I want to know one concrete example (or better, an example of a consistent pattern) where the trickle down system has ACTUALLY worked. I keep reading about it in books and magazines and I keep hearing it coming from the mouths of businessmen and politicians. But never have I actually known it to work. Reagan, who was practically the poster boy for the trickle down system, might have seen unemployment levels fall during his terms, but the number of people below poverty level (especially minorities) increased all the way until 1992. Coolidge and Hoover, other advocates for the trickle down system...and well...history speaks for itself. Now I'm not saying that I'm absolutely right. I just want somebody to provide me with a clear argument for this system and why it works and how it's worked in the past.
Despite all the negatives you can attribute to it, it actually works very well. It's actions can be best seen on a smaller scale. If a new factory is built in a smallish town, employment immediately rises, sales at local stores increase and the overall economy of the immediate area will benefit. The standard of living will improve and usually results in continued expansion of employment in the area (more employees in the stores, more stores, support industries, and home building) as well as increased property values. All of this increases the tax base which will usually result in improved services for the population.
Light, what makes your example an example of trickle down? If there is nobody who can afford to buy the product they won't build the factory. I think the "trickle down" term is only relevant to goverment policy and has no meaning in private sector transactions. jhuang and whoever, Who pays the taxes and who gets the benefits? How do we know if our government is running a net trickle down or a net trickle up government policy? Even with government policy trickle down is a relative idea. We can't calculate the break even point between trickle down and trickle up government but we can usually tell whether a policy is more or less trickle down than an alternative policy. If we just talked about who pays the taxes we could figure out who is paying the highest proportion of their income in taxes. But should we be talking about proportion of income or proportion of disposable income? Lump Federal state and local together because government is government regardless of how they devide up their duties. Sales taxes are taxes. Auto registration fees are taxes. Is mandated Auto Insurance taxes? Mandated Auto insurance transfers wealth from the poor to the rich because if a poor man crashes his $500 dollar car into a $50,000 car his insurance must pay to replace the $50,000 car but if the rich man crashes into the $500 car his insurance pays to replace a $500 car. If there were only crappy cars driving around insurance would be much cheaper. Who do you credit with paying property tax, the rich landlord or the poor tenant? The landlord paid with money he got from the tenant. If their were no property taxes more people would want to be landlords and the supply of housing would increase and the tenant would get a cheaper rent. Who pays the social Security Payroll tax? The government says the employer pays half and the employee pays half but nobody would be richer or poorer if the employer paid the whole tax or if the employee paid the whole tax. We can't even figure out who is paying the taxes and that is the easy part of the trickle up trickle down equation. Figuring out who is getting the benefits is even harder. Who benefits from the war in Iraq and by how much? If police protect property ownership the are doing more for the wealthy because they have more property. If the poor steal more and steal mainly from their neighbors who are also poor then the police are mainly protecting the poor because they are mainly protecting the poor neighbors of the poor thieves. But government allowed the zoning laws that let the rich not have poor people living next door. But the rich could live in private gated communities that don't allow the poor in. It his hard to figure out who is getting more benefits from government. More restrictive American trade and immigration policy would probably benefit the poorer half of Americans but would hurt the wealthiest half of americans. No government means no trade policy so cutting off the acsess of the wealthy to cheaper labor would be a government transfer of wealth from rich to poor. Being rich means having the ability to consume more hours of labor than you produce. A rich man gets rich by trading one of his hours for many of somebody elses hours. The rich can do this because his tools (money/credit, natural resources, and tools) or his technique or his intuition are superior to other peoples tools, technique and intuition. Extra effort can help you improve your tools and techniques. Buying low and selling high will make the rich richer and the poor poorer because the rich never get forced to sell low or buy high if they use their intelligence but the poor are often forced to sell low and buy high because their lack of cash reserves at times of crises often don't let them pick and choose when or how to buy and sell. Everybody benefits from a competitive market place. The more people that have good tools and good techniques the more total production is possible. So although the rich think it is unfair if they are taxed at a higher percentage of ther income than the poor are doing so may help maximize production by increasing the ammount of tools and techniques available to be applied to hours of human labor towards production. What good is stuff / production except to keep people happy and healthy? This is another reason why taxing the rich at a higher rate than the poor might be a good thing. You can only use one toy at a time. A rich woman may have a clost full of shoes but she can only wear one pair at a time. On the other side if you keep the people poor we won't have to worry so much about pollution and overpopulation. The rich will hire many poor as sevants and pay them starvation wages. The poor won't buy anything and thus won't create pollution. You might want give the poor cooking fuel because otherwise they will burn trash and that is very polluting. If the poor are paid so poorly that they are malnurished then they will get sick and die and population growth won't be a problem. Keeping the majority of people poor and miserable and making them fight by wits and strenght to survive guarantees continued evolution which might be a good thing. Name the government that was neutral and exactly at the cut off point between trickle down and trickle up.
