Why Trickle Down Economics failed

[AllentownJake]

The trickle down economics theory of 30 years ago has been a failure. Simply put, wealthy people do not give money away for free, if they did they would not be wealthy. They will however invest money in the form of providing loans and buying capital.

So you have a situation, where wealthy people have more money to invest in loans and capital, they will inflate the value of assets. Generally in the land and commodity sector by buying more of it. Again, wealthy people, did not become wealthy by giving things away for free, so they will sell the land or rent and the same with the commodities for a premium on their investment.

This would be fine if the employees of the wealthy were being paid well, again, wealthy people don't become wealthy by paying people exorbitant salaries. However, they will lend with interest.

So you have people who are working who in order to start out, need to finance themselves. In order to do this, generally they need some form of education. This cost money, and will be financed with an interest rate payment and principle against future earnings.

They need a place to stay so they either have to rent or finance a house and the commodities for daily living must be purchased from the wealthy as well.

Essentially you inflate the cost of things, while reducing the amount you pay people, and tax them more to pay for the governmental system. Making it more difficult for people to save, which means they have to borrow more, which means that you have more claims on future income.

Now the way to make this workable is through taxation, which is the only way, you can get the wealthy to give something away for free. As stated before, the wealthy hate giving away things for free. However, in a democratic republic, it is the cost of doing business. By paying for the government operations the wealthy make an exchange for a democratic republic to allow them to exist. After all, since the government is democratic, the people can create laws to take from the wealthy at any given time.

Trickle Down economics puts the burden of taxation on the non-wealthy.

In reality, the wealth only exists because there is a government to back it up. No government to back up your claim to property and put a system of orderly laws in place for you to utilize said property, the non-wealthy will band together and take your assets by force.

Look what happens as soon as there are no threat of police or military in an area with poorer people and richer people to the assets of the richer people. Quick hint assets change hands rather quickly generally based on who is bigger.

Whenever I hear anyone of any wealth say I hate government, I crack a smile, no you hate paying for government, you like government just fine because without government your lifestyle is over. Without a court system, roads and bridges, military and police, etc. You my friend are a hunter/gatherer and judging by your profession, I doubt you'd be a very good one.

Essentially what will happen under Trickle Down Economics is a lesson taught to any 12 year old who sits down with 5 to 6 friends and plays a long game of monopoly.

However, for the monopoly lesson to be fully understood, each kid needs to start at different intervals letting the first child to get to start with 5 rolls of the dice before the other, the next child with 4 rolls, etc and the first child to be given more money than the other children.

The end of the game will generally always result in either the first or second child bankrupting the other children. It is an extremely rare occurrence when the last child wins, and that is only because somehow the child manages to land on both Boardwalk and Park Place and somehow be able to purchase them.

It really matters not, once one person controls all the assets the game is over.

You cannot have a democracy and a wealthy class that does not want to pay for government. The only way that system works is if you have a dictatorship, which the wealthy should be just as weary of, because the dictator can confiscate property at a whim faster than in a democracy.

[laughingliberal]

1. That pretty well sums it up.

Any chance of having the wealthy pay their share in taxes?

[AllentownJake]

2. Don't think so

They are behaving quite delusional right now.

[Caliman73]

71. I was alway destined to lose at Monopoly.

I would feel bad when people landed on my properties and would cut them breaks. I guess I am not destined for wealth. I just don't have that killer instinct.

[reformist2]

70. This is a great illustration of why we need to recognize the right to own property.

I don't mean the right to buy property, I mean the right to own it as a birthright. Because if you're born into a world where all the land is already bought up and costs a fortune, you're pretty much screwed.

[Hannah Bell]

3. K/R. You presented the trend of the last 30 years in an easily understood way.

[Union Yes]

4. Testify ATJ!

:applause:

:kick: and rec.

[Demeter]

5. FRSP!

You know it's coming.

[ThomCat]

6. Yup. Unfortunately, Obama is giving us Trickle Down Economics again.

I've been saying it for almost a year now, what Reagan failed to accomplish with Trickle Down Economics, Obama is going to give us from a Democratic administration.

It seems to be a trend that Democrats, once they get power, put Republican wet dreams into effect. The things they fight AGAINST when republicans are in power are the things they DO when they are in power. Democrats gave us Welfare "reform" that destroyed the social safety net for millions of people and made mass poverty even worse than it needed to be. Democrats gave us Bankruptcy "reform" so that only corporations can successfully get out from under debt, but people can't. If people owe corporations, we have to pay up, no matter how painful it is, and how much deprivation it creates.

