- craig hawkins
- Los Angeles, CA
- United States
Certified Financial Planner, Certified Financial Planners Board of Standards, Inc.
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Trickle Down Economics - Where is it successfully practiced?
I work with many Conservatives and I've been asking the same question for over 20 years. Where is Supply Side Economics practiced and what are the conditions of that community? I was very disappointed with TED for not posting Nick Hanauers Talk - Income InEquality. We all know the corporate sponsors would have been upset, but restore the "Fairness Doctrine". "Ideas Worth Spreading", live up to the name and offer both sides. Have someone like Arthur Laffer come to TED and present the counter balance of this discussion. I know the talk boarders on line of Political speak but ideas worth discussing.
craig hawkins
Ehis Odijie 10+
craig hawkins
pat gilbert 50+
You have this idea stuck in your head. Numerous comments have demonstrated that this is a specious idea.
You owe it to yourself and your clients to clear this up.
Can you give me an example of a trickle up economy?
craig hawkins
pat gilbert 50+
Regarding Reaganomics the numbers say you are 180 degrees to the truth.
This quote from a friend of mine:
The main point is that the additional freedom via deregulation and incentive to work, invest and produce gained via the 25% across-the-board marginal-rate tax cuts in the early '80s was strong enough to carry the U.S. through almost 25 years, until successive increases in government, regulation and/or marginal tax rates by every President since Reagan finally hammered freedom and incentives hard enough to halt and defeat the uptrend.
The only other time this has occurred was during Harding-Coolidge
scott lee
Money doesn't trickle down, it trickles up. If money trickled down then rich people would be getting poorer and poor people would be getting richer. If you can find a country where that is happening then you will find the trickle down theory actually describing something happening in the real world.
In general, supply side economic policies have been put in place all over the world since the days of Reagan, Thatcher and Mulroney. There hasn't been a whole lot of trickling down, but an genuine investigation into the consequences of of those policies couldn't hurt.
Krisztián Pintér 200+
it does not happen today in the US. it is a good question why. why would the system that created the middle class suddenly destroy it? can we suspect something else?
scott lee
Did capitalism cause a trickle down effect in the 18th and 19th centuries? Assuming you are talking about America, there was a lot more going on than just capitalism. There was oppurtunity for poor people, but it was built on conquest more than capitalism. The government was giving away free land which was stolen from the indiginous people. There were resources that were unvalued by those people, and so were left in abundance to be taken by the european immigrants. The most obvious was gold, but also there was coal, iron, and the most astonishing lumber on the west coast the europeans had ever seen.
Of course, rise of the american economy during that time was also built on slavery. How do they figure into the trickle down effect?
By the beginning of the 20th century wealth had been centralized again to unsustainable levels and the economy collapsed. The middle class was almost non existant. It was only the post depression reforms that lead to the strengthening of the middle class and a prosperous post war period. Those very reforms have been undone using the "trickle down theory" as justification and now the middle class is in danger again. Inequality is as great as it was in the days just prior to the great depression.
Krisztián Pintér 200+
there are many attempts to attribute the success of capitalism to slavery or colonialism. however, neither of these can explain what happened. there was no slavery in europe in the 1800!s, and there was no colonialism in germany or the US at that time. this is nothing but a copout answer, so we don't have to answer to the question, how could the world develop the fastest under free market, if we want to blame bad things on the free market?
scott lee
Are you arguing that colonialism and slavery had no effect on the economy? Your ideology is blurring your vision of history. There is no single factor responsible for the rise of the economy in any time period. You may argue that capitalism allowed for the industrial revolution. It could be that Isaac Newton made a greater contribution with the invention of calculus and understanding of the behavior forces that allowed for the invention of the steam engine.
Of course there is also democracy. Through democracy people in power actually have an incentive to try to benefit the poor. After all, capitalism did not benefit African Americans, Native Americans or even women in 19th century America, and neither did democracy. It was only in the 20th century when those populations gained the right to vote that they started to see some of the benefits.
Finally, we have to remember that unfettered capitalism failed. It collapsed in the great depression. It was only after the great depression that it became clear that the invisible hand doesn't exist and it is possible for people pursuing mutual self interest can lead to mutual self destruction. Capitalism is useful, and beneficial, but it must be kept on a short leash by a strong democratic government.
Krisztián Pintér 200+
technology is a result of the free market economies. the other tried to stop us, but free market prevailed.
