Trickle Down Economics Has Been Thoroughly Dis-proven.

Discussion in 'Politics, Religion, Social Issues' started by AP_piano295, Jun 9, 2012.

  1. AP_piano295 macrumors 65816

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    #1
  2. leekohler macrumors G5

    leekohler

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    #2
    As soon as people are honest with themselves and stop clinging to ideology instead of acknowledging reality.
     
  3. citizenzen macrumors 65816

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    Good video.

    It neatly ties into the ones I posted in this thread where Mitt Romney's former Bain Capital partner argues (badly) for trickle down and deregulation.

    But whether enough voters understand and embrace the message Stiglitz is putting forth is the question. At this point it really shouldn't even be a controversy. The trickle down position should be laughed at and easily dismissed. Yet it stubbornly persists.

    And right now, Obama and the democrats are doing a pretty poor job at framing the issue and swaying voters. The latest example is Obama getting hammered for saying the private sector economy is "fine". As Stiglitz point out it's not fine. Obama needs to get his head in the game and start honing his messaging or we'll have a president who believes in and advocates for this disproven theory.
     
  4. thewitt macrumors 68020

    thewitt

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    Actually it works brilliantly until the government steps in and destroys the investment incentives,

    Do you work for a poor man?
     
  5. Mac'nCheese macrumors 68030

    Mac'nCheese

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    I don't work for one man. I work for a corporation. And corporations are not people.
     
  6. leekohler macrumors G5

    leekohler

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    It's never worked- not once. The last forty years have proven that.
     
  7. MadMitch89 macrumors regular

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    #7
    I don't think anyone has said it doesn't work out well for those on top; it's the working class proletariat that does the 'real' work, that makes the wealth, that gets left behind... Most are too busy trying to feed and provide for their families (conveniently) to realise the inherent inequality built into our way of doing business.
     
  8. jnpy!$4g3cwk macrumors 65816

    jnpy!$4g3cwk

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    This reminds me of a satirical Doonesbury sequence decades ago in which someone's wealthy father just couldn't get out of bed in the morning any more because of the lack of incentives.

    That was back when most of us were mostly middle-class. Apparently you're too young to remember it, but, it worked.
     
  9. NickZac macrumors 68000

    NickZac

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    Trickle Down Economics has not really been accepted in quite a few economic schools for years. The primary reason for this is because we have seen a freeze and even a decline in real wages relative to actual (increasing) corporate profits. Even though there have been periods in which bottom lines have increased, wages have not followed the same trend.

    The problem with this theory is that running a business is primarily about cost containment in order to turn profit. You (with you meaning 'a business') make a product or deliver a service at the lowest cost possible. If you don't do this, you won't be running a business much longer. Ultimately, if you are making more money that is 'profit' money, you don't necessarily immediately spend this money down. You don't necessarily spend this money down at all nor do you necessarily increase what you pay your workers if your bottom line itself is increasing. A more common outcome is payout to shareholders, which usually does not cover most workers except those in employee-owned businesses (ex: Southwest Airlines). And so the money may not ever make it back into the economy as originally implied.

    The exception to this are employee-owned companies, in which the Trickle Down does work because your investors are your employees, and vice versa. However, employee-owned companies do not comprise anywhere near the majority of most American businesses.
     
  10. Eraserhead macrumors G4

    Eraserhead

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    #10
    Managers are more important than the workers, at least because they have more responsibility, but they aren't 100x more important.

    Investors in the company are important, but they don't deserve to pay their taxes (dividend and capital gains) at a lower rate than the employees.

    If you really believe the managers of a big company are 100x more important than the workers you'd have no issue with Obama getting a 2000% pay rise? Even that would only give him ~$11.5 million a year, which is less than many corporate leaders even though his job is more important.
     
  11. Rodimus Prime macrumors G4

    Rodimus Prime

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    I would like to point out even in employee owned companies they do not get the pay raises either because generally they are paid around market rate even when you count in their profit sharing bonuses. With the market rate pushed down they are paid less as well. Also most of the employee owned stuff goes into retirement.
     
  12. Happybunny macrumors 68000

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  13. NickZac macrumors 68000

    NickZac

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    This is a good point. I do believe a few try to change rate very closely with the company's bottom line both up and down without using profit sharing bonuses and just basing pay off the previous year...although in this economy I imagine that is somewhat risky given if the bottom line falls out for a few years, pay could see a major shrink. Are profit bonuses generally paid in outright cash or dividends?
     
