What Is Wrong with "Trickle Down Economics"?

[gturner]

Well Karl Marx was not funny, and what he did to the Modern World wasn't funny either, it was his economic theories that resulted in nuclear missiles being pointed at the United States, and for that I cannot forgive him!

You on the other hand definitely are funny.
By the way, who is responsible for nuclear missiles being pointed at the Soviet Union? Max Weber, Adam Smith? Or do we have to go further back and blame George Washington himself?

There is a huge difference between a capitalist H-bomb warhead and a communist one, or there was until we started talking about our designs during the Clinton administration, which the Russians probably copied. However, that would just mean that they switched to capitalist warhead designs shortly after they switched to capitalism. The A-bomb wareheads were, for a while, probably the same, but that's because communists don't respect intellectual property rights.

A capitalist warhead starts by firing a set of primers to set off a chemical explosive, which is like the initial investment, or seed money. That sets off the implosion of the core, freeing a vast amount of energy, which is then leveraged into even more energy by using secondary effects to trigger a huge boom. It operates just like the stock market and fractional reserve banking. A communist warhead was based on Sakarov's idea of squeezing layers of strata until a revolution occured. The capitalist system was much more efficient, yielding much lighter warheads for the same yield.

Having been murdered, raped or crippled by agent orange they did indeed pay a price.

I've heard lots of crazy claims about agent orange, but I've never heard anyone claim it was raping people.

It's also pretty darn harmless, except to plants. American civilians were exposed to far, far more of it than Vietnamese because we were spraying the heck out of the US, but more importantly because dioxin (the worrisome part of agent orange) is emitted by engines burning leaded gasoline, and from the combustion of plastic. Vietnam was about the last country to quit using leaded gas and burning plastic garbage.

Agent Orange was the result of not having an agreement by the North Vietnamese not to make use of vegetation to hide themselves when they ambushed American soldiers.

I'm pretty sure there's never been any agreement like that in the history of human warfare. The side effect of agent orange was a massive increase in Vietnamese rice production, because carving farmland out of the jungle, by hand, with axes and saws, is slow and difficult. Even after we left, many of the gains in the rice yield remained because that land remained under cultivation.

As for the native South Vietnamese, they could have done more of the fighting and complained less about how US troops were fighting for them.

To do that, the villagers would've needed modern guns. For a long while our military incorrectly viewed them as a part of the landscape, sort of the human terrain where the war was being fought, instead of the people who should've been armed to the teeth. It's kind of hard for villagers to defend their village against squads of people armed with SKSs, AK-47's, and RPG's when all they've got is a few WW-II era bolt action rifles, if that. Once we corrected that by giving the villagers modern rifles, the Viet Cong problem pretty much evaporated. Thus the North had to switch to columns of Soviet tanks.

 

[datagal]

Have you never heard of the Bonzai attacks

Is that when they throw carefully-pruned little trees at US battleships?

 

[gturner]

They're not "carefully pruned little trees" (whitewashing the horror of those attacks), they're shrubbery!

 

[Marc]

Basic economics tells you that a government should never prevent the bankruptcy of a company but it becomes more complex when they are network effects aka externalities. In this instance these are the long production chains, the fact that there isn't merely GM but an entire sub-industry which produces car parts and delivers them to car companies like GM.

The Australian experince is for every 1 direct car manufacturing job that goes, there can be upto 10 indirect and I doubt the U.S & Canada would be much different.

of if GM and Chrylser had collapsed completely millions could have wind up unemployed.

Oh and in case some-one wants to try and claim Ford didn't need a bailout - it had already had one a few years earlier but was able to get funding through the markets. GM and Chrysler couldnt' get the funding because there was limited credit available due to the GFC.

 

[StarCruiser]

I'm very late to this discussion - I know, but here's the basic issue:

"Trickle-Down Economics" shares the same fundamental mistake with Communism (different angle, but same false assumption):

People will do what is right for the whole (aka. Enlightened Self-Interest, in Capitalist terms).

Truth is, most people won't do the right thing. They'll do what they want to do, what they feel like doing.

Wealth = power and power = wealth. Power and wealth both tend to corrupt, even the best people are vulnerable to that corruption.

The secondary problem is that some will do "what is right" but, their version of "right" doesn't actually help that much.

Look at Bill Gates, insanely wealthy, and by all accounts doing some seriously good works with some of that wealth - but... He's no longer forming new companies and therefore, producing very few new jobs.

Per the concept of Trickle-down Economics, he should be forming businesses, or expanding existing ones with that wealth - therefore creating good jobs for the average person to earn a decent living and driving the economy.

