Summations Only

That's an interesting claim. I've seen it plenty of times...it seems to have sunk into the level of "common knowledge."Of course, so did the idea of "Welfare queens," which of course was a lie.So I wonder - is the government generally incompetent?People seem largely satisfied with Medicare, Medicaid, the interstate highway system, and the military. The only "incompetence" is really know about is that of funding - where some areas like the military receive far more than what I would ever allocate, and otehr programs utterly fail simply because their funding was crippled from the outset.I initially agreed, Percy, on such a reflexive level that I think I should re-examine that belief and see if it's actually a reflection of reality; it's never good to have a belief and not actually know what evidence it's based on. I've decided that I no longer have an opinion on the matter - I do not know if the government is competent or incompetent, and will have to form a new conclusion based on an examination of evidence.Do you have any specific examples where the government was more incompetent than the private sector at a specific task that was not a failure due to a lack of funding, but to real incompetence, inefficient management, or the like?

The problem, Percy, which you seem to completely ignore, is that spending does not increase linearly with increased wealth.A person making $30,000,000 does not spend a thousand times as much as a person making $30,000. Yes, he will spend more than a person making $30,000......but a thousand people making $30,000 each will actually spend more in aggregate than a single individual blessed with their total income.If economic activity is measured solely by the flow of money through spending (whether that spending is purchasing goods at the end of the production line or investing in a business at the top), allowing wealth to concentrate in individuals is objectively less beneficial than spreading the same wealth among a larger group of people.You have indeed said this many times, and frankly Percy......it simply reeks of "I've got mine, fuck you" mentality. You're clearly taking the position that taxation is a form of legal theft, whereby "the evil government" steals money from those good wealthy folk to give it to people who didn't earn it.You're being only slightly more subtle than "Atlas Shrugged" here. And if that's not actually the sort of position you see yourself in, perhaps you should try to re-examine your views.In any case, given that it is simple, plain fact that a person making $30,000 annually will always spend a higher percentage of his income than a person making $30,000,000 annually, encouraging investment by lowering relative tax rates for the incredibly wealthy is inefficient in comparison to lowering taxation for the poor and middle-class.There are far, far better ways to encourage investment from the top than by simply reducing relative tax rates such that Warren Buffet pays a lower percentage tax than his secretary. Lowered taxation isn't actually an incentive to do anything at all - it simply allows for those who already have an enormous pool of resources to have a yet larger pool of resources.If your goal was truly to encourage investment that trickles down, you wouldn't support a simple blanket tax reduction on the wealthy.Instead, you'd support things like a tax credit for opening a new business, or for hiring a new employee, or raising the minimum and median wage of your employees, or for providing new employee benefits - all of the things that trickle-down proponents say are the real goals of economic policy. This way the tax decrease is only available for those who actually do the things that trickle down to the rest.Yet curiously the proponents of "trickle-down economics" do not support these things. They support lower tax rates for the hyper-rich, the "job creators," on the basis that the lowered taxes will free up funds to create new jobs and fuel the economy...yet resist any and all attempts to actually tie the tax breaks to those actions such that those who choose to simply swim in their vault of gold should not receive the lowered rates as well.If a way to achieve a stated goal is readily and easily available, yet those who state that goal choose not to achieve it...then clearly their stated goal wasn't really their goal at all.The proponents of lower relative tax rates for the hyper-rich, then, do not actually intend for wealth to trickle down. They may think they do, but they do not; they are rationalizing. Their real position is "Fuck you, I've got mine, you can't have it, it's my money."They've written their conclusion, "...and therefore the rich should pay a lower percentage tax rate," before even starting to consider the problem. Afterwards, they've gone and tried to write clever arguments in support of that conclusion like "if the rich have more money, they'll spend more, and so the poor will get some of it too." But the simple fact is that whether trickle-down policies actually work at improving the lives of the poor and middle-class was not the deciding factor, or even considered.They're arguing from the wrong end. Trickle-down economics is not a conclusion stemming from evidence. It's a conclusion, supported by post-hoc rationalization to sell it to the majority so that they vote against their own best interest.Which is why, even though trickle-down policies do not work (as shown quite clearly even just in this thread) for improving the lives of the poor and the middle-class, the proponents of trickle-down policies will continue to champion their cause.After all, whether it works or not was never the deciding factor anyway.