You're right. The trickle-down theory is about taxes and interest rates, not production. The premise is that the wealthiest people are the most productive, that's how they got to be wealthy. Therefore if you put more of the capital in their hands, it will result in the increased surplus illustrated in the previous example and everybody will be happy. The problem is that depending on the ambient economic conditions, the wealthy may not use the money they save on their taxes or earn on their investments to increase productivity. They may choose to put it into one of the equity or commodity markets that functions more like a blackjack table than a factory, in which case it will have a negligible effect on near-term productivity and on the prosperity of the poor and the middle class. But you're wrong about insurance. It is of greater relative benefit to the poor. The rich man can get drunk and wreck his $200,000 car (your figures are a little out of date, middle-class people drive $50,000 cars) and he can afford to replace it. Even if he only replaces it with a BMW he can still get to the office and his life isn't impacted very much. But if you get drunk and wreck his $200,000 car, and you don't have insurance, how many years do you think you'll spend living in a trailer park and eating beans while the marshall garnishes your wages to pay for that car? I work for an insurance company. Sure everybody has "uninsured motorist" protection so my company will replace the guy's Lamborghini if you don't. But we will take you to court and we will get a judgment against you and the authorities will take a crippling chunk out of your paycheck every week until you've bought somebody else a Lamborghini. And I'm sorry to say that I'll be relieved when that happens. Because if my company loses $200,000 enough times, I won't get a raise next year. That's my version of the trickle-down theory. Please Register or Log in to view the hidden image!
If you bring the uninsured into the equation you may be right. In California you must have insurance to register your car. No insurance, no little year sticker for your liscence plate. I am the only person that I ever heard bring up my idea that the poor subsidize the rich through insurance. Is my idea common or very rare? Forget about the unisured and think about how what I said applies to poorer people who have insurance and wealthier people who have insurance. If nobody drove without insurance wouldn't the transfer of wealth from poorer people to wealthier people via Auto insurance be true?
The trouble is that to get what they want, the rich don't HAVE to give much money to the poor. It takes a lot of consumer products sold to make wages for workers. A rich man can only eat so much food, use so much soap and shampoo, and need so much help even on a large estate. Any government handouts to the rich are a waste. People who earn wages spend most of the money they get and the rich people still recieve it because they sell almost everything that we spend it on. Reagan's "trickle down" was an excuse for subsidizing large corporations using billions of dollars in tax money. He brought in the worst economy that the U.S. had had since before WWII, and I suspect that more people owned their own homes during the Depression than after the 1980s. The job market never recovered. 550 billion dollars was stolen out of savings accounts during the Reagan era by his buddies.
An example of trickle-down economics in action is in developed countries like China and India. Investment by firms to run factories requires labor. Firms hire those who provide labor. Wages increase because of increased demand for labor.