" colonialism and slavery had no effect on the economy?"
negligible. colonies were far away, no capital goods could be moved from there. gold and spices don't spin up the economy. in fact colonialism cost resources. the US north was more advanced than the US south. also many european countries developed fast without slaves. it is not a factor.
"Of course there is also democracy"
democracy is much newer. great progress already happened in the 1800's and before.
" we have to remember that unfettered capitalism failed"
despite it never existed? strange claim. all the good things came about as economic progress enabled them. one after the other. of course, governments and unions were always quick to claim the success for themselves.
l aresu
Krisztián Pintér 200+
for capitalists to get rich, they have to serve the masses. they have to make everyone's lives better.
l aresu
Krisztián Pintér 200+
l aresu
Krisztián Pintér 200+
l aresu
Krisztián Pintér 200+
scott lee
Mercantalism was the basis of the European empires. Why do you think they bothered to colonize most of the globe if they didn't want the resources? Do you think there was no trade at that time?
"technology is a result of the free market economies. the other tried to stop us, but free market prevailed."
The Ancient Egyptions had some of the most advanced technology of their time, so did the medieval Chinese. Was that the result of the free market? What about ancient greece? Technology is the result of human ingenuity. It happens in all cultures.
"now comes the part when i tell you that 2008 was caused by government."
Now you are really going off the deep end. The government did not force private companies to dish out bad loans and sell the debt as secure investments. The government did not force private companies to charge interest rates below prime, or give out loans with no money up front. Those companies did that because they knew they could sell the debt and not have to worry about the risk of the loan. The only thing the government is responsible for is not regulating them enough to prevent it from happening. The deed was done by Wall Street, that's why they bare the blame.
You say unfettered capitalism has never existed, but how unfettered do you think it has to be? The lowest corporate tax rates in history aren't low enough? The ability to move money instantly to anywhere in the world and avoid taxation all together isn't free enough? Corporations that are larger than many countries are still too oppressed? Perhaps only if there is no government at all will you be satisfied. Of course there is no such thing functional anarchy, and if there was no government, then the corporations would become the government.
Krisztián Pintér 200+
when ancient egypt led the world, there was no free markets around. when there was a race between free market and central planning, free market won.
"caused by" and "did" are two different things. the government didn't do 2008. they merely caused it with misguided legislation, and crazy money creation by the fed.
every government program has to be repealed that is harmful. there is no correct amount. each and every expenditure has to be scrutinized, and abandoned if it just hurts.
"of course" is not an argument.
l aresu
i would have spent the same words.
scott lee
Often neo-libertarians will talk as if they have the authority of the study of economics behind them. However, economists do not all agree with those ideas. Wikipedia refers to the austrian school of economics as heterodox because it is not popular among most economists. Many economists hold to the line of study that came from Keyens after the economic collapse of the great depression.
The fundemental problem with neo-libertarianism is it views corporations as individuals, as if exxon mobile fundamentally similar to the guy selling me tomatoes at the farmers market. That is not the way governance functions. In reality state sized corporate actors share governance with geographically tied states. The take part in the negotiation of trade deals, sit on government boards in many countries, and lobby (sometimes bribe) for legislation that they want. They directly influence the law through strategic lawsuits to set precedence they desire, and complicated licensing of technology and intellectual property. They directly influence the media through direct ownership and have an impact on democracy as a result.
The idea that the study of economics naturally leads to more deregulation, government austerity, lower taxes is one that is strong in the public eye. However, this is not because that's what economists agree on, it's because those ideas are pushed by powerful people who are simply trying to avoid taxes. Those ideas are pushed through public relations, privately funded "think tanks" and centralized media. Not from the consensus of economists.
Krisztián Pintér 200+
you need to start measuring claims on their validness. that requires understanding economic theory. and if you do that, you find out that what austrian economics says, stands. what other economists say, does not stand.
l aresu
it's like a mantra they wish all of us to believe blindly (mustn't be casual that the base of the republican party is full of bigots who believe in the literal interpretation of the bible), as so far there isn't a single example where this perfect free market has eradicated poverty allowing the huge majority of a big society (little fiscal paradises who live robbing the taxes that belong to nations whose people sweated for that can not be considered an example) to live a decent life without having to struggle to reach the end of the month (common expression we use here in italy). the nations where the best living conditions are spread among the largest number of people are in nord europe and in scandinavia particularly, where there is free market indeed, but the intervention of government makes so that through the payment of taxes (amongst the highest rates in the world!!) nobody stays behind. a friend of mine is living in denmark since 5 years and will never come back to italy if not to visit his parents and relatives: he's happy despite the cold weather :). i do agree on every single point of your post, especially when you talk about the strength of lobbies with a huge economical power to push the laws who serve their selfish interests. so far, recognizing the positive aspects of free market, i do strongly oppose their nearly total lack of empathy, their hate for the weak and their pretense that any individual must struggle alone, thats the opposite of what makes us human: belonging to a social species.
