What Is Wrong with "Trickle Down Economics"?

Discussion in 'Miscellaneous' started by Knight Templar, Sep 11, 2012.

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  1. Knight Templar

    Knight Templar Commodore

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    A criticism often leveled at the Republicans in particular and conservatives in general is that they believe in "trickle down economics".

    The general idea being that the GOP supports cutting taxes for the wealthy mainly and hoping the benefits they received will "trickle down" to the people below them as the wealthy spend money and/or invest in new job creating opportunities.

    It seems to be widely denigrated because to many it seems unfair. Why should a few wealthy people get to pay less in taxes while the rank in file only get benefits second hand?

    But isn't this the way it should be? If some middle class person gets a $1,000 tax cut, are they really likely to invest it in some new technology or in starting a new business? I would say that chances are they'll use the money to retire some debt or by some creature comforts.

    On the other hand, a wealthy person who gets a $500,000 tax break I woiuld say is far, far more likely to actually put the increased money to good use.
     
  2. Robert Maxwell

    Robert Maxwell memelord Premium Member

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    That nothing "trickles down" except piss.
     
  3. auntiehill

    auntiehill The Blooness Premium Member

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  4. RoJoHen

    RoJoHen Awesome Admiral

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    A wealthy person is just as likely to squander his money on creature comforts as a middle class person. Extra money is extra money, and different people will use it for different things.
     
  5. Marc

    Marc Fleet Admiral Premium Member

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    maybe a better question - "what's right with trickle down economics"

    after all proving what's wrong is easier than shooting fish in a barrel with a gattling canon.
     
  6. PKTrekGirl

    PKTrekGirl Arrogant Niner Thug Admiral

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    What's wrong with 'trickle down economics'?

    In a word: GREED.
     
  7. 1001001

    1001001 Very Stable Genius Moderator

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    Yeah, what this country needs to do is divert resources to the very wealthy, and then hope they will pass along a few crumbs to us at some point in the future.

    Sounds reasonable.

    :techman:
     
  8. cooleddie74

    cooleddie74 Fleet Admiral Admiral

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    It doesn't really work and the wealth gap just keeps getting wider the longer it's implemented. The rich get richer at an immensely faster rate than the middle class, and the poor show mediocre income growth at the very best. And adjusted for inflation as time passes the poor get poorer because their wealth hasn't kept up with the upper and middle classes and their purchasing power plummets.

    Giving most of the tax breaks to the wealthiest in our society just results in the rich getting richer and more powerful and the middle and working classes and the poor getting left farther and farther behind in the race for prosperity.

    How is this news after more than thirty years?
     
  9. cooleddie74

    cooleddie74 Fleet Admiral Admiral

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    [yt]http://www.youtube.com/watch?v=SGXTTCfn3-o&feature=related[/yt]
     
  10. Gotham Central

    Gotham Central Vice Admiral Admiral

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    Trickle down does not work because its based on a flawed assumption. There is no such thing as "job creators." NO ONE creates jobs out of thin air. Jobs are created as a result of business creation/growth which happens as a means of addressing a demand within the market. The reason that "job creation" has been stagnant recently is because demand has been flat or in decline. Consumer spending is the engine that drives the American economy. If ordinary folks are not spending money then there is no demand for the so called "job creators" to meet...thus no jobs get created. Giving more money to rich people is fundamentally a dead end. Rich people have diminishing utility for every additional dollar they receive. Simply put they can only spend so much before it becomes useless. Never mind that most rich people have more than enough money to meet their consumer spending needs. Giving them an extra dollar or tousands of dollars won't make a difference since they can't consume anymore. The result is that they horde money wihch does nothing for the economy. Plus, numerically there are not enough rich people to fill the consumption void necessary to drive demand since they have most of their demands met regardless of economic conditions.

    Giving poor and middle class folks money is the fastest way to drive the economy. A good example of this was "Cash for Clunkers." Just giving ordinary folks money to buy new cars was a HUGE boost the the auto industry. Hell even the Bush administration recognized that giving tax rebates to ordinary Americans (even if their ultimate tax burden ended up being zero) would temporarily boost consumption.
     
  11. Brolan

    Brolan Commodore Commodore

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    Excellent statement of the facts. In addition when employers take away pay raises, benefits, and retirement plans the middle class has less money to create the demand that results in more jobs. Sending jobs overseas doesn't help either. The wealthy are actually destroying the economy they hope to use to enrich themselves further.
     
  12. cooleddie74

    cooleddie74 Fleet Admiral Admiral

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    When George W. Bush fully understands and embraces what the current Republican ticket and party leaders don't(or won't) that ought to give you a peek into the Salvador Dali-esque hallucinatory dreamworld that the right currently wallows in.
     
  13. Showdown

    Showdown Fleet Captain Fleet Captain

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    I don't think Trickle Down Economics is bad. It is not perfect, but I doubt any economic system is.