I'd expect to see GDP increase at around the same rate as the top 5%, and the median and bottom 5% also increase around the same, but delayed, as they receive the improved wages and lower unemployment from the trickled-down investments of the wealthy. It should essentially look like the wealthy are pulling everyone else up after them.But that's not what we see. We see the wealthy leaving everyone else, especially the bottom 5%, completely behind as they receive vastly disproportional benefits that never actually get passed down to anyone else.

You're right about minimum wage, except that I would expect the minimum wage to be raised over time if the poor are actually to feel the benefits of trickling down. If the minimum wage remains stagnant and the minimum earners actually become worse off through inflation (as actually happens), then clearly trickle-down economics is not helping them one bit. With the GDP-per-capita, it's fairly close, yes.But not the median. Both GDP and the top 5% outpaced the middle class by far.Remember that we're looking at %change here. The median line should trail the top 5%, but the median point should merely be a year or five behind, not a 100%vs20% difference as seen in 2005. If trickle-down worked, we'd see (as an example) the wealthy hitting the 20% difference mark, and then 1-5 years later the median should also hit the 20% difference mark. Both classes would be prospering at the same relative amount, separated only by time for the policies to affect different income levels.Instead we see the wealthy hit the 40% change mark in 1990...and the middle class never reached that much of an income increase (as a percentage, remember; the guy making 10,000,000 is now making 14,000,000 in adjusted inflation dollars, so the guy making 50,000 should have been making 70,000 just a few years later if trickle-down was working).The rich got richer, a LOT richer. The middle class got a little richer and then plateaued (until 2008, when it started to fall again...). The poor got fucked, as usual.If this is trickle-down working, then it's clear that the real goal of the policy is not in fact to increase the prosperity of everyone as stated, but rather to simply make the rich richer and fuck everybody else.

Difficult to say. The dividends are universal, so they are given to the wealthy too...but on the pure basis that $x is a greater percentage gain for a median income than it is for an income in the top 5%, and the fact that lower income brackets actually spend a far larger percentage of their income, such a policy should be expected to benefit the poor and lower-middle-class significantly more than higher income brackets. I could see the argument being made.Honestly, though...I think that the simple observation that lower income brackets spend a far larger percentage of their income than the wealthier classes (including investment as "spending," and leaving aside debates on whether $x spent purchasing actual goods and services are identical in economic benefit to $x invested) conclusively sets the prior expectation that trickle-down policies are less efficient than policies which would give tax breaks or income increases to the lower classes.I have yet to see any evidence presented at all that challenges that expectation to a significant degree.

"Improvement to the economy" is rather vague. When you say it, I still have no real idea of what specific metrics you might be talking about; given an economy over time, I would not be able to tell whether you think that economy has "improved" or not.Do you mean lower unemployment? Increased GDP? Increased median income? Increased consumer spending? A higher stock market average? Something else? Some aggregate of all of the above? Can you weight each metric such that I can tell whether a .01% increase in employment is better, worse, or equivalent to a .01% increase in GDP?

