Does Trickle Down Economics Work Or Not?

[lefty louie]

Once economist described that era as "flood up", not trickle down.

It's great that you did well.

But it has sweet f all to do with anything beyond your checkbook.

Well everyone that was my customer was doing well, it was the era of the yuppie, kids right out of school making 30K +, back then it was doing well, so yes the economy as a whole was doing quite well!

 

[Felis Leo]

Do you know who coined the term "trickle down" economics? I certainly don't -- I thought the term "Voo-Doo" economics was the term meant to demonize this economic theory.

Well, the term "trickle down" economics was originally started off as a joke made by Will Rogers, and goes back even further to William Jennings Bryan, one of my favorite political figures in United States history, who said in 1896:

"There are two ideas of government. There are those who believe that if you just legislate to make the well-to-do prosperous, that their prosperity will leak through on those below. The Democratic idea has been that if you legislate to make the masses prosperous their prosperity will find its way up and through every class that rests upon it."

I disagree with the man, but few people have stated the argument better or more succinctly for progressive tax policy or redistributionism.

 

[bluesmoke]

Trump Officials Say Trickle-Down Economics Will Work For Tax Plan?Here's Why That's Wrong

From the article “The rising tide lifts all boats idea remains a popular GOP theory, namely that a tax cut for the very rich creates indirect benefits for the middle class and lower-class Americans.” Basically the more money the wealthy have the better for everyone.

I am not an expert on economics but a rising tide lifting all boats sounds like a pretty solid premise. In light of what Senator Rubio admitted earlier this week about the failure of the tax bill to deliver on what they claimed it would do so far -- trickle down economics is in the news again.

Is anyone here in favor of trickle down or do you oppose it?

Going back to Reagan, I've called it "tinkle-down" economics. It did not work under Reagan, nor under Bush2. It won't work under Trump, except, as he himself said, for his wealthy friends "You All Just Got a Lot Richer." I've never seen any data to support that "trickle-down" works. It just makes the rich and big corps more wealthy while the rest get crumbs as their piece of the tax-cut pie.

 

[late]

Well everyone that was my customer was doing well, it was the era of the yuppie, kids right out of school making 30K +, back then it was doing well, so yes the economy as a whole was doing quite well!

Economists have a name for the change in the rate of rising (or falling) income inequality. During the 80s, it broke the record for going up, and that was largely a result of the politics.

It didn't go down, it went up. This is what economists call a fact.

It has since gotten a lot worse.

Btw, the Fed crushed inflationary expectations, that was part of it. But what actually turned things around was business purchasing. A lot of routine purchases had been deferred in the 70s. In the 80s, those things got worn out and had to be replaced. Ain't sexy, but there it is.

 

[independentusa]

First off, no proponent of Supply-Side Economics (to my knowledge) has ever called it "Trickle Down Economics." Or if they do, they know little to nothing about the theory. "Trickle Down Economics" is what opponents of Supply Side economics called it. This would be like me starting up a thread straw-manning Demand-Side Economics and asking "Is anyone here in favor of Venezuelan Starvation Economics and thinks that it will work?"

Yes, supply side economics works. But here is the thing: It works to lower unemployment; it works to expand corporate profit; it works to do that because help private individuals keep more of their own money (whether a lot or a little) to invest their money where they believe it will do the most good to for them, rather than where the government believes it will do the most good for them. But, and here is the thing, it does nothing to cure deficits. I do not believe you can can cut taxes and keep spending at the same rate, and then claim with any degree of certainty that the future explosion of economic growth will make up for the ballooning debt.

Well, I take that back. You can claim that. But you would probably be lying through your teeth by doing so.

Actually the reason that supply side does not work well in this country for the majority of people and for the economy in general is that we a consumer driven economy. Although it will boost the economy some, it won't do the job like a tax cut that is aimed on the middle class and the poor, who would have been the consumers we want and buy things. The real reason for the slow growth of the economy over the last thirty years is the moving of high paying manufacturing jobs to low pay countries. At one time the USA bought 25% of all of the goods and services produced in the world. Since then with what were the high paying jobs going overseas, we have lost the ability to purchase as we once did. In fact, we would not be able to buy as much as we do without personal debt, which in 2017 hit the trillion dollar mark. In a way to increase profits the companies that moved jobs overseas might have killed the goose that were laying their golden eggs.