    The goal of TDE is to expand the economy by growing businesses with free markets, lower taxes, and more investments. It is not just about lowering taxes for the rich. It also lower taxes for everyone else. The higher income earners usually get a bigger tax cut because they generally paid more taxes. I read somewhere (forgot where, sorry) that most the growing wage gap is cause by globalization and advance technology, and not TDE.

    Another one economic system is, what I like to call, Ripple Out Economics. It is where the government tries to grow the economy with government projects and social programs. Sometimes these are paid for by raising taxes. For example, tax money is spent in a road project. The cash spreads to the workers through wages. Then, it ripples out to stores where they buy goods.

    It seems more Democrats support ROE because they support government over greedy corporations who want to increase their wealth, and Republicans support TDE because they support corporations over power hungry government agencies that want to gain more control.

    Speaking of economics, I like this video about two guys rapping about it.

    http://www.youtube.com/watch?v=d0nERTFo-Sk
     
  14. nightwind1

    nightwind1 Commodore Commodore

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    HAHAHAHAHAHAHAH!!!!!!!HAHAHAHAHAHA!!!!!!!

    Are you even listening to your self when you write that?

    If a wealthy person gets a $500,000 tax break THEY'RE GOING TO SOCK IT AWAY IN A BANK IN THE CAYMAN ISLANDS!

    And a "poor" person using $1000 to retire debt or buy creature comforts STRENGTHENS THE ECONOMY!!

    Because, it's putting the money back into the economy, NOT INTO A BANK ACCOUNT IN THE CAYMANS!!

    Trickle-down merely means the have-nots get trickled on by the haves. It's been that way since before Saint Ronnie.
     
  15. Knight Templar

    Knight Templar Commodore

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    I think people that know how to make money are going to use extra money they get to make more money.

    Not "sock it away".
     
  16. Locutus of Bored

    Locutus of Bored This is the Way Moderator

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    Let's call it what it actually is: "Let's ignore history and human nature economics."

    Trickle-Down Economics has been tried before, multiple times, and all it does is help the wealthy become wealthier (with no appreciable benefit to the middle class and poor) and builds up massive budget deficits --but again without the benefits of creating or saving jobs and preventing economic downturns like a stimulus that goes toward state/local government and business does.

    The very wealthy convert their extra earnings into capital gains which are taxed at a lower rate, or they move their money offshore. They save it and use it to acquire even greater wealth instead of reinvesting it in areas beneficial to the economy and lower income people.
     
  17. Peacemaker

    Peacemaker Vice Admiral Admiral

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  18. Gov Kodos

    Gov Kodos Admiral Admiral

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    And shit with it, like the trickle down theory...
     
  19. cooleddie74

    cooleddie74 Fleet Admiral Admiral

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    Even Alan Greenspan once admitted during a Senate Finance Committee hearing that Reaganomics and trickle down didn't quite work the way many hoped and that a combination of spending cuts and marginal tax increases would be the only way to effectively tackle the nation's swelling deficit problem.

    If one of the most famous of all Reagan Administration appointees as well as one of the most powerful and influential men on the planet between 1987 and 2006 admitted that in front of television cameras and members of the United States Senate then forgive me if I don't think that KT has an ironclad grasp on the theory.
     
  20. Gotham Central

    Gotham Central Vice Admiral Admiral

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    No the Democrats support what you call ROE...or what everyone else calls Keynesian economics...because ITS WHAT WORKS and it WORKS EVERY TIME! Think WWII...it was a massive government spending and jobs program.

    Again...consumer spending IS THE ENGINE THAT DRIVES THE US ECONOMY! Taxing the rich and then either creating government jobs via public works or using transfer payments has the net result of actually taking money that would be sitting in bank accounts an giving it to consumers to spend. In essence...its government putting fuel in the engine.

    Tax cuts go no where and do nothing. Its ironic that one of the GOP's talking points is that almost half of Americans don't pay income taxes (ignoring the fact that they don't make enough in real dollars to be worth taxing). But even assuming that's true...it means that tax cuts have minimal economic impact since the people that the economy needs consuming are not impacted by the cuts.

    The reason why Bush's tax rebates actually spurred economic activity was because people got rebate checks even if they ultimately paid no income taxes. So even if a person's income was so low that they got all of the taxes that they paid to the IRS back, they STILL got a rebate check. For some people that was an extra $1200 dollars on top of their income. In effect Bush's tax rebate was a massive transfer payment to working Americans. You know what, businesses started reacting to the very idea that people would suddenly have an extra $600-$1200 dollars to spend. You started seeing ads telling people what they could spend it on.

    Its a simple equation folks...find a way to move money from the richest 10-20% of the population and give it to the bottom 50% and the economy will BOOM!. The top 20% of the population controls something like 80% of the wealth. That is massively dysfunctional.

    The other solution is to leave everything as it is and then approve across the board debt cancellation for everyone in the bottom 60%. Freed of crushing debt burdens lower and middle class Americans will both save and consume like there is no tomorrow.
     
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