Does Trickle Down Work?

I have seen and commented on many posts over the years about the validity of the “trickle down” economic model. Not surprisingly, many people think it’s a sham designed to benefit the rich and patronize the middle class and poor. I can’t argue that what the Republican party has put forth as trickle down economics has worked. If it did work to some extent to create jobs during the Reagan years, it certainly won’t work to “bring jobs back to America”, as the current administration is trying to sell.

My argument against the trickle down deniers has often been “how does trickle up work?” This is often met with silence. Sometimes someone will venture to comment that there is no such thing as trickle up economics. I disagree. I agree it can’t work, however, the current tax plan being put forth by the GOP is exactly that. The plan is simple, take from the middle class, give to corporations and ultra rich individuals and hope against hope that the fat cats will do the right thing. Trickle up, or flood up…it’s INSANITY!!!!

The trickle-up effect or fountain effect is an economic theory used to describe the overall ability of middle class people to drive and support the economy. The theory was founded by John Maynard Keynes (1883–1946).It is sometimes referred as Keynesian economics in which economic growth is enhanced when the government lowers taxes on the middle class and increases government spending.

The trickle-up effect states that policies that benefit the middle class directly will boost the productivity of society as a whole, and thus those benefits will “trickle up” to the wealthy. On February 17, 2009, Obama signed into law the American Recovery and Reinvestment Act, a $787 billion economic stimulus package aimed at helping the economy recover from the deepening worldwide recession.

Did the stimulus save the American economy? Marxist economists like Paul Krugman of the NYT will say yes.They’re all full of shit. The stimulus created a minimum wage state where people need to work two or three jobs and put in 100’s of hours to stay alive, while providing those who contribute nothing to society the luxury of checking their food stamp status on an $800 smart phone. If that’s success, Krugman can have it.

WTF happened to fiscal conservatism? Republicans have been preaching about getting the deficit under control and limiting wasteful spending since Reagan left office…and never delivered. Now they are willing to completely blow up the deficit and in the process add trillions of dollars in debt in order to bring less than minimum wage jobs back from overseas that wouldn’t help anybody even if it were possible. The hard reality is that the GOP is still living in 1050. The manufacturing jobs they are so nostalgic about are being down by robots in America, and by slave labor overseas.

The term trickle-down originated as a joke by humorist Will Rogers and today is often used to criticize economic policies which favor the wealthy or privileged, while being framed as good for the average citizen. In recent history, it has been used by critics of supply-side economic policies, such as “Reaganomics”. David Stockman, who as Reagan’s budget director championed Reagan’s tax cuts at first, but then became critical of them, told journalist William Greider that the “supply-side economics” is the trickle-down idea:

It’s kind of hard to sell ‘trickle down,’ so the supply-side formula was the only way to get a tax policy that was really ‘trickle down.’ Supply-side is ‘trickle-down’ theory.

-David Stockman, The Atlantic-

The truth here is that we really don’t know how well “trickle down” economics works because we have never tried it. What we are being asked to buy into is reverse Robin Hood economics.

Supply-side economics is a macroeconomic theory that argues economic growth can be most effectively created by lowering taxes and decreasing regulation. According to supply-side economics, consumers will then benefit from a greater supply of goods and services at lower prices, and employment will increase.It was started by economist Robert Mundell during the Ronald Reagan administration.

Lest I be accused of bias for the Democratic Party here, there argument against “trickle down” is tax everyone, especially the rich and give the money to the poor and middle class. IDIOTIC! Has anyone ever seen what happens when you give something away? I’ll clue you in, you devalue it. You will NEVER lift people out of poverty with giveaways. You’ll encourage binge spending at best.

It’s important to notice here the limited thinking behind all the quick fix models that politicians offer in regard to economics focus on taxes. Prosperity and growth come from innovation and invention. The growth of the mid to late 90’s had NOTHING to do with taxes. It came from innovation and advances in technology that made the personal computer business and all the related businesses flourish.

The take away from this: In order for capitalism to work government needs to be keep an even policy towards business and individuals.We cannot legislate the poor into prosperity but we can create a business friendly environment WITHOUT taxing the middle and lower class to line the pockets of the rich. In order for “trickle down” to work there needs to be a method for accountability. The current model is ba=sed on hope and blind trust. IF the rich and corporations were to lose all the loopholes currently offered and given a simple dollar amount savings for every full time job created, we could at least have some way to measure if true trickle down economics works.



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