the economy. When Roosevelt got in, he changed the policies and the economy grew. Then in 1937, the Republicans came into power in Congress, slashed the budget, and the economy tanked again. The Republicans then got voted out, the New Deal was restored, and the economy got back to the same levels they were before the Crash.
And in the modern economy, the economy has always done better under Democrats than under Republicans. When will we ever learn from our own history?

Rrhain

Thank you for your submission to Science. Your paper was reviewed by a jury of seventh graders so that they could look for balance and to allow them to make up their own minds. We are sorry to say that they found your paper "bogus," specifically describing the section on the laboratory work "boring." We regret that we will be unable to publish your work at this time.

Minds are like parachutes. Just because you've lost yours doesn't mean you can use mine.

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