  14. MorphingDragon macrumors 603

    MorphingDragon

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    #14
    Trickle Down economics doesn't even follow capitalist theory. Capital and Growth is generated by creating demand, you don't do that by giving corporations more money.
     
  15. citizenzen macrumors 65816

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    Okay ... I'll ask.

    How does the government step in and destroy investment incentives?
     
  16. srf4real macrumors 68030

    srf4real

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    #16
    No, trickle down economy theory works. But only as long as the economy is in the crapper. S*** always flows downhill.;)
     
  17. AP_piano295 thread starter macrumors 65816

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    I work for the government.
     
  18. Rodimus Prime macrumors G4

    Rodimus Prime

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    Sad part is if you want to boost the economy try doing it from the bottom up. I know it goes against the grain of our GOP idiot but clearly top down does not work. Why not go from bottom up. The people at the bottom tend to spend 100% what they are given or earn. At the time you might bet 40-50 cents on the dollar extra you give them.
     
  19. Macky-Mac macrumors 68030

    Macky-Mac

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    by dropping trade barriers and tariffs on imported foreign manufactured goods while keeping preferential tax rates for investors in companies that build plants abroad and close their operations in the US thereby transferring any "tickle down" to workers in other countries??? :p
     
  20. niuniu macrumors 68020

    niuniu

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    A good recent example is the UK govt. trying to stimulate the economy by opening access to business loans to small businesses. They used banks to handle the loans at their discretion.

    Sounds perfect.

    Except small businesses never saw any of the money. Banks held on to it, they didn't trust small businesses to invest the money well (irony, I know right?).

    Trickle down sounds good in theory, but greed and mismanagement at the top means it can never benefit the working and middle class proportionately.
     
  21. itcheroni macrumors 6502a

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    #21
    Trickle down economics is a loaded term. If the issue is taxes, higher or lower rates, we can have a discussion of the issue. But trickle down economics provides the rationale for one side. The usual rationale is that if rich people pay less taxes, they will spend that money, and stimulate the economy. It's a bit unfair to have a debate where you force the other side to defend a rationale they may or may not hold.

    If you are saying trickle down economics doesn't work, I agree with you. But that doesn't mean lower taxes is a bad thing. Or that one person making more money than another is a bad thing. These are separate arguments from trickle down economics.

    The burden of proof is backwards. Trickle down economics gives an argument that rich people having more money benefits other people. Its easy to come up with examples of when it doesn't. But if a person is not hurting anyone, he or she should be allowed to make as much as they want. The argument needs to be made that it does hurt someone.

    I don't believe trickle down was ever a theory. It was made up to convince voters to accept a proposal. It's political rhetoric, easily dissected under a microscope.
     
  22. srf4real macrumors 68030

    srf4real

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    Yeah well, this is not my brain on drugs either.. :cool:
     

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  23. Eraserhead macrumors G4

    Eraserhead

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    #23
    Given the US is a democracy it is certainly a bad thing that the Americans are much less reluctant travellers than Europeans (and even the Asians are starting to really travel quite a bit).

    The Americans don't travel a lot for two reasons, one a lack of paid holiday, and two a lack of money for the middle class.

    The Americans have wasted trillions of dollars fighting wars in Afghanistan and Iraq - and quite a bit of that is down to the people have a relatively weak understanding of other cultures due to lack of exposure.

    Secondly I'm not really clear on how you can have equality of opportunity without some reasonable level of equality of achievement and without equality of opportunity you land up with this huge underclass who are essentially leeches off the more productive members of society with very little opportunity for them to improve their position - which is bad for everyone.
     
  24. hulugu macrumors 68000

    hulugu

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    Lowest cost isn't the only variable for a company's success. While in commodity businesses cost is essential, in others there can be variations of business models that *can* make a business successful even if it is generally more expensive than its competition.

    Generally, I agree. Trickle down economics was the phrase for a more complicated set of assumptions that turns out to be, if not true, at least more complicated than made out to be.
     
  25. Sydde macrumors 68020

    Sydde

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    There you have it: Americans do travel abroad – to kill people.

    So, honestly, why should we even allow private industry to handle banking and finance? In the US, most of the economy is focused on this type of activity, so our skills at actually doing things are seriously starting to atrophy (the empire is crumbling under the weight of its own success). If all forms of finance, which are supposed to serve us not leech off of us, were constrained to be non-profit organizations limited to 1% overhead, more active money would stay in the system and rich people would have to work to earn everyone's respect.
     

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