The problem with "Trickle Down Economics"

[imagep]

Liberal? You've missed my point entirely.

Inheritance is not a confiscation of anything but a deliberate passing of that thing to the elected recipient. The person who receives does so as a he would receive any gift and the act of giving the gift creates the right for the receiver.

Are you being serious with that comment or just obtuse?

Just "being obtuse" about calling you liberal.

Inheritance should be taxed exactly like income, because to the person who recieves it, it is income - it's wealth he didn't have and recieves. Earned income and unearned or passive investment income should all be taxed identically. If we taxed inheritance the same as earned income, our income tax rate could be lower and the government could have the same revenue amount that we do now. I'm all about lower taxes.

 

[imagep]

Let more jobs be exported. I'm glad that we have low-cost labor for low-productivity production. That gives us more disposable income to increase our quality of life. Of course, minimum wage is destroying the opportunity for young people to earn wages and get a huge return if they invest that, and we wouldn't have to pay for transportation. But still, the point is, outsourcing is not the evil it is made out to be. Free trade and further division of labor is a boon to production.

I agree about outsourcing as a source of inexpensive labor, to the extent that the trade is recipricated close to dollar for dollar (which it is unfortunately not). However I seriously doubt that anyone can prove that lowering or eliminating the minimum wage would create more jobs for teenagers.

 

[Dezaad]

The thing that is "scaring" them is that they won't get a return on their investment. The reason that they are very correct about that is because too much wealth has pooled at the top. The Middle Class cannot consume what the wealthy would invest in to produce.

That is the reason the pie is shrinking, and no other.

So to be sure what you are saying, after about 200 years of the rich continuously striving to get richer, you are saying that they have, as a unified group, determined that they are all, every one of them, rich enough and that there is absolutely no need for them to invest and gain more wealth.

Do you actually believe this nonsense?

No, and I am having a difficult time seeing where you drew such a notion from my post.

I very clearly stated that the wealthy are choosing not to invest because there is not enough return to be anticipated for the risk that would be incurred. In other words, they are afraid they will lose money. "that they won't get a return on their investment".

I then stated that they are correct to fear this.

I then stated that the reason is that there are not enough dollars floating around the middle class to consume all the stuff the investing class could produce, because too much of the wealth has pooled at the top.

I then stated that this is the reason, the only reason, that the pie is getting smaller.

Where in that do you read "that there is absolutely no need for them to invest and gain more wealth"? I didn't say that they are experiencing a lack of need to invest. I described a lack of opportunity to invest.

Idle dollars at the top of the wealth distribution is inherently inefficient. No one has any rational reason for wanting such a situation to continue.

 

[code1211]

Just "being obtuse" about calling you liberal.

Inheritance should be taxed exactly like income, because to the person who recieves it, it is income - it's wealth he didn't have and recieves. Earned income and unearned or passive investment income should all be taxed identically. If we taxed inheritance the same as earned income, our income tax rate could be lower and the government could have the same revenue amount that we do now. I'm all about lower taxes.

If a family owns a business and the owner dies, the business, under that system would have to be sold. I don't like that idea.

Should birthday gifts also be taxed? How about "tooth fairy" earnings? What's that pay off up to now? I've heard $5/tooth. Figure a population of 300 million all losing about 30 teeth at $5 a crack and we've got the national debt paid.

 

[code1211]

No, and I am having a difficult time seeing where you drew such a notion from my post.

I very clearly stated that the wealthy are choosing not to invest because there is not enough return to be anticipated for the risk that would be incurred. In other words, they are afraid they will lose money. "that they won't get a return on their investment".

I then stated that they are correct to fear this.

I then stated that the reason is that there are not enough dollars floating around the middle class to consume all the stuff the investing class could produce, because too much of the wealth has pooled at the top.

I then stated that this is the reason, the only reason, that the pie is getting smaller.

Where in that do you read "that there is absolutely no need for them to invest and gain more wealth"? I didn't say that they are experiencing a lack of need to invest. I described a lack of opportunity to invest.

Idle dollars at the top of the wealth distribution is inherently inefficient. No one has any rational reason for wanting such a situation to continue.

Your premise is wrong. There is plenty of money floating around. How many new phone did Apple sell when it came out? Car sales re also up.

You are correct that they are afraid to invest because the ROI will not match the risk. The reason for that is not that there is no market. The reason is that they are terrified that any profit will be confiscated by the Fuhrer.

The Big 0 has decided that he knows better than the Congress, better than the Constitution and better than the American people. He is a serious threat to us and our country. "The Rich" are not going to be the next Boeing or Gibson or BP if they can help it.

Just opposing Obama gets people onto an enemies list. If this guy's party affiliation started with a R, he'd be depicted nightly on the MSM as the anti Christ. Since he's a Dem, he gets a pass.