Now a Democrat is giving us Trickle Down Economics to truly give all of our wealth to the wealthy. We have a jobless recovery, because who needs jobs as long as investors are doing well? And he's even hinting now that he may put Social Security AND Medicare on the chopping block.

Republicans have been trying for almost 20 years to re-implement Trickle Down Economics, and they have been trying for 75 years to destroy the social safety net. That net would be totally gone if Obama lets them take apart Social Security and Medicare.

Somehow, it is never the Republicans that succeed in doing the worst long term damage. They fuck things up in big expensive ways, but it is the Democrats that implement the big permanent legislative changes that Republicans WISH they were able to accomplish.

:(

[quaker bill]

7. the Freidman - Reagan concept

was pseudo "Fordist", after Henry Ford. The notion was that "wealthy people build industries". The essential problem is that this was never true. Bill Gates is an excellent example of something closer to the truth "people who have an idea and aspire to become wealthy build industries", and with some luck, it works for them. More wealthy people does not mean more jobs, and in fact, works against this.

When Ford came along, the "horseless carriage" was a toy for the very rich, more or less built one at a time by hand, almost a work of art. Ford had the concept of assembly-line mass production, that he understood could make many more vehicles than the existing market would absorb. So, he decided that paying his workers enough to be able to purchase one was essential to the economics of his new business model. If he did not, this new means of production would quickly flood the market, and his business would fail. But the essential thing to learn, was that he started as a person of modest wealth, who wanted to build a large business and become wealthy down this path. The essential question to be pondered was whether if instead he had started out massively wealthy, would he have bothered?

The point being that building a massively succesful manufacturing business is usually pretty slow and involves alot of hard work. The market manipulation we saw arise in earnest shortly after the Reagan tax cuts for the wealthy, builds or loses wealth very quickly and requires very little labor, no union contracts, no massive long term investment in factory construction projects, and limited exposure to a not entirely predictable market for manufactured goods. Beyond this, there is no need to share the proceeds with anyone, particularly workers, because as a market player, you don't have any, and certainly to the extent you passively own part of a company that employs folks, you have no vested interest in their well being.

The point being that instead of enabling the talented to build industry, their policy released financial predators and market manipulators. Why? Because this behavior was given a massive tax preference through low capital gains taxes, and because the stock market made this sort of play easy and potentially very profitable for those who had wealth to begin with.

If the typical path to massive wealth was building large industry manufacturing, this is the economic activity we would see. However, once market manipulation, or more or less gambling in the Wall Street Casino became the typical path to massive wealth, the economic activity changed to focus on asset bubbles and when to buy and sell in one.

The Freidman - Reagan model of trickle down never worked, first because it was based in a misread of history (people who wanted to become rich built businesses, some just kept going once they got there). Secondly, because they, through tax policy, they put the incentives in the wrong places to achieve their putatively desired outcome. They chose so poorly in this regard that I have to wonder whether the result obtained was the actual intent, and the rest of the BS simply a marketing ploy for overt political purposes.

[cameozalaznick]

72. What H. Ford taught us about trickle up economics....

Back in the twenties, Ford was tired of the turnover in his factories so he decided to start paying his workers $5 a day, which was considered a rather exorbitant wage in those days. Thousands lined up to take these factory jobs at that pay scale.

Ford was able to hire the best people and solved his turnover problem.

Thing is, there was an unintended consequence. Suddenly his workers were able to buy the cars they were building. It opened up a whole new market. And as Ford sold more cars, he bought more things like car parts and fabric and steel and stuff. And those businesses benefited. And they were able to hire more people who in turn were able to buy more cars and other things.

[cbdo2007]

8. This is quite evident in the recent study where people making $350 Million....

only paid 16.6% average in taxes in 2007.

If "trickle down economics" worked they would be happy to pay their actual tax rate, which in turn would trickle down to their state/Federal govts and the "little guys" everywhere. Instead they play tax games and they put their actual incomes away tax free (somehow?) and live off of their capital gains which are taxed at the lower rate.

There should be NO circumstance where someone making $350 Million is paying at a lower tax rate than I am making $70,000 (between wife and I). Even if I wanted to take "capital gains" out of my 401K I'd have to pay my normal tax rate on it plus a penalty.

