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Member (Idle past 93 days) Posts: 10333 From: London England Joined: |
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Author | Topic: Trickle Down Economics - Does It Work? | |||||||||||||||||||||||||||||||||||||||||||
Straggler Member (Idle past 93 days) Posts: 10333 From: London England Joined: |
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 (Idle past 93 days) Posts: 10333 From: London England Joined: |
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 |
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.
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crashfrog Member (Idle past 1494 days) Posts: 19762 From: Silver Spring, MD Joined: |
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.
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RAZD Member (Idle past 1432 days) Posts: 20714 From: the other end of the sidewalk Joined:
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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. Enjoyby 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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Percy Member Posts: 22499 From: New Hampshire Joined: Member Rating: 4.9 |
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
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crashfrog Member (Idle past 1494 days) Posts: 19762 From: Silver Spring, MD Joined:
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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.
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RAZD Member (Idle past 1432 days) Posts: 20714 From: the other end of the sidewalk Joined:
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Hi everyone
Why Rich People Don't Deserve Their Wealth. (That's Right, I Said It.) - Upworthy
quote: Speaks volumes. Enjoyby 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 829 days) Posts: 3193 Joined:
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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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Percy Member Posts: 22499 From: New Hampshire Joined: Member Rating: 4.9 |
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: 22499 From: New Hampshire Joined: Member Rating: 4.9 |
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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Percy Member Posts: 22499 From: New Hampshire Joined: Member Rating: 4.9 |
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 829 days) Posts: 3193 Joined: |
"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
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Rrhain Member Posts: 6351 From: San Diego, CA, USA Joined: |
Percy writes:
quote: 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: 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: No, they didn't. Because Glass-Steagall hasn't been re-enacted, the derivatives market is back on.
quote: 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.
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Rrhain Member Posts: 6351 From: San Diego, CA, USA Joined:
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Percy writes:
quote: 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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