 

[Dezaad]

Your premise is wrong. There is plenty of money floating around. How many new phone did Apple sell when it came out? Car sales re also up.

You are correct that they are afraid to invest because the ROI will not match the risk. The reason for that is not that there is no market. The reason is that they are terrified that any profit will be confiscated by the Fuhrer.

The Big 0 has decided that he knows better than the Congress, better than the Constitution and better than the American people. He is a serious threat to us and our country. "The Rich" are not going to be the next Boeing or Gibson or BP if they can help it.

Just opposing Obama gets people onto an enemies list. If this guy's party affiliation started with a R, he'd be depicted nightly on the MSM as the anti Christ. Since he's a Dem, he gets a pass.

You actually believe this nonsense?

 

[imagep]

If a family owns a business and the owner dies, the business, under that system would have to be sold.

Oh yea, the "family farm" argument. If family members choose to purchase the business, or the portion that they person who died owned, then they are welcome to do so - they just have to be the high bidder. But most of the time, small owner operated businesses don't survive ownership changes anyway, and most of the time the children have little interest in the business. I own a business, my son has absolutely no interest in it (wish he did), he has his own very different career plans, and has told me that if me and his mother pass away, he is going to burn the place down for the insurance money.

I don't like that idea.

You are welcome to like or dislike anything, it's a free country, but thats not a very compelling argument.

Should birthday gifts also be taxed? How about "tooth fairy" earnings? What's that pay off up to now? I've heard $5/tooth. Figure a population of 300 million all losing about 30 teeth at $5 a crack and we've got the national debt paid.

We do have a gift tax that the giver is responsible for paying, and that tax is quite logically implemented. Like inheritance tax, I am not proposing a 100% tax, that wouldn't be practical. We obviously for practical reasons need a certain exempt amount, and possibly a larger exemption for children under the age of 21 and spouses living in the same household.

 

[kamikaze483]

No, and I am having a difficult time seeing where you drew such a notion from my post.

I very clearly stated that the wealthy are choosing not to invest because there is not enough return to be anticipated for the risk that would be incurred. In other words, they are afraid they will lose money. "that they won't get a return on their investment".

I then stated that they are correct to fear this.

I then stated that the reason is that there are not enough dollars floating around the middle class to consume all the stuff the investing class could produce, because too much of the wealth has pooled at the top.

I then stated that this is the reason, the only reason, that the pie is getting smaller.

Where in that do you read "that there is absolutely no need for them to invest and gain more wealth"? I didn't say that they are experiencing a lack of need to invest. I described a lack of opportunity to invest.

Idle dollars at the top of the wealth distribution is inherently inefficient. No one has any rational reason for wanting such a situation to continue.

Your premises could only be true if the amount of wealth was finite and fixed. Because it is not finite and fixed, and can, in fact, be created, your premises and conclusion can not be true. Wealth can be created within the middle class. It does not have to come from another class, as if there is only so much to go around.

I also believe (and can prove) that there is no lack of opportunity to invest. What we have seen in this economy is a change in the types and scale of investments among every income class. It IS a buyer's market.

 

[code1211]

You actually believe this nonsense?

You don't think there is plenty of money floating around? The last figure i read was that American business is sitting on 3 trillion dollars. That sounds like "allot" to me.

You don't think that the withholding of this many is slowing the economy? I do. Why do YOU think this money is being held back rather than invested?

I'm wondering about the growth of small businesses that have just under 50 employees when Obamacare fires up. If you owned a business that employed 49 people and were considering hiring number 50, but would then have to pay the $2000/head fine called for by Obamacare, would you hire another person or maybe just contract with a temp agency? Unintended consequence.

This link describes Obama's enemies list. Hardly a mention in the press, but when nixon had a similar thing, there was a different media reaction. Double standard? You bet!

Strassel: The President Has a List - WSJ.com

 

[RGacky3]

You don't think there is plenty of money floating around? The last figure i read was that American business is sitting on 3 trillion dollars. That sounds like "allot" to me.

You don't think that the withholding of this many is slowing the economy? I do. Why do YOU think this money is being held back rather than invested?

Its not being invested because the economy is unstable, due to the last 30 or so years of liberalization of the economy, also because of diminished demand, also because of the classical internal contradictions of capitalism.

I'm wondering about the growth of small businesses that have just under 50 employees when Obamacare fires up. If you owned a business that employed 49 people and were considering hiring number 50, but would then have to pay the $2000/head fine called for by Obamacare, would you hire another person or maybe just contract with a temp agency? Unintended consequence.

Which is why we needed single payer ...