 

[Irwin Corey]

Trump Officials Say Trickle-Down Economics Will Work For Tax Plan?Here's Why That's Wrong

From the article “The rising tide lifts all boats idea remains a popular GOP theory, namely that a tax cut for the very rich creates indirect benefits for the middle class and lower-class Americans.” Basically the more money the wealthy have the better for everyone.

I am not an expert on economics but a rising tide lifting all boats sounds like a pretty solid premise. In light of what Senator Rubio admitted earlier this week about the failure of the tax bill to deliver on what they claimed it would do so far -- trickle down economics is in the news again.

Is anyone here in favor of trickle down or do you oppose it?

Never has never will. The government will e starved for funds the budget will “try “to be balanced on the backs of the middle class and working poor. The rich get richer and the jobs that are created are predominately low wag wit no bennifits

If djt gets nothing else accomplished the 1% got their money’s worth.

 

[Lord Tammerlain]

You know, for 8 years we had "Trickle UP" Obamanomics, it didn't work.

The Reagan Supply side "trickle down" approach that Trump is loosely following, works.

The Reagan admin borrowed money heavily to pay for government operations (not to mention massive increase in FICA taxes). The borrowing by the government was in fact a huge stimulus to the US economy. Without the government borrowing the US economy would have grown at a much lower rate than it did under Reagan.

Supply side under Reagan and under Trump did not work and will not work without the mass government spending, even when the economy is supposed to be doing well, when government borrowing should be declining. It is in effect government stimulus

Can supply side economics work, under certain economic conditions, certainly. Under high taxes and restrictive regulations, the lowering of either would provide a good economic boost. From a practical standpoint the US is not heavily taxed or heavily regulated, in which economic activity is being restrained by it.

China removed many regulations for domestic companies, in the 80's and grew heavily from it. Of course at the expense of very high pollution and very weak labour laws

India has fairly restrictive regulations for domestic companies (for labor and business, not so much environment) and as such has seen much lower growth. Unsure about taxes in India, but they are very low in China

France and Italy probably would see benefits from implementing some supply side economic policies. The UK, right now no where near as much benefit as they deregulated heavily in the 80s

 

[lefty louie]

Economists have a name for the change in the rate of rising (or falling) income inequality. During the 80s, it broke the record for going up, and that was largely a result of the politics.

It didn't go down, it went up. This is what economists call a fact.

It has since gotten a lot worse.

Btw, the Fed crushed inflationary expectations, that was part of it. But what actually turned things around was business purchasing. A lot of routine purchases had been deferred in the 70s. In the 80s, those things got worn out and had to be replaced. Ain't sexy, but there it is.

Should we ignore lower interest rates and a turn around in American pride instilled by the leader of the moment? Don't misunderstand me, I can name a host of things Reagan did that I don't approve of, just that, for whatever reason(s) the "Economy" turned around under his watch. That too is called a FACT.

 

[jnug]

Should we ignore lower interest rates and a turn around in American pride instilled by the leader of the moment? Don't misunderstand me, I can name a host of things Reagan did that I don't approve of, just that, for whatever reason(s) the "Economy" turned around under his watch. That too is called a FACT.

That is all fine as long as we do not confuse Donald Trump with Ronald Reagan.

 

[lefty louie]

That is all fine as long as we do not confuse Donald Trump with Ronald Reagan.

While it's early in the season for Mr. Trump, he is certainly no Reagan, that said, Reagan is no Donald Trump.

 

[late]

Should we ignore lower interest rates and a turn around in American pride instilled by the leader of the moment? Don't misunderstand me, I can name a host of things Reagan did that I don't approve of, just that, for whatever reason(s) the "Economy" turned around under his watch. That too is called a FACT.

Do you also want to give Reagan credit for anything else that is inherently cyclical, like the sun coming up?

There is mostly always a lag, between something a president does and the resulting change, sometimes a quite long one. I'm thinking about 20 years...

Then there are the limiting factors, the government spending made it a lot harder for Volcker to break inflation. I'd like to see a study newer than the one I was referencing. But I don't want to do the work. Find me a reputable study that addresses the causes of the economic recovery, in the 80s. I am vaguely curious as to what the current thinking is. Just not enough to spend time looking.

 

[lefty louie]

Do you also want to give Reagan credit for anything else that is inherently cyclical, like the sun coming up?

There is mostly always a lag, between something a president does and the resulting change, sometimes a quite long one. I'm thinking about 20 years...