The problem under the Communist system is thus: the power gained by the party (and therefore it's members) corrupts them and results in mass misery for the majority of the people. If all people were completely free from corruption - including the party bosses - the Communist system would, in theory, work very well and should be quite fair but...reality sucks...

 

[Nerys Myk]

Not the way I see it operating now. Maybe the Media operated differently back then, I was a child so I can't say much differently, but now I see the media look the other way in a big way when it comes to Obama and the Democrats, perhaps the Media was more balanced in the 1970s than it is now. Obama's been doing a lot more than what Nixon almost got impeached for.

Then perhaps you should get someone to investigate. FOX News would probably love to get hold of this information you have about the President's illegal activities. From what I hear they are a very popular media outlet and do not seem to be a fan of the President. Surely the most watched and trusted news source in the nation could break this story.

You mean like not enforcing laws he doesn't like and going around congress with EPA regulations when Congress doesn't pass environmental laws that he asks for?

Well, have you given this information to FOX news and the authorities so they can investigate and prosecute the President?

 

[Misfit Toy]

They're not "carefully pruned little trees" (whitewashing the horror of those attacks), they're shrubbery!

Ni!

 

[sojourner]

Agent Orange was the result of not having an agreement by the North Vietnamese not to make use of vegetation to hide themselves when they ambushed American soldiers.

This is the funniest thing I've read on this board all year.

 

[iguana_tonante]

It would be hilarious if it wasn't so sad.

 

[gturner]

Agent Orange was the result of not having an agreement by the North Vietnamese not to make use of vegetation to hide themselves when they ambushed American soldiers.

This is the funniest thing I've read on this board all year.

But it works on so many levels.

"Sergeant, why are all those enemy soldiers standing motionless in the rice paddies along our line of march?"

"It's an ambush, lieutanant. Under the agreement MACV and the State Department signed with Hanoi, we have to pretend not to see it."

"Oh, then let's march on, sergeant."

"Yes sir."

****

By the way, the agent orange defoliation was to keep the enemy from concealing and moving large bodies of troops, along with their supplies. We couldn't see under the jungle canopies. The problem wasn't ambushes, it was finding the enemy so we could hit them, and shutting down their supply routes. Ambushes work even better in a dead forest because the ambushers can be scattered in much more depth still have a good line of sight on the targets. And, of course, horizontal trees make much better cover than vertical trees, which is why armies madly chop down trees so they have lots of logs as cover when they dig in.

Of course, going to a DMZ strategy would've made the defoliation unnessessary, as there wouldn't have been large North Vietnamese Army units strolling south through the jungle.

 

[Squiggy]

This is the stupidest fucking thread in the history of textiles.

 

[nightwind1]

They're not "carefully pruned little trees" (whitewashing the horror of those attacks), they're shrubbery!

Ni! Ni! Ni!

 

[gturner]

Anyway, to get this thread back on track, we used trickle-down economics for over a century (because prior to the income tax amendment, income wasn't directly taxed), had about the same growth rates, and less gap between rich and poor.

 

[horatio83]

Bullshit, income inequality has been low from 1940-1980, i.e. precisely when tax rates have been high, when the welfare state has been pronounced, when corporate power was limited. After the Reaganite revolution it began to rise.

 

[gturner]

^ Gee, to refute the suggestion that income inequality was less prior to the income tax, you produce a chart that doesn't show anything prior to the income tax.

Also, income is not wealth. Rich people have scads of ways to increase their wealth that don't show up as official income, which they use when tax rates are high.

But back to what little your chart can show us:

In 1980 the real GDP in 2005 dollars was $5.839 trillion, of which $2.04 trillion (35%) was in the top 10%, and $3.80 trillion was in the bottom 90%. In 2010 the GDP was $13.088 trillion, of which $6.28 trillion was in the top 10%, and $6.8 trillion was in the bottom 90%. So the bottom 90% increased in wealth by 333% over 30 years.

If you go back 30 years more, to 1950, the US GDP (in 2005) dollars was $2.00 trillion, of which $0.68 trillion was in the top 10%, and $1.32 was in the bottom 90%. The bottom 90% increased in wealth only 288% over 30 years, instead of the 333% they gained under the tricke-down system. 288% is even less than 300% growth you'd get looking at 1800 to 1830 - before their was an income tax.

Part of the idea of trickle-down economics is that higher growth rates benefit everybody, and a slight increase in growth rate can dominate everything else.

