the trickle down and trickle up theories. do either work?

Question

do you think either theory works. if so, why? if not, why not, and what would be a better choice?

('work' as in benefit the economy more than other proposed ideas)

this isn't my homework, sorry if it sounds like that. i'm just wondering what people think about this.

i know what they mean. i want to know whether or not you think they help stimulate the econ

Answer 1

"Trickle down theory" used to be justified by the idea that high income people have a larger marginal propensity to save and invest, so they will invest their tax saving to increase the productivity of the economy which will benefit everyone. However over the last 30 years the fraction of income, and even more of the after tax income has gone to high income people and our savings rates have declined, and are now negative. Now the argument for lower taxes on high incomes revolve around that taxing them will decrease their incentive to work and innovate and investment is rarely mentioned. Many advocates of flat tax rates no longer even claim that it will trickle down, but just that progressive taxation is unfair to high income people.
Trickle up can be thought of as improving or investing in the human capital of the future labor force. In the US low income people have more children, and the educational attainment and health of children is correlated with household income. Over 1/3 of our children live in poor housholds (less than 2 x poverty level).

Answer 2

"Trickle down" is a phrase used by critics of market reforms. Economists themselves don't use the term. The idea is that economists think that the benefit to the whole economy - mainly the rich or non-poor - trickles down to the poor. Economists actually think that the poor can benefit from the market to the extent that they can contribute to it - and in practice there are many ways they can and are doing so. Their benefit is basically limited by the value of their contribution.

"Trickle up" is simply hilarious. Just try to imagine it!

Answer 3

trickle down....basically = tax cuts for the upper class...the wealthiest 9% of the population will control more than half of the economy and the middle/lower classes will be dependant on their generosity (or willingness to invest)...while middle/lower classes, who are essentially the consumers, use their unrealized buying power to filter out low quality or overpriced products and companies...since the consumer group represents more than half of the population we should give them the POWER to trickle as they please...because 1-they balance market prices and 2-they complain and maintain quality in goods......