Everything is set up to benefit the wealthy. EVERYTHING! The only things us little guys can do to strive for our own survival is to get out of debt and play the game as well as we can by their rules. Sure, they're still going to win but my goal here is to protect myself and my family so I'll do what I have to do to learn about the stock market and get a little piece here and there when I can.

[closeupready]

9. Yes, trickle down is a bankrupt economic theory that doesn't work.

Why don't people get that? Frankly, I think the wealthy don't WANT to get that.

[blindpig]

10. It was always a sham.

Libertarian nonsense.

[cbdo2007]

11. It's ironic how you always have politicians praising "Trickle Down" and not economists.

"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."
- from the Wikipedia

[Romulox]

13. What were the Wall Street bailouts if not the soul of "Trickle Down" economics?

You'll get a fresh justification for it, for sure (lately: ARMAGEDDON!!!!!1111!!!) but the monomaniacal theme of all "orthodox" economics is money for the wealthy.

[cbdo2007]

16. Good point....and it didn't even have anything to do with "tax rates"

which are typically what the trickle down and supply-side theories focus on.

It's funny because I know just as many Repubes as Dems who don't agree with the Wall Street Bailouts. Trickle Down "lower tax" tea-partyiers I know are very angry about the wall street bailouts, so they're a strange thing that don't seem to have any fans or supporters besides those actually getting the checks in their pockets.

[misanthrope]

12. I like the Monopoly analogy but you forgot...

...one thing. In that extremely rare case when the kid with one roll of the dice lucks up into landing on Park Place and Boardwalk, then everyone holds his exceedingly rare case up as an example that the system is fair and "anyone can still be anything they want," ignoring all the other outcomes, odds and factors in the game.

As I'm fond of telling economic conservatives, "There are documented cases of fish raining from the sky but I don't run outside with a net every time I hear thunder."

[laughingliberal]

15. "I don't run outside with a net every time I hear thunder..."

Great analogy!

[ChoppinBroccoli]

14. You Lie!!! It DOES Work!!! And It Works For EVERYTHING!!!

Trickle down theories work to solve ALL the world's problems!!!

Trickle down theory to end world hunger: Give food to fat people.

Trickle down theory to health care reform: Only give medical treatment to healthy people (wait, that's kinda how we do it now!)

[cbdo2007]

17. Wikipedia actually does a pretty good job explaning why supply-side economics

doesn't work and has been proven to not work.

http://en.wikipedia.org/wiki/Supply-side_economics

I'm not sure why more politicians don't point to some of these facts and just laugh in the faces of the "lower taxes" fools.

[robertpaulsen]

26. Clicked that, then I clicked on Mellonomics. What's the difference?

Cuz I can't find any!

http://en.wikipedia.org/wiki/Mellonomics

Perhaps that's because supply-side economics, or whatever name it goes by, has been a miserable failure since the 20's!

[hobbit709]

18. The only thing that trickles down to us is warm, wet, and yellow.

[ChoppinBroccoli]

19. And By The Time It Gets Here, It's Cold

[Yurovsky]

64. And who wants it at that point?

all the goodness is pretty much gone...

[ConstitutionalLib]

20. I am sorry that Imust beg to differ with you, but...

You make some pretty fantastic assumptions that just aren't factual, and I feel I must call attention to them, and , Yes I know this will win me no friends here, but here goes;

I am a small(very small) business owner. I own a cleaning/carpet cleaning/ tile and grout cleaning company. I know I am an evil capitalist even though I, to, clean toilets, push brooms, and clean carpets. I sometimes work, as I did last week on a big job 22 hours in one day. No, I do not wish to pay my people MORe than their efforts are worth to me. No, I do not reap rewards at their expense. No, they do not work for my benefit.

If the tax code allows me to keep a little more of my money, that allows me more to invest in my company. That means I can purchase more productive equipment, or in last years case, I bought a tile and grout attachment that allowed me to branch out. It also allows me to hire people, which in turn expands the tax base, resulting in higher tax revenues. This is why when JFK cut taxes, and when Reagan cuts taxes, and even when the hated W. cut taxes actual money collected by the treasuries in ensuing years increased.