Part of the beauty of not having an income tax is that the tax is like handing a bag of hammers to a room full of toddlers. All they're going to do is get mad and smash each others fingers, and "leadership" amounts to telling them whose fingers to smash next.

 

[horatio83]

People care as much about pre-taxation income inequality as about pre-taxation income. Nada.
About capital income tax evasion, it is today far higher than back in the sixties. Lack of enforcement and international tax havens, not high tax rates are the reason for these major crimes.

Growth rates have nothing to do with trickle-down economics. Gee, do we really have to get back to basic definitions while being on page 21? Trickle-down economics is a right-wing propaganda idea which falsely suggests that any income increase at the top of the ladder will automatically make everybody else benefit from it.

The 90% experienced faster wage growth under social democracy than under anarcho-capitalism. An increase from 3.8 to 6.8 is not an increase of 333%, it is not even an increase of 100%. And an increase from 1.32 to 3.8 (roughly tripling) is larger than an increase from 3.8 to 6.8. (less than doubling)
You might wanna stop embarrassing yourself. Or you might wanna go on and illustrate that being bad with numbers and being prone to right-wing economic propaganda go hand in hand.

 

[gturner]

People care as much about pre-taxation income inequality as about pre-taxation income. Nada.
About capital income tax evasion, it is today far higher than back in the sixties. Lack of enforcement and international tax havens, not high tax rates are the reason for these major crimes.

Yeah, and people rob banks for the free lolipops.

Growth rates have nothing to do with trickle-down economics. Gee, do we really have to get back to basic definitions while being on page 21? Trickle-down economics is a right-wing propaganda idea which falsely suggests that any income increase at the top of the ladder will automatically make everybody else benefit from it.

Which, strangely enough, it does because you're adding wealth into a fixed population, kind of like Oprah moving to a small African country. There's no way her money isn't going to go zipping through their economy.

By your logic, if an increase in income at some point on the ladder (why is $20 in a wealthy person's wallet somehow magically different from any other $20?) doesn't tend to provide benefits for everyone else, then a decrease in wealth shouldn't cause any harm, either. The current recession primarily hit the upper-income brackets, and gee, we got massive unemployment, budget deficits, municipal bankruptcies, and a massive decrease in the wealth held by average families.

If we undid all that, going backwards in time, it would look exactly like we'd fixed it by giving a bunch of money to wealthy people.

The 90% experienced faster wage growth under social democracy than under anarcho-capitalism.

I would think so, since no Americans have ever tried living under anarcho-capitalism, so the non-existent anarcho-capitlist wages really couldn't grow.

An increase from 3.8 to 6.8 is not an increase of 333%, it is not even an increase of 100%. And an increase from 1.32 to 3.8 (roughly tripling) is larger than an increase from 3.8 to 6.8. (less than doubling)

You might wanna stop embarrassing yourself. Or you might wanna go on and illustrate that being bad with numbers and being prone to right-wing economic propaganda go hand in hand.

Oops. That means not even moderate income tax rates we bitch about today were outcompeting the 1800's when we didn't have an income tax.

 

[Peacemaker]

why is $20 in a wealthy person's wallet somehow magically different from any other $20?

Well, just off the top of my head, and, granted, I'm just a mere plebeian, not a sophisticated economist writing in journals living in Kentucky like yourself, I can think of at least two:

1. The wealthy person can shelter that $20 elsewhere in a manner the poor person can't.

2. The wealthy person doesn't value that $20 the way the poor person does.

Care to ask for any more obvious answers that sabotage your Santa Claus beliefs?

 

[Trekker4747]

A poor person can take that $20 and feed his whole family on it if he spends it right.

A rich person can drop that $20 and actually lose money if he stops to pick it up because his time is that valuable.

Yes in reality the "buying power" of the money is the same for both people but the poor person needs that $20 a hell of a lot more. If it's the only $20 he has it'll feed him for a couple days.

A rich person can lose $20 and not even miss it because he's got 100 million more of them in various accounts available to him.

 

[gturner]

Which is exactly why rich people wandering around dropping $20's makes everyone better off!

A poor person needs a $20 more than a rich person, but an African needs a $1. They'd have more ones if there were more people wandering around with $20's, and there'd be more people wandering around with $20's if there were people like Oprah spending stupid amounts of money on local crafts.

Or look at the stock market crash of '29. Almost all the money was lost by rich people. Were the poor better off because of the stock market crash, or did they end up standing in soup lines? If you played the crash in reverse, would they have been better off when all those rich people got enormous increases in their stock values, going from the end of '29 back to '28, with the poor backing from the Great Depression into the roaring twenties?