Your premises could only be true if the amount of wealth was finite and fixed. Because it is not finite and fixed, and can, in fact, be created, your premises and conclusion can not be true. Wealth can be created within the middle class. It does not have to come from another class, as if there is only so much to go around.

I also believe (and can prove) that there is no lack of opportunity to invest. What we have seen in this economy is a change in the types and scale of investments among every income class. It IS a buyer's market.

of coarse it can be created, and thats one of the problems iwth capitalism, it requires continual growth, otherwise it all pools to the top and it ends up collapsing.

Also there is plently of opportunity to invest, but it doesn't happen because for profit capitalism simply is too unstable right now.

The reason is that they are terrified that any profit will be confiscated by the Fuhrer.

Taxes are at record lows ...

Also if your gonna loose a % of your profit, its still better than making no profit ... So thats not a disincentive ... Never has been, and there is no empirical data showing that.

 

[kaya'08]

So if we increased the capital gains tax, which is mostly paid by the rich, exactly what mechanism would be used to pass on costs to consumers?

By increasing the price of commodities to achieve a higher profit margin/to make up for a reduction in the profit margin? That is, after all, the entire purpose of the private sector.

 

[ttwtt78640]

Oh yea, the "family farm" argument. If family members choose to purchase the business, or the portion that they person who died owned, then they are welcome to do so - they just have to be the high bidder. But most of the time, small owner operated businesses don't survive ownership changes anyway, and most of the time the children have little interest in the business. I own a business, my son has absolutely no interest in it (wish he did), he has his own very different career plans, and has told me that if me and his mother pass away, he is going to burn the place down for the insurance money.

You are welcome to like or dislike anything, it's a free country, but thats not a very compelling argument.



We do have a gift tax that the giver is responsible for paying, and that tax is quite logically implemented. Like inheritance tax, I am not proposing a 100% tax, that wouldn't be practical. We obviously for practical reasons need a certain exempt amount, and possibly a larger exemption for children under the age of 21 and spouses living in the same household.

So, if a family farm/ranch is 10,000 acres, and dad passes it on to his child at 200 acres per year for 50 years, then that is not taxed, yet if dad passes it on all at once in a will then it is taxed? That makes sense?

 

[imagep]

So, if a family farm/ranch is 10,000 acres, and dad passes it on to his child at 200 acres per year for 50 years, then that is not taxed, yet if dad passes it on all at once in a will then it is taxed? That makes sense?

That does make sense, there will always be ways of avoiding taxes, thats part of the reason that a 100% inheritance tax is not practical, regardless, we still have a gift tax.

 

[code1211]

Its not being invested because the economy is unstable, due to the last 30 or so years of liberalization of the economy, also because of diminished demand, also because of the classical internal contradictions of capitalism.



Which is why we needed single payer ...



of coarse it can be created, and thats one of the problems iwth capitalism, it requires continual growth, otherwise it all pools to the top and it ends up collapsing.

Also there is plently of opportunity to invest, but it doesn't happen because for profit capitalism simply is too unstable right now.



Taxes are at record lows ...

Also if your gonna loose a % of your profit, its still better than making no profit ... So thats not a disincentive ... Never has been, and there is no empirical data showing that.

I'm guessing that you neither own nor manage a business.

Am I wrong?

 

[code1211]

By increasing the price of commodities to achieve a higher profit margin/to make up for a reduction in the profit margin? That is, after all, the entire purpose of the private sector.

And it is also the vehicle that will make the price of American produced products increase while the price of foreign produced products remains stable.

One of the costs of Liberalism is that whether you intend to have them or not, there are always consequences. Liberals seem to think that they are immune from consequences.

 

[imagep]

And it is also the vehicle that will make the price of American produced products increase while the price of foreign produced products remains stable.

One of the costs of Liberalism is that whether you intend to have them or not, there are always consequences. Liberals seem to think that they are immune from consequences.

Of course unintended consequences are always likely. But just by the laws of chance, about half of them will be good, the other half bad, conservatives and libertarians like to pretend like unintended consequences are always bad. As long as there is a net gain in the intended consequence, the unintended ones tend to pretty much cancel each other out.

 

[jambalaya]

I think trickle down just like any other economic strategy in this country doesn't work because the opposing forces of a given economic strategy are going to do everything in their power to make sure it doesn't succeed.

 

[iliveonramen]

So how is it the middle class are earning more in the US/UK and living better lifestyles then they ever where in the previous decades?

The median salary of a man in the late 1960's was better than the median salary of a man today. What you're pointing to is housholds going from the single breadwinner to both members getting jobs and the increase....or basically womens median wages creeping up to men medians wages. Overall all though...both women and men in the household would be better off making the wages (inflation adjusted of course) as a median middle class male in 1968.

