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"Trickle down" economics

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"Trickle down" economics

Old 08-12-2015, 11:53 AM
  #1  
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Default "Trickle down" economics

It seems many on the left/liberal side of the political spectrum take this phrase as a patently false and disproven idea. Why is that? I just can't see where they are coming from.

Amazon did not exist 20 years ago. Now they are a multi-billion $ revenue company employing . . . thousands of people. Those people get most of their money from employment by Amazon. Isn't it fair to say that this money is "trickling down" from the company to those employees? Change the example to include all the high tech firms you can think of: Microsoft, Apple, Intel, Google, Oracle, Samsung, etc. These people have not simply stolen money from another sector . . . they have significantly expanded the wealth pie, and the proceeds of that new wealth do not just go to stock holders, it goes to the often well paid employees of those technology companies. Isn't that money real? Why is "trickle down economics" sneered and snarked at?
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Old 08-12-2015, 12:32 PM
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Trickle down is simply economic activity.
If I could have kept more of my money I made last year, I could have had the body work done on my Bronco and had a new paint job. Instead, all we could do this year is finally put wood flooring and porcelain tile in our house. The local guy at the body shop did not get the economic benefit of doing the work on my truck. He knows I've been planning to do it, and asks me every time I see him if I am ready. He could probably use the money.

Trickle down better describes what happens when you send money to Washington and then wait for all the great programs they have for us.

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Old 08-12-2015, 02:30 PM
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yes but that wasn't what Reagan meant. What Reagan did was give Americans a chance to do right by each other without the consequences Americans had already earned, government regulation.

Reagan turned back the clock on regulation to a time with less regulation in order to give Americans the opportunity to be the Americans he thought were the best thing on earth. In a nut shell Reagan's only fault was he was a bad judge of character, the American character.

I think Reagan's later years were not a case of Alzheimer's, he just refused to believe Americans were so devoid of patriotism and chose to live in a world were they were, only in his mind.
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Old 08-12-2015, 03:06 PM
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Originally Posted by nodog View Post
yes but that wasn't what Reagan meant. What Reagan did was give Americans a chance to do right by each other without the consequences Americans had already earned, government regulation.

Reagan turned back the clock on regulation to a time with less regulation in order to give Americans the opportunity to be the Americans he thought were the best thing on earth. In a nut shell Reagan's only fault was he was a bad judge of character, the American character.

I think Reagan's later years were not a case of Alzheimer's, he just refused to believe Americans were so devoid of patriotism and chose to live in a world were they were, only in his mind.
Nodog, I'm having a little trouble figuring you out. Some days you want no government, and the next day you criticize a president who made government smaller. I think if you took off running you might split in half.

You are right though. Reagan did believe in the American people.

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Old 08-12-2015, 07:09 PM
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I didn't understand where nodog was going with that either.

As for trickle down, most people tend to misunderstand it and then argue in a circular fashion. Regardless of when people think the term was invented (it was before any of us were born), the term is most often applied towards Reagan's tax reductions and used to disparage any tax breaks for businesses.

Although the term is supposed to refer to reducing marginal tax rates (the taxable income brackets) and capital gains taxes (taxes investors pay), most leftist articles focus on capital gains taxes and the higher income tax brackets (i.e. for the rich people).

Those for trickle down economic tax policies argue that taxing corporations and individuals at lower rates will leave them more money to invest and/or spend and thus pump money back into the economy. Individuals will be able to spend more on luxury items, repairs,etc. while corporations will have more money to invest in expanding production, jobs and sales. People consider more things than just if they have the money before deciding to spend it and corporations often hold onto extra money as a buffer during uncertain financial times, especially when corporations aren't sure what the government is going to change on taxes, regulations, etc. It's human nature to want a little bit of an economic buffer. With the right decisions by the government, people and corporations will feel more comfortable and spend more of that money whereas with wrong decisions by the government will have the opposite effect.

The people who argue against trickle down economics say it doesn't work and only the rich get richer while the poor and middle class get poorer. This is the point where the argument becomes circular and nobody on the left is ever held accountable for their "policy" beliefs.

Aside from the obvious sham that it's trickle down economics whether it's increased spending by corporations and individuals or by the government, most people never take the discussion further. Think about it carefully. Government has substantially increased spending during the last 10-12 years (about half of Bush's term and all of Obama's term). Has much of that $18 Trillion in debt "trickled down" to you or anybody you know? Not much huh? Government has been conducting a huge wealth transfer and claiming some sort of economic benefit is going to happen for the poor (trickle down economics anyone). Yet that benefit hasn't happened for the poor or the middle class. Interestingly, who really did benefit from this "wealth transfer?" Hint, there's only one group left.

Instead of being lied to by all politicians and smug leftists, people should look at historical economics and see for themselves whether trickle down economics works. When taxes were much higher for individuals and corporations, did the government substantially improve the welfare on the poor and middle class with the "extra" money they gained through taxes? Nope. Did government revenues substantially increase? Nope. Are there flaws in this stupid idea? Yes.