Wade Crum
Then I would take it a step further to allow these types of busnesses to proliferate. (wow...why would I assume a business like this would proliferate?) Because it is based on balance rather than explotation. How do we monitor when things tilt towards the exploitative side? Education, transparency, and truth in journalism. Once we recongize harmful macro economic business practices we simply no longer invest in companies with said practices.
Business should have a strong innovation component. Marketing should be product driven where technology is not spoon fed to us through patent law. Note: These are my opinions and when I say "should" I really mean suggest.
Robert Winner 50+
I am a independent and always speak up to bashing from both sides. You bashed now defend.
Your attack on TED is also out of line. If you have suggestions please direct them to TED. Your TED story in your bio says you like TED for what it is now you want it to change. Why?
Bob.
craig hawkins
As far as the 14Trilion dollars deficit. Wouldn't it be far to look at the previous administrations spending record.
Two Wars - never paid for (Republican lead) - billions spent monthly. Current Administration voted against the wars (Obama)
Tax Cuts - Unfunded
Medicare Prescription Coverage - Never Paid for
Housing Crisis - (Mainly due the defunding/underfunding of the Justice Department by Republican Administrations)
This added up to 9 Trillion before the current administration. Every effort to pay for some of these past expenditure has been blocked by the Congress. Therefore the deficit will continue to increase. We are now at around $15.5 Trillion in debt, the same trajectory the previous admin had us on with there same policies. Want to lower the deficit?
End the two Wars you started.
Pay for our Tax cuts ()
Pay for the Medicare Prescription coverage
Fund the Justice Department - (S&L Crisis under Reagan/Bush) , (SubPrime Loans - G.Bush)
Where in the world does Trickle down economics work in the world? I think we call them third world nations.
Robert Winner 50+
craig hawkins
george lockwood 20+
Scott Armstrong 50+
There is no such thing as trickle down economics. All money flows from the workers to the owners.
pat gilbert 50+
As matter of fact I have yet to come across a business owner who has done anything less than bust their a$$ for a very long time at great risk with a typical failure rate of 96% after 5 years.
The fact is that most things you enjoy in your life (including that electric guitar, Leo Fender) came from a small business owner.
As I recall you are a public school teacher. I guarantee you don't have a clue what it takes to make a business work I will also guarantee that it is hardest thing you will have EVER done.
What a freaking glib statement you make about "all money flows from the workers to the owner. NOTHING COULD BE FURTHER FROM THE TRUTH.
Rhona Pavis 50+
Ehis Odijie 10+
The truthfulness of the statement is irrelevant - the view that government should grant favours to businesses, as a way of stimulating the economy, is flawed. There is no such thing as government money. Government takes money from you and I ; giving it to the rich through tax break or bailout is a nice way of paying friends . .
The problem of tax should be treated differently . .
I am for freedom. .
Gail . 50+
David Hamilton 50+
The key to sustainable growth, is local investment. Instead of shopping at the big chain, go to the local place. Every time you shop at McDonald's you are exporting money away from the city you live in, and the people you care about. Find people who are good at things, get to know them personally, and become a responsible consumer as often as humanly possible. Intelligent consumption and investment decide the future of an economy, not the top tier tax rate.
Lower taxes in general, across the board, are good. If you were going to pick a target to really unleash economic growth however, I would go with skilled labor. Skilled laborers can use lower tax rates to take the next step into small business owner, and they drive the real economy.
pat gilbert 50+
2) Capital goes where it is treated best.
3) Extrapolating from the above if we want full employment we should encourage investment by reducing the punitive forces on investment. This is not rocket science.
4) Unlike the idiot in TED lover's video. These are natural laws that are good for the soul. Government handouts are bad for the soul.
Rhona Pavis 50+
pat gilbert 50+
Rhona Pavis 50+
scott lee
Investors do not drive the economy, consumers do. If there is no market demand then there are no investors, period. If an investor starts a business where there is no market demand, the business will fail, and whatever employees he or she hired will lose their jobs.
