Do you believe in trickle down economics?

Question

http://news.yahoo.com/s/ap/20070829/ap_on_re_us/helmsley_s_pooch

Or trickled on?

Leona, the queen of mean shows the way.

Answer 1

If productivity goes up, and if the increased production is distributed in such a way that the poor get more, then it will work.

In general, productivity rises slowly with time (if there are no major shortages of physical resources), and so the first half of the statement has been true for much of recent history.

So the real question is whether the poor get any of that increased productivity. The answer depends upon a variety of factors, including whether the supply and demand of labor change to make labor more valuable.

As population increases and physical resources (oil, iron, etc.) decrease, labor will become relatively less valuable and physical resources will become relatively more valuable. The net result is that the poor are likely to become less well off.

This can be partly offset by increasing education/skills, doing a better job of "steering" people towards areas in which there is less of a labor shortage, etc.

Thus there is no simple answer.

In general, however, I do not believe that trickle-down economics is likely to help the poor very much. My personal belief is that trickle-down economics is largely a slogan designed to discourage the poor from trying to change the status quo.

Answer 2

There is no real reason why trickle down economics has to work: the rich could simply spend money on themselves.

Also, the idea behind trickle down economics is that it is supply side: that is why you are cutting taxes on the rich, to make them work more. But most people work a set number of hours anyway, and the super rich often work for other reasons than money. There was no increase in labor hours or work effort or productivity due to any tax cut that has been looked at.

You would think that some of the money would trickle down, but where does the money come from? Typically, Reagan and Bush borrowed the money to pay for tax cuts that mainly went to the Rich. But that means we have to pay back the borrowing with interest that could go for something else.

Answer 3

As Joseph Stiglitz, a Nobel prize-winning economist, recently noted in an op-ed on the mortgage backed security debacle, the Bush tax cuts didn't help our economy to pick up from the post tech bubble collapse. If trickle down really worked, then that would have been a positive test and result. Instead, the Federal Reserve had to lower interest rates to get the economy moving.

The greatest fallacy of trickle down economics is as a domestic policy. If you cut taxes on the holders of capital, there is no guarantee that they will invest here in the U.S. rather than China or India- as the recent past has indisputably proved.

Answer 4

As long as everyone's involvement is free and voluntary, trickle down works. It's when the government gets involved and regulates prices and taxes everyone that it falls apart.

Leona once said "only little people pay taxes". She was brutalized in the press over it, but the sad thing is, she was right. Well, mostly right. Rich people and businesses simply don't pay any taxes, never have, never will, she didn't make that so, it's just a law of the universe like Gravity. The reason is that they can pass those taxes along to someone else. REALLY little people don't pay them, either, since they get government subsidies to pay them with, leaving exactly what?

Only the middle class EVER pay taxes. That's why all tax cuts, even to the very very VERY rich, will always benefit the middle class.

So, yes, trickle down works. Point to Leona all you want to, but the fact is that she's proof, if you understand how taxes really work.

Answer 5

That's pretty sad, here it seemed this woman had it all, but clearly she was unhappy. Now instead of using this opportunity to repair what she screwed up in life, she carries on after death, may God have mercy on her soul. Money doesn't buy happiness, but her grand kids deserve to be treated better, and her dog has absolutely no use for it.

Answer 6

It hasn't worked well.