Then there are the limiting factors, the government spending made it a lot harder for Volcker to break inflation. I'd like to see a study newer than the one I was referencing. But I don't want to do the work. Find me a reputable study that addresses the causes of the economic recovery, in the 80s. I am vaguely curious as to what the current thinking is. Just not enough to spend time looking.

While certain aspects of an economy are cyclical you can't blame all the good that took place in the 80's boom on cyclical events, you can't give credit to JFK either (20 yrs to take effect). If that were the case the 90's would be Carters fault/credit.

I can bang Reagan over his spending and arms deals and I can give him credit for helping to turn the economy around and getting a wall torn down. Be fair, people will respect your ability to see both sides of an issue.

 

[Rogue Valley]

A non-existent theory is a mirage. Agreed!

An insipid drive-by. The links I posted in #8 demonstrate that Trumps economic promises are as empty as his head.

 

[KLATTU]

When somebody says an economic theory "works"or 'doesn't work' you should immediately discount their position as being based on politics.

As if it were a binary situation .

 

[poweRob]

Trump Officials Say Trickle-Down Economics Will Work For Tax Plan?Here's Why That's Wrong

From the article “The rising tide lifts all boats idea remains a popular GOP theory, namely that a tax cut for the very rich creates indirect benefits for the middle class and lower-class Americans.” Basically the more money the wealthy have the better for everyone.

I am not an expert on economics but a rising tide lifting all boats sounds like a pretty solid premise. In light of what Senator Rubio admitted earlier this week about the failure of the tax bill to deliver on what they claimed it would do so far -- trickle down economics is in the news again.

Is anyone here in favor of trickle down or do you oppose it?

No it does not.

Money is anti-gravity. As soon as it leaves your hands the vast bulk of is put on it's natural migratory path back to the top.

 

[late]

While certain aspects of an economy are cyclical you can't blame all the good that took place in the 80's boom on cyclical events, you can't give credit to JFK either (20 yrs to take effect). If that were the case the 90's would be Carters fault/credit.

I can bang Reagan over his spending and arms deals and I can give him credit for helping to turn the economy around and getting a wall torn down. Be fair, people will respect your ability to see both sides of an issue.

I took a brief look for something relevant, didn't find anything worth mentioning.

 

[Lord Tammerlain]

Should we ignore lower interest rates and a turn around in American pride instilled by the leader of the moment? Don't misunderstand me, I can name a host of things Reagan did that I don't approve of, just that, for whatever reason(s) the "Economy" turned around under his watch. That too is called a FACT.

Paul Volcker increased interest rates drastically, causing a recession in 1980-1982 or so. That broken the stagflation that the US was experiencing. Then the US government borrowed massive amounts of money, providing stimulus to the economy

 

[late]

natural migratory path

Capitalism is a completely artificial human construct.

There is no natural path.

A lot of it is the result of political decisions that favor the wealthy. Like the Trump, Bush and Reagan tax cuts.

https://www.amazon.com/Price-Inequa...8-1&keywords=stiglitz+the+price+of+inequality

 

[jnug]

Paul Volcker increased interest rates drastically, causing a recession in 1980-1982 or so. That broken the stagflation that the US was experiencing. Then the US government borrowed massive amounts of money, providing stimulus to the economy

That is absolutely correct. Volker was the only guy that had the guts to stick it out because you have to break the strangle hold of Inflation before you can attack anything else. Inflation is the only economic element that feeds itself from everything else around it. People are buying up oil futures right now because they fear the price of oil rising and what do we think results from buying up all of the oil futures available. The price goes up.

Volker had to use interest rates to drive out inflation and interest rate hikes actually feed the beast all the way up the point where you have choked off borrowing completely which is frankly right at the bring which is why it take courage to stick it out.

If you have Inflation along with other economic issues, you have to drive Inflation out first or nothing else you do will work. You are simply doomed otherwise. I never thought we would be stupid enough to let the Inflation genie out of its bottle again, that we would test this again. But it appears that is exactly what we are doing. In all honesty I don''t see any Paul Volkers around this time.

We still have some time because wages are still not doing very much. Once that cracks....look out!!!!! We are going to pay from Trumpian Economic policy which is nothing more than a mishmash for a long time once this starts to get up a real head of steam.

 

[KLATTU]

No it does not.

Money is anti-gravity. As soon as it leaves your hands the vast bulk of is put on it's natural migratory path back to the top.

....and then what? Don't they own business ?? you know those horrible things that hire people? ( rhetorical)

 

[poweRob]

....and then what? Don't they own business ?? you know those horrible things that hire people? ( rhetorical)

As it goes up, barely any goes out. Then it is used to do stock buy backs and off-shored and removed from the economy.