I think "the economy" is as practically useless a term as "the world;" If someone says that either "the economy" or "the world" has improved in the past decade, I would have little idea of the basis for such a claim. The terms are simply too vague.And indeed, the vagueness of the term when used to justify various economic policies seems suspiciously convenient to me; under a given policy, it's entirely feasible that one segment of "the economy" could receive a boon, while another segment could be affected adversely. In fact, this seems to be almost universally the case with any policy that comes to my mind.When discussing "trickle-down" economic policy, we seem to be talking about an economic theory that predicts that relaxing taxation and/or regulation on the wealthy will eventually cause improvement for the non-wealthy...but this improvement is never quite specified. Will the minimum wage eventually be raised so that the very poorest working people will benefit? Will unemployment benefits be increased so that the jobless can benefit? Will the income of the average family increase, or will their unavoidable monthly expenditures like healthcare, housing, or other costs be reduced? Will employment in general rise?We're never actually quite told what to look for in the years after a prospective policy is enacted to confirm whether that policy is actually achieving its never-quite-stated goals. We can;t compare competing policies to see which would be the most effective, because there doesn;t seem to be any metrics we can ever use.In the media and on the political circuit, "the economy" seems to be tied almost exclusively to Wall Street, with token lip service given to employment when sufficient people become unemployed as to signal a crisis. Even unemployment is gauged on uncertain metrics - virtually the only number ever thrown around is the number of new unemployment insurance claims, which of course don't consider those who have run out of their unemployment benefits, or those who never applied for them in the first place (my fiance falls into the latter category).What economic segment, specifically, should see a benefit from trickle-down policies, and what should that benefit look like?The way it's sold, you would think that everyone is supposed to benefit at some point, by giving the "job creators" (such an offensive classification for the rich) a tax break. Yet I would wager that nobody on the street could tell you how they, themselves, have benefited from trickle-down economics over the last three decades, even if they think that trickle-down policies "work" somehow.I'm not an economist, and perhaps that's the real reason I don't know where to look to find metrics that would actually let me measure the results of specific policies.I do know that my wages, year after year, tend to go down in real numbers, as my healthcare and other costs continue to rise, and as my employer gives infrequent raises that never quite cover the cost of those same increases (that's right...my employer will give me a 3% raise, but then increase my share of my healthcare benefits by 5% of my total wage in a single year, and that's when I GET a raise...). I'm a lot closer to the "median" income than the "wealthy," and I can only imagine the pain felt by those for whom a $.10 increase in fuel costs constitutes more than their monthly disposable income.I also know that unemployment is still at crisis levels, and that some industries like new home construction have nearly collapsed...yet I don't know if this is a result of trickle-down policies, or a failure of trickle-down policies, or something else entirely...because I can't quite put my finger on what, precisely, trickle-down economic policies are supposed to cause other than allowing the wealthy to become yet more wealthy.If neither of us can actually, clearly state what the real goals of such policies are, nor provide real metrics by which those goals can be evaluated for success or failure or comparison to other alternative policies......how can we possibly know whether trickle-down economic policies actually work?I strongly suspect that even the strongest proponents of such policies and the politicians who actually enact them into law do not actually have a significantly more clear view than you or I do on the matter.And that suggests to me that the real goal of such policies has nothing to do with whether or not they will actually result in any measurable improvements for anyone else...but rather that the goal is simply to allow the wealthy to become more wealthy, and that's it, regardless of what other consequences may follow. And since the wealthy have a strong incentive to become more wealthy, and also have the means to lobby strongly toward that end...

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.

...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.

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:

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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.

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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.

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Just one example. 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. 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!

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 fact that it arbitrarily limits an economic theory to a single economic policy, that being specifically taxes, when the exact same reasoning is used for other, non-tax related economic policies.The arguments used when discussing deregulation of investment and other boons for the wealthiest classes are exactly identical to those used when discussing their taxes: benefit the top, and the benefit will trickle down to the rest of us. Cut taxes at the top and they'll hire more; deregulate investment and they'll invest more and that will create more jobs; etc.It looks like a duck, Percy. It sounds like a duck. It swims like a duck, it flies just like a duck.The only thing preventing you from recognizing that it's a duck is that there's a Wikipedia article telling you that we can only talk about one, specific duck rather than all of the ducks.The distinction is arbitrary and meaningless. Unless you can give a single, good reason why "trickle-down economics" discussions should not include economic policies other than pure tax policy?I wonder why it's not just called "trickle-down tax breaks?"I'm not redefining anything; Wikipedia just has a bad definition. That's hardly unusual, considering that anyone can just edit Wiki articles. Should I go ahead and just edit the article and give it a better definition? If I do that, would you accept that "trickle-down economics" is, as the name implies, a broad theory for developing economic policy, which includes but is not at all limited solely to tax policy?