Google did not create the demand for a better serch engine. Do you remember what searching the internet used to be like? It was frustrating. Everybody wanted a better search engine. In fact, they created that search engine with very little investment. Apple didn't create the demand for the smartphone. The iphone was one of a long list of portable devices that existed before hand, and people liked them.
No amount of advertising allowed them to sell to people who couldn't afford them. They didn't creat a consumer market where there wasn't one.
If investors drove the economy then the US would have a booming economy right now. After all, investors have never been richer. Where are all the billionaires rescuing the economy? They are afraid to invest because consumers are too poor to make their businesses viable.
pat gilbert 50+
In the context of this thread the pertinent point is the thing that makes the economy grow.
This has been proven to be encouraging investment.
Rhona Pavis 50+
pat gilbert 50+
Rhona Pavis 50+
pat gilbert 50+
Rhona Pavis 50+
Krisztián Pintér 200+
pat gilbert 50+
Your disagreement is duly noted.
Rhona Pavis 50+
pat gilbert 50+
These conversations are going to be someone stating their opinion most of the time is conjecture. I don't want to waste time on conjecture.
When state something it is not an opinion based on sound bytes. I have studied this subject. There are only a few on this board who have genuinely done their home work on this subject. When someone really wants to learn something about this or any other subject the denizen of this forum fall all over themselves to help. And I might add are good at it.
But someone just wants to opine or "be right" what is the point?
I will add but not argue with you:
How come we have geometrically more specialties geometrically more GDP than when the industrial revolution started? This is a manifestation of Matt Ridley's video
Rhona Pavis 50+
Krisztián Pintér 200+
so the idea is that we reduce tax for the rich, so they can pay more to the poor.
suppose the government did not do budget cuts at the same time, so we can separate the effects.
in that case, the only way to reduce tax at the top is to raise tax at the bottom. the extra money received by the rich might indeed used to pay wages, but it will be just enough to compensate the increased tax there. net job creation is zero.
now suppose the government decides to cut the budget at the same time. in this case, true job creation can happen, but it is a result of the budget cut, not the "trickle down" effect. if the government decided to reduce tax at the bottom, it would result in the same increase in jobs, since now it is cheaper for employers to employ people.
of course there are some subtleties to this. it is possible that if you redirect some money from the bottom to the top, it will rearrange the economy to produce more capital as opposed to consumption. but it does not really seem to be the case. if we make labor relatively more expensive, and make employers possess more money, it might just cancel each other out, but it is also possible that a part of the money will be used other ways, like outsourcing to china, replacing labor with machines or simply take the cash and invest it in a remote part of the world.
moral of the story: you can't cut the bottom of the blanket, saw it to the top of the blanket, and hope to have a longer blanket. the rule of thumb is that the total amount of tax matters, not its distribution.
David Hamilton 50+
You might argue, that the 1% saved, will be better spent by individuals than governments... but it won't make up for one system being objectively more corrupt and destructive than another.
Krisztián Pintér 200+
David Hamilton 50+
Fritzie Reisner 100+
I agree that this particular philosophy professor is critical thinking-challenged. He shows dramatic confirmation bias.
No one should think he represents his field.
pat gilbert 50+
http://en.wikipedia.org/wiki/Trickle-down_economics
Economist Thomas Sowell has written that the actual path of money in a private enterprise economy is quite the opposite of that claimed by people who refer to the trickle-down theory. He noted that money invested in new business ventures is first paid out to employees, suppliers, and contractors. Only some time later, if the business is profitable, does money return to the business owners—but in the absence of a profit motive, which is reduced in the aggregate by a raise in marginal tax rates in the upper tiers, this activity does not occur. Sowell further has made the case that no economist has ever advocated a "trickle-down" theory of economics, which is rather a misnomer attributed to certain economic ideas by political critics.[9]
Gail . 50+
http://www.youtube.com/watch?v=b4JsCEYpIUA&feature=my_liked_videos&list=LL23ULzV7ik5lQQo51yOnJ0g
pat gilbert 50+
Fritzie Reisner 100+
He is not an economist. He misconstrues the words "invisible hand," which had no religious connotation in Adam Smith.
He seems also to be involved with 9-11 conspiracy theories, according to Wikipedia.
Krisztián Pintér 200+