Edit: In a nut shell...no different than sending kids off to work in order to gain another breadwinner for the house and increase household income.

 

[Mach]

I then stated that the reason is that there are not enough dollars floating around the middle class to consume all the stuff the investing class could produce, because too much of the wealth has pooled at the top.

I like your summary style.

So it's your claim that because someone else has a relatively large financial portfolio, this has directly resulted in individuals going too far into debt by choice, defaulting on their home that they could not afford? That's absurd. If it were not absurd, you could show some reasonable, common examples of the logical cause-effect relationship, right?

I then stated that this is the reason, the only reason, that the pie is getting smaller.

On what basis do you make the claim that not only is the pie fixed, but shrinking?

I would argue anyone who believes there is a fixed pie (or shrinking), is limiting their ability to navigate efficiently in a relatively free economy. As such, in a way, it's self-fulfilling.

 

[Mach]

The median salary of a man in the late 1960's was better than the median salary of a man today. What you're pointing to is housholds going from the single breadwinner to both members getting jobs and the increase....or basically womens median wages creeping up to men medians wages. Overall all though...both women and men in the household would be better off making the wages (inflation adjusted of course) as a median middle class male in 1968.

What?
My wife supported us on an entry-level 4-year degree wage, for years. You believe a similar entry level woman in the 1950s and 60s, made relatively more money, and related to that had a higher standard of living? In what world does that make any sense? There are certain periods where opportunity did change, for example, when we settled North America, that was an opportunity that we don't enjoy today...but then, that's not a directly result of economic policy/tax stuff either (well, conquest, but you get what i mean).

Are you factoring in advances in medicine, liesure, transportation, culture, etc.?

 

[iliveonramen]

What?
My wife supported us on an entry-level 4-year degree wage, for years. You believe a similar entry level woman in the 1950s and 60s, made relatively more money, and related to that had a higher standard of living? In what world does that make any sense? There are certain periods where opportunity did change, for example, when we settled North America, that was an opportunity that we don't enjoy today...but then, that's not a directly result of economic policy/tax stuff either (well, conquest, but you get what i mean).

Are you factoring in advances in medicine, liesure, transportation, culture, etc.?

I stated the opposite in regards to womens salaries. In fact my point was that the increase in household income has been due A) women joining the workforce so there are 2 breadwinners and B) womens wages increasing over time to match mens salaries.

The OP posted that household incomes are higher than ever because of trickle down economics. My point is that...no it's only due to cultural changes. That the fact is the median salary for a man or woman is lower than the median salary for a man (adjusted for inflation) decades ago.

As for the advances in medicine or transportation etc, I'm not sure what you're saying. My point was based purely on income. Now if you're arguing that scientific advancment and cultural advancement would of stopped if we wouldn't of instituted supply side economics in the 80's.....I would have to strongly disagree.

 

[imagep]

I think trickle down just like any other economic strategy in this country doesn't work because the opposing forces of a given economic strategy are going to do everything in their power to make sure it doesn't succeed.

In the case of trickle down, the "opposing forces" are the rich who don't want a penny of their wealth to trickle anywhere.

 

[code1211]

Of course unintended consequences are always likely. But just by the laws of chance, about half of them will be good, the other half bad, conservatives and libertarians like to pretend like unintended consequences are always bad. As long as there is a net gain in the intended consequence, the unintended ones tend to pretty much cancel each other out.

The point is that a business is a complex set of planning and arrangements. People at the Central Government planning offices are usually well intentioned idiots not in possession of most of the facts. This posture almost guarantees unfortunate unintended consequences.

If the power of government were to be split as the Founders encouraged through the Constitution into the various states, we would now have 50 incubators of solutions for problems instead of one toilet of corruption in DC.

Our current corrupt and ineffective national government is the unintended consequence of the imperial Presidency combined with the complicit acquiescence of the weak willed Congress.

 

[code1211]

I think trickle down just like any other economic strategy in this country doesn't work because the opposing forces of a given economic strategy are going to do everything in their power to make sure it doesn't succeed.

Trickle down is a political slogan, not an economic policy. It was called Reaganomics until reagan won a landslide re-election.

 

[code1211]

The median salary of a man in the late 1960's was better than the median salary of a man today. What you're pointing to is housholds going from the single breadwinner to both members getting jobs and the increase....or basically womens median wages creeping up to men medians wages. Overall all though...both women and men in the household would be better off making the wages (inflation adjusted of course) as a median middle class male in 1968.

Edit: In a nut shell...no different than sending kids off to work in order to gain another breadwinner for the house and increase household income.

That nutshell is exactly what was happening in this country in all times except when the USA had bombed the rest of the world into rubble and effectively eliminated the competition for its industrial complex.

We enjoyed a wold world market with only domestic competition.