You are right wealthy(and I am not one) do not give money away for free, nor are they supposed to, BUT, it is a fact, that the top 1% of wage earners pay 40.42% of the Federal Income Taxes collected in 2007. The top 5%, paid 60.63%, the top 10% paid 71.22%, the top 25% paid 86.59%, and the top 50% paid 97.11% of ALL federal Income taxes collected. (data from the IRS)So it is fair to say that the Rich do pay their fair share of taxes.

But, if you are wealthy, AND a business owner, as most of the high wage earners are, the money you earn allows you to build your business either, bigger, or more diverse, or put it in a more successful position, which allows you to hire more workers, all of whom pay taxes of some kind, thereby helping the economy. Look at it this way; Bill Gates has a NET WORTH of somewhere around $60,000,000,000.00, That is not cash but shares of microsoft. If he were to liquidate everything, and give it out to everyone under the poverty line in America, each person would receive about $2,800.00, which they would most likely spend. The financial engine that is Microsoft would be gone. 30,000 workers would be out of work. those tax dollars lost. His wealth, and its resultant use, is more beneficial to the country than any populist distribution of it could achieve.

As to your assertion that the wealthy, by investing their money, simply inflate the cost of goods and commodities, to make a profit, that is absurd. The market effectively prices goods and commodities daily in reaction to an incredible variety of news and information from the world over. Example; there is a freeze in the mountains of colombia this week, coffee prices in NY are going up.

There is a new find of copper in the Andes, copper prices and all the resultant products prices are going down over time. If a wealthy person, to use your example buys a property to rent out, and make money. They have invested their money in a property that they can rent our for more than their mortgage payment, resulting in a positive cash flow(which generates tax revenue to the government) and presumably someone rents it because they feel it is a worthwile home for the price, everybody wins! The renter gets a space that they use for a price they are willing to pay, the owner gets rent money which he values mroe than the space, even the government makes their cut off the transaction.

That is basic economics. It is not one person or class of people taking advantage of another, it is transactions by mutual trade to mutual benefit. At least that is how my economics professor taught me.

Comments welcome. And yes, politically I am more of a Constitutional Libertarian, and that is why I predominantly believe that the government can only screw things up by controlling an economy.

[cbdo2007]

21. Your situation is the only reason there is actually *discussion* about this at all...

on both sides. Small Businesses are always held up as the example of who is getting taken advantage of by high taxes, and who would benefit the most from tax cuts and trickle down economics but rarely are they the ones who see the gains from policies that implement forms of trickle-down economics. Rather, "small business" is the tool they use to fight this in the same way they they use American soldiers to support war. Nobody is going to come out and say they don't support small businesses. Of course we all want small businesses to have lower taxes and to do well because most small businesses go out of business or make very little money.

But lowering the capital gains tax to 15% isn't going to help you or most Americans and that seems to be the major sticking point here. Capital gains taxes are only helping those people who are buying and selling stocks, which rich people are using as their primary income to lower their overall tax rate. That's why we're seeing the tax rate of the top 400 earners in the US at an average of 16.6% while you an I are paying closer to a 25% tax rate probably.

I agree with you for the most part. Capitalism would work in a fair system and the theory of trickle-down economics makes sense for the most part, but there are too many catches in the system where the bigger the company, the bigger the breaks, which raises taxes and prices for the rest of us.

[ConstitutionalLib]

30. I am sorry to have to differ with you again, but...

First of all, 80% of the 400 richest people in America are first generation millionaires, in other words, self made.

Second, It is not only stocks that generate Cap. gains tax, it is ANYTHING bought for one price and sold for higher. This includes property, vehicles, almost any investment you are lucky enough to make money on, INCLUDING your retirement funds, depending upon their structure. As to mine and your tax rate, My EFFECTIVE rate, meaning the percentage of my income paid in taxes is 54%. This is because even though my business registered a loss for the last two years, I STILL have to pay self employment tax on the gross receipts, not what I am actually paid.

As to your tax rate, lets look at this dispassionately; Lets say you make, for round figures, $50,000/yr. gross. You have the typical wife and 2 kids. You do not itemize, but claim the standard deduction of $11,400, leaving you with $38,600, BUT WAIT! You have four exemptions, worth another $3,650 each for a total deduction of $14,600, now leaving you with taxable income of $24,000. Child tax credit and Child and dependent care credit will lower your taxable income by another $1,700. on average leaving you with taxable income of $22,300. Your tax on this amount will be $2,506. $2,506/ $50,000 = 5% Your EFFECTIVE TAX RATE, meaning the rate you actually pay after deductions, exemptions, and the like is 5%, not the 25% you think it is. and nowhere close to the 16.6% paid on average by the Forbes 400. BTW they spend hundreds of thousands more on tax attornies to get their taxes down to that effective rate. If you make $1,000,000 this year, and you paid an effective rate of 16.6%, that means you paid $166,000 dollars in tax to the federal government. You probably paid another 10% to an accountant or attorney or both to get your taxes to that rate.