When taxes were lowered and government spending decreased during the Reagan years and kept down during the Clinton years, did the poor and middle class find better economic news? Make more money? Jobs easier to find? Jobs tended to pay a little more and raises happened more often? Why? people had extra money to spend so it made sense for corporations with extra money to ramp up production, expand facilities and have to hire more workers to make more money. JMHO of course but I think "trickle down" economics is a convenient label to dodge some hard economic facts by people pushing for bigger government with its' inherent waste.
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Old 08-13-2015, 02:02 AM
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Originally Posted by Alsatian View Post
It seems many on the left/liberal side of the political spectrum take this phrase as a patently false and disproven idea. Why is that? I just can't see where they are coming from.

Amazon did not exist 20 years ago. Now they are a multi-billion $ revenue company employing . . . thousands of people. Those people get most of their money from employment by Amazon. Isn't it fair to say that this money is "trickling down" from the company to those employees? Change the example to include all the high tech firms you can think of: Microsoft, Apple, Intel, Google, Oracle, Samsung, etc. These people have not simply stolen money from another sector . . . they have significantly expanded the wealth pie, and the proceeds of that new wealth do not just go to stock holders, it goes to the often well paid employees of those technology companies. Isn't that money real? Why is "trickle down economics" sneered and snarked at?
You will always fail to understand the left/liberal side of the spectrum if you hold them to facts and reason. The best way I can put it, people who are working low paying full time jobs get tense when they hear about the millions their company makes. Then they make assumptions about where the profit goes. Workers talk and the politicians play on it. This is as simple as I can describe wealth envy Alastian.

Cummins Engine Company is a great place to work. It is owned where they build the engines and they put back millions to its employees and its hometown. For every good employer you and myself could name I can name a bad one. These places are quite the opposite, nothing goes back to the point the place of business looks dingy and sometimes dangerous.

It is the owners right to do as they see fit. The employees do have the right to quit or stay. The democrats have found a place in the middle.
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Old 08-13-2015, 03:39 AM
  #7  
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"Trickle Down" is an economic theory. Just as "Bottom Up" is its counterpart. They are "THEORIES" used by economists to predict economic behaviour.

"Trickle Down" purports to impact economic behaviour thru the manipulation of Capital by increasing the Supply of Capital available for investment before it enters the economy. In effect it is saying, "Build it and they will come".

"Bottom up Marketing" purports to impact economic behaviour by using the DEMAND for goods and services as the prime instigator for investment of Capital. It increases Capital AFTER the economic activity has worked its way thru the economy.

They both work!!

However, they both break down as one approaches the extremes of their distribution.

They are TOOLS used to artificially impact economic activity. They can and are misused for political purpose.

For instance, take a pair of pliers and a hammer. Needing a tool to remove the lid from a jar, both have been used with success, however the pliers are much more efficient. Logically one would choose the pliers for this event. However, if the maker of hammers can politically prevent the use of pliers, the hammer maker will receive an economic benefit.

The major problem impacting the failure of "Trickle Down" is that Demand is assumed to be available for consumption of the products manufactured. By ignoring this factor, the Theory falls like a house of cards. Only high risk Investments are made BEFORE DEMAND is authenticated, such as in Venture Capital. Therefore, "Trickle Down" creates a glut of uninvested capital, which altho available for investment is withheld in interest bearing accounts as the most advantageous return. This results in a reduction of economic activity.

The reason economic activity decreases is because 70% of economic activity is created by CONSUMPTION, and herein lies the crux of the matter. When economic activity falls, the revenue available for consumption falls, and with it falls DEMAND. Most advocates of "Trickle Down" dance around this situation by defining Demand as "the desire for the product. However, there is a second element taught in all business schools, "the ability to pay for the product", and herein lies the connection to LABOR.

Consumption spending % of income is not evenly spread across individuals in the economy, so altho the folks making their money from Capital are getting more to spend, they most often do not spend enough to make up for the loss in buying power of the masses due to unemployment and the reduction of wages due to the decrease in Demand.. A second element here is that the folks relying on Capital, are more likely to spend their money OUTSIDE their resident economy, thus removing purchase power within the economy.

Problems arise when Politics operate to disallow the implimentation of the proper theory.
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Old 08-13-2015, 05:19 AM
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I'd much rather have the "trickle down economics" of Reagan than the "trickle up poverty" of OBozo and his Merry Band of Junior Idiots and Broom Hilda in the on deck circle!
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Old 08-13-2015, 06:05 AM
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Originally Posted by flags View Post
I'd much rather have the "trickle down economics" of Reagan than the "trickle up poverty" of OBozo and his Merry Band of Junior Idiots and Broom Hilda in the on deck circle!
There are blissful people everywhere.
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Old 08-13-2015, 06:53 AM
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Originally Posted by waddler View Post
There are blissful people everywhere.
Why thank you. I am quite blissful. By the way, do you know the definition of "blissful"?

Blissful: extremely or completely happy : full of or causing bliss

Bliss: complete happiness

Most conservatives I know could be considered "blissful". Are you saying this is a bad thing? It is LIBs such as yourself that seem to be full of angst and melancholy.
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