IMO, overall, history has shown trickle-down theories, when applied to taxes as per the Regan-era politics in the US, have not provided the effects they predicted. The wealthy often did not re-invest, or distribute the money around. Often the lower-income workers saw a drop in average wages (or a flat level, in cases of minimum wage), because the profit that the company sees does not relate to the wages paid out. If a company makes $1.00 profit, and people are willing to show up for work at $5, then they will be paid $5/hr. If the company gets a tax break, and now profits are $1 million dollars, but workers are still willing to show up for work @ $5/hr, then they will not see a raise. Profit does not directly tie into employee income; it may drive more investment into new markets, which may provide new jobs. However, income on those jobs will again not be tied to profits; as long as there is an available unemployed workforce to pull from, income levels will not increase simply because they don't have to. Demand itself does not increase price for any good, if the supply is there. Scarcity drive up price and incomes, and trickle-down theory does nothing to help increase or decrease the scarcity of skilled and unskilled laborers. Poverty numbers from 1982-1990 (the two year over-lap from Carter to Bush SR. to allow for the std amount of time for a president's financial plans to take effect) show that trickle-down didn't have a great effect, and arguments of the long-term benefits ignore the inherent problem of the 1987 crash and subsequent recession. In fact, between 1960 and today, unemployment, poverty and violent crime numbers all saw their lowest values during Clinton's 1992-2000 (US census bureau). More than likely, these days, a trickle-down tax cut will result in the CEO of the above company seeing a $800k bonus, and the company either banking the difference as a cash reserve, or paying off back debt, which does not increase production - it pays off work already completed. In 1980, the difference between a CEO salary and the income of the average employee of a US company was 42%. Today, it's just shy of 450%. http://www.osjspm.org/101_wages.htm http://www.aflcio.org/corporatewatch/paywatch/pay/ Golden parachutes pay millions to people leaving a company in ruins, after having failed to even produce the stock price increases that drove their short-term visions for the companies they worked for. In one case, a CEO signed up, then quit the next day, taking his multi-million dollar payout with him. And these are the people who trickle-down theory thinks are going to responsibly push their tax savings back into the domestic marketplace.
Exactly river wind. And nifty, things are somewhat different between a young and growing economy and a mature one that naturally has slower growth rates. The differences are exacerbated by the ability of capital to slosh around the world at the speed of light.
The rich vs. the poor argument is so overplayed because in all honesty, wealth is a series of personal choices. I think the biggest hinderance to alot of poor people is the welfare system...Not just that, but this handout/welfare mentality that they don't need to work for anything as society owes them something. People owe them something. In many cases, a political party or specific group owes them something. I volunteered at a food shelter for around a year and primarily it was for Poor African Americans and you wouldn't believe the kind of attitudes these people had. Offering free food was no longer something of charity, but they deserved it. Same time each month, there would be a line of people to pick up there food stamps and welfare checks. Soon after to be spent on frivolous things or substances that bring temporary relief. If you read the book, Rich Dad Poor Dad, you will see many examples of how the poor live in a certain mental state vs. the rich. I still believe that in a lot of ways, it comes down to a persons choice. Yeah, bad shit can happen to you and you can make mistakes, but people choice to live and dwell there and not pull themselves out. Case in point- With some simple strategy of Buy low sell high and a marketplace and availability like ebay, we were able to see a person at the food shelter begin to create success for himself. I won't go in depth into this, but a lot of this is to be blamed on the education system right now. I don't mean dump more money into shitty textbooks. We need to rethink what we teach people in schools and maybe shift to aim at teaching people real life lessons...even though that should be the job of the parents, but where are the parents. Unfortunately, kids parents are TV sets. Wow, way off topic. Sorry.
Reaganomics , Thatcherism , Pinochetism etc . The trickle down system allows the privatisation of our wealth by handing control of our wealth over to the private concerns of the national reserve bank or in America the Federal reserve , our money for their exploitation . The freemarket system allows 99% of our nations wealth to be held by the top 1% of the population , and believe me as you already know we really get a trickle down effect . Poverty , mass unemployment , mass under employment , homelessness , declining social infrastructure etc . The trickle down system of economics is a system , simply put , that creates a welfare state for the wealthy , where we the underclass subsidize the ruling capitalist class . The trickle down system of economics was solely devised designed and finally implemented by corrupt politicians by spurious and deceptive means with the help of the compliant corporate media on an unwitting population . So yes this system does work for the 1% of the population it benefits .
Actually, name "trickle down" is misleading. What valuable thing can trickle down from Dick Cheney, for example? Maybe sh*t for fertilizer. What are money? Nothing, without people working for them. Therefore, the correct name is "trickle up". Sweat and work of billions people trickle up into few millions pockets. And as we know, money=power. Some of the working billions get juicy bone for participation in "trickle up" scheme. The rest get not so juicy bone + state terror + tonnes of brainwashing to convince them that it's the only sensible way for human societies to be. Sure, "trickle up" societies work for many hundreds years. The question is, should humanity allow such a repressive system to be. Why ruling elites always manage to trick working people to participate in the system working against their true interests?
