Summations Only

I don't think that anyone argues that rich people don't spend money in the local economy. The question is whether giving them more money means more spending in the local economy compared to giving more to the poor or, say, spending it on infrastructure projects.Would giving $100,000 to Bill Gates result in more economic stimulus than giving $100 each to 1000 poor families ? Is maintaining or building transport routes - which can give long term benefits to businesses that use them - in addition to the money going to the construction firms and their workers, obviously worse than cutting taxes for the rich?It doesn't seem obvious that trickle-down is even plausible, let alone definitely a good idea.

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The right question to ask is if Bill Gates has $100,000, who should decide what he does with that money?

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No, it is not because that question has nothing to do with whether trickle-down works.

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You said, "I don't think that anyone argues that rich people don't spend money in the local economy," so we agree that trickle down happens. The question I think you're raising is who can best decide how to dispose of the money of the rich, the rich themselves or the government through tax and spend programs.

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Absolutely not. The question is whether the best way to help the economy is to give money to the rich - the claim of trickle-down economics - or something else. I argue that giving money to the poor or spending it on useful infrastructure are plausibly better. The morality of taxation is a complete irrelevance. So, no, I asked the questions that I meant to ask which are concerned with the alleged practical benefits of trickle-down.

I think that Percy is arguing that the rises and falls happen at the same time, although they are far less pronounced in the median income. That includes the dip just after 2000 which is not present in the GDP curve. However, this could easily be due to common causative factors, without trickle-down playing any role at all.I would be cautious of drawing too much from this graph, however, the fact that the income of the top 5% closely tracks median income up to just after 1980, but soars ahead after that date - while median income seems to show about the same level of growth as before -argues against any significant benefit from trickle-down on median income.

One thing I see in the graph which I don't think you've addressed is the change in about 1981.From 1971-1981 the top 5% income tracks the median income quite well. From 1981 on, the top 5% income grows at a faster rate than the median income - which seems to grow at much the same rate as before. If trickle-down actually worked to increase median income, shouldn't we at least see median income growing at a noticably faster rate than before ?Per-capita GDP doesn't seem to see much benefit either. So trickle-down doesn't seem to help that. Do you have any evidence that trickle-down economics actually works?

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No, because the median is the value at the middle of the range. If the incomes at the top 5% increased while everyone else's remained the same, the median would increase because of growth at the top end. But that wouldn't be an example of a rising tide lifting all boats, but merely a statistical artifact of the increase in range of incomes.

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That's not right, Crash. A rise in just the top 5% incomes wouldn't raise the median at all. It's the reason for choosing the median rather than the mean (which would show exactly the effect you give, although not for that exact reason).The median is the 50% point - half of the population have that income or lower. It only changes upwards if people move from being at or below that point to above.Edited by PaulK, : No reason given.