 

[Xelor]

Trump Officials Say Trickle-Down Economics Will Work For Tax Plan?Here's Why That's Wrong

From the article “The rising tide lifts all boats idea remains a popular GOP theory, namely that a tax cut for the very rich creates indirect benefits for the middle class and lower-class Americans.” Basically the more money the wealthy have the better for everyone.

I am not an expert on economics but a rising tide lifting all boats sounds like a pretty solid premise. In light of what Senator Rubio admitted earlier this week about the failure of the tax bill to deliver on what they claimed it would do so far -- trickle down economics is in the news again.

Is anyone here in favor of trickle down or do you oppose it?

One need not be an expert on economics. Plenty of people have been animated by notions of and thus written objectively about the viability and realized outcomes from supply-side ("trickle down") economics. Their analysis has been qualitative and empirical.

• Background: Supply-Side Economics
• 1981 -- Supply Side Economics: What chance for success?
• 1982 -- Is Supply-Side Economics Enough?
• 1982 -- Reflections of Supply-Side Economics
• 1990 -- Supply-Side Economics: An Analytical Review
• 1993 -- Supply-side economics and endogenous growth -- This is a very technical document, and its conclusions rely on convex modeling (1990) and is thus subject to the assumptions, premises and constraints thereof. Since the principal paper cited in this bullet point was written, Dr. Jones has since improved upon the ideas presented in the link in the preceding sentence. (2005)
• 1994 -- Some unpleasant supply side arithmetic -- Individuals keen on supply-side notions should purchase and read this document.
• 1995 -- Supply-Side Economics in a Global Economy
• 1997 -- Supply Side Economics: Do Tax Rate Cuts Increase Growth and Revenues and Reduce Budget Deficits ? Or Is It Voodoo Economics All Over Again?
• 2009 -- The Rise and Fall of Supply-Side Economics
• 2013 -- Empirical Foundations of Supply-Side Economics -- Below is a video presentation of a paper.
  
• 2014 -- Foundations of Supply-Side Economics -- If one is going to form a conclusion on supply-side economics and one cares to read only one thing to develop an understanding of it so as to have a well informed view of it, this is the document to read. I looked for a free version of it.

Simply, like much about economics, what's good and bad about it, what it really means and yields isn't intuitive. Supply side is one of those ideas that sounds really great to everyone -- it's egalitarian, it seems to make sense, and one'd think it motivates extant sources of stored capital to deploy it so as to create new opportunity and profits -- but implemented, it is not capable of delivering on what any reasonable policy maker or person subject to economic policy's outcomes would demand: that supply-side policies, while they produce desirable outcomes, mainly they make the rich richer, overall they diminish the fortunes of improvident, non-intellectually availing/adroit, non-enterprising/non-entrepreneurial, and/or non-rich people.

Why? Because holders of investable capital don't deploy it until there's a problem that needs fixing and that can be fixed in a profit maximizing way that outstrips the profitability of holding that capital. Tha sort of exploratory investing is the realm of venture capitalism, and that sort of "bleeding edge" innovation doesn't produce jobs for "regular" people; it produces jobs for folks having highly specialized skills, insights and abilities. In other words, if one is a "regular" guy simply trying to live a "regular" middle class life that doesn't call for one to be part of the "quest to be among the best" at something, supply-side economics suck. The "regular" folk don't have any opportunity to get into "the game" until the "good money," the early returns have been reaped. One need only ask oneself this: What "regular guy" potential investors are invited to participate in IPOs? The short answer is, barring some exceptional circumstances, none.

 

[lurchadams]

Oh! I know this one!

Not.

 

[Casper]

Trump Officials Say Trickle-Down Economics Will Work For Tax Plan?Here's Why That's Wrong

From the article “The rising tide lifts all boats idea remains a popular GOP theory, namely that a tax cut for the very rich creates indirect benefits for the middle class and lower-class Americans.” Basically the more money the wealthy have the better for everyone.

I am not an expert on economics but a rising tide lifting all boats sounds like a pretty solid premise. In light of what Senator Rubio admitted earlier this week about the failure of the tax bill to deliver on what they claimed it would do so far -- trickle down economics is in the news again.

Is anyone here in favor of trickle down or do you oppose it?

Has not worked in past, it assumes things will happen to work and that rarely works out as planned.
We shall see what the long term results will be because that is all that counts.