Have you ever thought how stupid that sounds? So, provided the right choices, every unit in a hierarchical societies can climb on the top or stuck in the middle of pyramide? Who's going to be at the bottom, if everybody will make the right choices? Say that to billions of people living in Mexico, China, Brazil.... where welfare in nonexistent. Read freaking American history of pre welfare times. So society owes nothing to anybody, people owe nothing to anybody, then why do we need societies? Back to jungles, strongest will win. Sure thing, poor people should be made of steel, experience no desperation, depression, need for drugs, etc, etc. just run in a rat race hoping to outrun less lucky ones. USSR - individual qualities are less important than qualities of the system they live under. USA - qualities of the system are secondary to the qualities of people populating that system. As beaten as it sounds, there should be a reasonable compromise between those two extremes.
Add on. Yes, I do think that many people in USA could work more and use less welfare (for poor). Welfare for rich is an untouchable thing. However, let's be real. OK a poor person (really poor) can throw out food stamps and make some $ to buy some junk food, which will kill him sooner or later, poor person can leave subsidized housing/shelter and make enough to pay for a roach infested appartment. And that's it. Few lucky ones will achieve more if one will think in the terms of the capitalist "trickle up" system. Sure, there are many individual "successes", BUT .... the pyramide will be still a pyramide. Lots of poor folks who failed to jump from roach infested palaces to more decent future will get desperate.... and go back to shelter. The capitalist system relies on the pool of poor and desperate for 1) cheap labor and 2) as a scarecrow for more $ blessed, shut up, put up or you'll be there yourself.
The best management system is trial and error, survival of the fittest, competition. The reason this is true is because in any other system management will continue making the same mistakes over and over rather than admitting that management has made a mistake and taking the resulting blow to their egos. So, communism and multinational corporations without enough competitors will not be as efficient as small business because the top down leadership will not discover their mistakes. Small business's on the other hand don't get the benefits of scale. Crony capitalism/ feudalism / Baksheesh culture/ corruption / Mobutuism-Pinochetism is an anti-competitive form of economics. Corrupt power is used to interfere with free Market competition to benefit politically connected wealthy interests. This kind of criminality correlates more strongly with the impovirshment of nations than any other factor does. Buying low and selling high makes a man wealthy but ads nothing to the economy. If I earn a living by trading stocks sucessfully I take wealth from others and give it to myself but I create no wealth for the world. There is some value to the liquidity the speculator brings to the market but this value is minimal. The poor often are forced to buy high and sell low. This happens because they have no cushion for crisis, and also happens because they may be ignorant, and also because they don't benefit from opperating on a larger scale. Thus, without some sort of intervention there will be a tendency of the poor to get poorer and the wealthy to get wealthier. Reaganomics , Thatcherism, by not intervening to help the poor become productive competitors reduces total competition and productivity and therefore harms the economy. Communism, slavery, and corporations do not let workers keep the full value of their productivity and thus reduce the incentive to work hard and work smart. The more people that have access to better tools and techniques and incentive for production, the more production that will take place. The poor and their children should be helped to become full competitors. How to efficiently help the poor to compete is a difficult puzzle to solve. It would be wasteful to try to turn stones into creative hard workers and you must be carefull to not waste resources trying to educate the poor for jobs that don't exist or jobs which they will never be able to do; but anything that helps the poor to compete better, will help the economy. What is wealth for? It is for human health and happiness. A millionaire can not be helped as much by an additional $10,000 as a poor person will be. Therefore intervening in the economy to transfer wealth from rich to poor will improve total health and happiness even if it did not improve productivity. Reaganomics says that dangling more pontential wealth infront of the wealthy will make them work harder and create more; but isn't the same true for the middle class and the poor? Reaganomics was just a unconscious rationalization for a government policy of helping the kind of people who are friends and associates of successful potical and corporate leaders. As George Bush senior said in 1980 while running against Reagan, "Reaganomics is Voodoo economics". You can't separate supply side from demand side and even if you could the wealthy capitalist is only a small part of the supply side creators. People do the work; the wealthy capitalists simply organizes the people in exchange for be allowed to buy their labor low and sell their labor high.
Everyone will not make the right choices. Most people do the bare minimum to get by and so the lower rungs will aways be filled by them. They live in corrupt cesspools ruled by thieves. Their governments are the main thing holding them back, as evidenced by the success many immigrants experience when they come to the US. We live in societies for the mutual benefits of specialization. A higher standard of living can be enjoyed by all when everyone can do that which he does best and then trade with others for things he can't produce on his own.