Percy is John Galt...

...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?Imagine, for a moment, that a new Creationist poster suggested that "The biosphere is just too complex. There are many, many variables. Determining cause and effect is extremely difficult. I'm positive that Intelligent Design happens."How would we normally respond?You're simultaneously suggesting that we cannot know, and that you still know. Those two claims are mutually exclusive.So...is it possible to determine whether "trickle-down" happens and offers an effective strategy for improving the economy in general, and you know this? Or is the economy too complex, and you cannot say? You really can't have it both ways. All currently active policies should be considered. Just because a given law is old doesn't mean it isn't still having an effect. Laws against homicide are about as old as the governments that enforce them, and the effect of a murderer in prison is still caused in large part by those old laws. Tax policy, if still in effect, will have an effect on the economy, regardless of when that policy was specifically enacted.I don't know if specifically the Reagan tax cuts had a meaningful effect on the current crisis, you're manufacturing a nice specific strawman of my far more general position. I do know that the deregulation and neglectful oversight of the financial sector over the past several decades has had a cumulative effect on the current economy, generating artificial booms and staving off more natural market corrections (ie, smaller, more manageable recessions) until the collapse almost broke the financial back of the entire world.

Sure. This is fine in principle. If I have 10,000 invested , and a super-rich dude has 1,000,000, and we both make 10%, then I'll have 11,000, and the rich guy will have 1,100,000. I made just 1,000, and the rich guy made 100,000. That's fair.But what happens when I still just get 10%, but the rich guy gets a 60% return, from the very same investment?I still only made 1,000, and he made 600,000.That's what's happening in the real world - the super-wealthy aren;t jsut getting more because it takes money to make money. They're disproportionately making more money hand over fist off of the rest of us.If thigs were fair, a 20% increase in productivity would result in a 20$ increase in earnings, for the workers and all the way up to the top.Instead, after a 100% increase in productivity, the workers are getting something like a 20% return for their labor, while the wealthy are making more than a 100% increase! It's called the "income gap," and it's getting worse every year.When CEOs fail utterly at their jobs and drive businesses into bankruptcy, they get golden parachutes. When they need government bailouts to keep their doors open, the CEOs get bonuses for screwing up so badly they needed to beg the taxpayers for money.When you or I fail even a fraction of that severity, we just get fired. No bonuses. Hell, I don't get bonuses for saving my company hundreds of thousands or even millions of dollars. I'm lucky if I even get a raise.When you look at the productivity and the earnings graphs, you see that the rate of increase for all classes used to be fairly even. When productivity went up, earnings went up for everyone, and by a similar percentage.Looking at the graphs for the past few decades, something has changed. Productivity didn't change much, it continued to increase at a fairly steady rate. But income, rather than being tied at a steady percentage increase across income levels, started to skew wildly toward the wealthy. The middle-class mostly plateaued, showing some increase but not much, the poor actually lost money because nobody bothered to raise minimum wage despite the existence of inflation, and the wealthy shot so far beyond everyone else it's like suddenly the income of the wealthy was no longer based on anything even remotely attached to the factors that determine income for everyone else.There's no problem with the idea that money makes money, and more money makes more money. Whether you invest $10 or $100,000, you should both get the same rate of return, whether it's 1% or 50%.There's a huge problem when more money makes disproportionately more money. The guy who invested 1% shouldn't be getting a 1% return if the guy who invested $100,000 is getting a 60% return.