In my case I would LOVE to hire someone so that I don't have to spend 12- 20 hours a day on the truck, but with the pending health care legislation, the threat of cap and trade, the proposed increases in workmens comp, and liability insurance, I can not accurately guage my employment costs, and I will not hire someone only to find I have to fire them 3 months down the road because it costs too much to employ them.

[HughBeaumont]

48. No million/billionaire on the Forbes 400 is "Self Made". NOT ONE.

http://www.commondreams.org/archive/2007/11/07/5075

What Forbes means by "entirely self-made" is that the fortunes were not inherited but derived from business activity. Does this make the Forbes definition of "entirely self-made" reasonable? After all, if someone starts with modest resources, does well in business, and makes a fortune, isn't it fair to attribute that wealth to individual merit? Not really, though Forbes would like us to think so.

To see what's wrong with this idea, it's easiest to start with criteria that ought to disqualify a person from claiming to be "entirely self-made." After we've applied these criteria, we can see who's left in the pool. So, then, let us scratch from the list of the self-made anyone whose accumulation of wealth has been aided by any of the following:

Laws concerning property or contracts, and the public agencies that enforce such laws
Public schools or employees educated in public schools
Employees or customers who rely on public transportation
Roads, bridges, airports, sewers, water treatment plants, harbors, or other utilities built and maintained at public expense
Mail systems built and operated at public expense
Public hospitals and government-licensed physicians
Health and safety regulations created and enforced at public expense
Police and fire protection provided at public expense
Public libraries and parks
Any public amenities that add value to commercial or residential real estate
Government contracts
Government-provided business incentives
Regulatory agencies, such as the Federal Trade Commission or the Securities and Exchange Commission, that sustain trust in the stock market
A government-granted license permitting the exclusive use of a broadcast channel
The Internet
A form of currency legitimated and backed by a stable government
Social welfare programs that keep the poor from rebelling
The U.S. military

If we use these criteria to determine who can legitimately claim to be "entirely self-made," the Forbes number drops dramatically. It's not 270 out of 400. In fact, it's precisely zero.

If not for the legal and political arrangements that we create and maintain as a society -- with contributions from us all, costs to us all, and benefits to us all -- and if not for what we call "the public infrastructure," nobody could accumulate wealth. In short, there can be no private wealth without common wealth.

What's hilarious is that Steve Forbes himself isn't self-made. He's part of the "Lucky Sperm Club" - he inherited his father's publishing empire.

[ConstitutionalLib]

66. Ok, if that is your criteria, then...

what is it that separates Bill Gates form you? The items on your list are for the most part the proper function of government, and paid for by the taxes of our citizens. They are available to everyone, and therefore can not be used to claim that the ingenuity of one man had no place in his success.

People like Bill Gates, Warren Buffett, Larry Elison, Harland Stonecipher, these are people that did not inherit any particular wealth but created companies that have become very successful, making them billions in the process. They created the company. They managed it. They engineered the success, They benefitted, how can you NOT call that self made?

Or for a more drastic illustration take An Wang. Do you remember Wang Computer? An Wang immigrated from China in the late 40's or early 50's. He landed in America with $0.12 in his pocket. He created Wang computer, later bough by Compaq, then DCS, then somebody else. Before his death he funded the Wang Center for the performing arts in Boston. Educated in China, self made in America. Didn't even speak english when he arrived, had to take night classes.

[HughBeaumont]

76. You're like, not real big on history or facts aren't you?

What was Oracle's genesis? Anyone? It started off as a relational database for the CIA. Who was one of Ellison's first clients? Wright-Patterson Air Force Base. Oracle is still used in a vast amount of governmental projects and entities. Public, Public, PUBLIC MONEY.