Well, it's quite a convenient logic, borrowed from the Christian appologetic, I guess. On one hand to say, "system allows anyone to climb to the top provided the hard work, yadda, yadda, yadda...". On the other, "if one didn't climb to the top, one didn't make the right choices, didn't work hard, yadda, yadda, yadda...". It will not matter a bit, if society will become an olygarchy with a handfull of leeches on the top and hundreds of millions of slaves at the bottom, one successfully can apply this kind of a logic. It's very social Darvinistic approach to defend status quo, it's very old trick elites use. There is more or less reliable statistics on the employment and incomes that employment brings. Thus, one can more or less correctly predict the number of loser spots and guys who didn't try hard enough. The efforts on the part of an average statistical guy doesn't matter. But I think we are arguing about personal philosophies. Yours - the hierarchical system is good for the right people. If one will play his card right (get the right education, suck the right asses, socialize with the right people, backstab, be good at what one does (if it's a lucrative field, of course), etc. ), he can get his share of crumbles from elite's table or even join the elite ranks. Those who didn't make it are human garbage anyway, born to slave for those who did make it (or die without causing trouble). In two words, world is a jungle, life is a rat race, "resources" are for those who played the card "right" or who was born into the right family. The losers must accept that, slave diligently, be docile and die. That worldview certainly have the right to exist. One can argue against it only by using his favorite "philosophy", which is also subjective. So I will not try to claim I got it right, maybe world is meant to be a jungle. I just hope that humans will eventually come up with societies, which will maximize the positive life experiences (not only material stuff) for as many people as possible. Nope. USA is as corrupted as Brazil. It's just that corruption is allowed only for big Boys in the USA. Also, was 19th - early 20th century USA a corrupt cesspool ruled by thieves Please Register or Log in to view the hidden image!? Many immigrants experienced success $ wise, that's true. An immigrant experience automatic $ success in States by doing the same kind of jobs, because salaries are higher here (in dollar terms). Many immigrants experience $ failure. Lemme guess, it's because they didn't do something right, it's not because American government and economic system held them back? If so, then what about those Brazilians, for example, who made it in Brazil? Seems that living in a cesspool didn't hinder some Brazilians from living in the opulent gated communities. Thus, any system which allows for some of its units to get ahead is fundamentally just. It's just damn people who don't play card right and cause all troubles. QED. Be consistent in applying your views. Nice, but not true. There are tonnes of occupations specialization in which will not lead to comfortable existence. Higher standards of living for everyone does not play well enough with capitalism, which is built on expropriation of added value by the few. It's true that working/serving man in the West enjoys higher material standard of living. However, it's not because of specialization etc.. 150 years ago, American workers were as specialized as they are today.
It's not a trick. It's the truth. Sure no system is perfect. But I've worked all my life and have seen that most people are lazy trying to exert the bare minimum of effort possible without being fired. Other people work hard and have some pride in what they do. Guess who gets promoted? I am the son of a steel mill worker whose father came to this country with nothing. My family was taught the value of hard work and all of us are relatively successful. BS. Anyone who works hard can do well. Of course we're arguing philosophies. I believe in freedom. I believe in the capacity of men to provide for themselves so long as no one has a boot on their throat. Utterly absurd. Why are salaries higher? Is there something majic about being on the right side of the Rio Grande? Nice piece of Reductum Ad Absurdum, By that logic Nazi Germany was fundmentally just. I was speaking of the US, or any free nation. Spend your youth doing drugs and partying and you may find no one offering you a job as a brain surgeon or CEO. That's some of those bad choices I mentioned earlier. Completely ridiculous. Most people were farmers. Doctors were doctors, not otolaryngologists, orthopedists, cardiothorasic surgeons, ect. It is specialization that allows greater productivity which is the cause of the increased standard of living we've enjoyed these last hundred years or so. What is your prefered system? Are you a communist? Because this: sounds like Marx.
Let's suppose we have a good kid with below average intelligence, but plenty of energy and good health. Straight out of high school he takes two jobs. 40 hours a week at McDonalds, and a second 40 hours a week at Burger King. He stays at these jobs flipping burgers. Only if offerred a promotion will he stop flipping burgers. Being clearly not to bright, but also clearly responsible, how long must he flip burgers before getting promoted? How many years can he work 80 hours a week before his health and stamina reqire reducing hours to 60 hours a week. Will he do well?