Bill Gates is also a bad example of "self made". While not born into massive wealth, his family was wealthy enough to lend him start-up capital for Microsoft and well-connected enough to get him into I.B.M. as a provider. This is confirmed by his mother's position on the UW Board of Regents, where she met John Opel, IBM chairman. You don't think Gates takes heavy advantage of the h1-B and L1 visas the Government allows him to have? You don't think he takes advantage of the tax breaks he gets for sending jobs overseas? Government contracts/projects?

I also don't buy your story about A. Wang. $0.12 in his pocket? How did he get into Harvard, then? Last I checked, Harvard was never free. Did he win some lottery money?

Everything listed above absolutely lays claim that no man is an island. Who do you think buys products? Buys initial shares of stock? Where do the employees receive their education? What about business compliance? Where did all of their research come from? Utilities? What about partners? Where do you think Oracle and Microsoft's bread and butter CAME from? You DO know the Internet started out as a government creation, right?

And with that first crack, are you trying to imply that Bill Gates is "my better"? Are you shitting me? Nobody is "BETTER" than anyone else. You ain't anything special because everything fell into place for you. For every Warren Buffett, there are about 10,000 or so others that tried and DIDN'T make it. I'm sorry that you're under the impression that these people received no public or governmental help whatsoever, thereby justifying the cockamamie theory that they should get away with paying little or no taxes, but that's not my problem. "Still, it is so".

Forbes and the economic class it represents would like us to forget that wealth always depends on collective effort. Why? Because of what the "entirely self-made" myth implies: If I have amassed a fortune solely through my individual talent and hard work, then it is wrong for the government to take any of it away. By further implication, taxation is wrong, and progressive taxation is really wrong.

Casting "the government" as an evil entity that confiscates the fruits of one's labors also serves the interests of the Forbes class. Working-class and middle-class people who embrace this view are less likely to take an interest in government as a means to build, protect, and fairly employ the nation's common wealth. By helping to portray government as the enemy of individual initiative and prosperity, the "entirely self-made" myth thus also saps the spirit of democracy, leaving government ever more in the control of the wealthy.

( snip )

But we should reject the myth -- not just because it's wrong, but because, unlike many other comforting myths about American society, this one has especially pernicious consequences for democracy and community. At worst, it can make us feel that we have no right to democratic control of our common wealth.

If we recognize that all private wealth depends on our common wealth, then we incur two obligations. One is to contribute our fair share -- and the bigger the rewards we derive from society, the bigger that share should be. The other obligation is to participate in protecting our common wealth and determining how it is used. We should not let those decisions be made only by those who sell us a self-serving myth and then laugh all the way to the bank.

[ConstitutionalLib]

82. I never said any man is an island, and now I understand

your position is that if you have ever had any contact whatsoever with anything paid for or provided by the government, even payment for services rendered(as in a business vendor) that you have not succeeded by your own efforts.

Ok, in your claim about Oracle, what does it matter who his first clients were? He started a company that provided a service, and he got paid for that service. What does it matter if the client is the government, or Ben and Jerry's? He is getting paid for work performed, it is not a gift, nor a loan, nor anythiing that detracts from his success.

As for Bill Gates, of course he takes advantage of visa, and governmental regulations, he would not be successful if he did not, does that take away from the fact that he created a company that now employs 30,000 people? Does that diminish that achievement?

So you are telling me that if I land a huge contract today, and I fulfill that contract well enough that it leads to other contracts, and my company grows to make me a millionaire, I did not achieve that through my own efforts?

As to your last paragraph, I said nothing about Bill Gates or anyone else being "better" than you or I, how could I? I don't even know you, but that doesn't stop you from exhibiting all the rage of feeling that I did cast him in a better light than you, why? And everything did not "fall into place" for me. That was my point if you bothered to read and understand it. I did not do anything that anyone could not do. I was unemployed, but knew that I would lose my family if I stayed there. That was my motivation to do what I had to to find work. 9 months of interviews daily, walking to them because I didn't have bus fare, talking to HR people who didn't like the fact that I didn't have a phone, or a proper address. My point was, that I was given no gifts, and you, sir, have the same potential in you, success to any degree is not about luck, or genetics, but hard Goddamn work!

[Yavin4]

84. The Point Is This

Capital gains tax cuts only lead to speculative investments which artificially inflate and deflate asset values.


he entire housing crisis was built on changes in the capital gains tax cut for housing. If a homeowner owned a home for a certain period time, that homeowner could sell it and get a cut on the capital gains. This change opened the door to those exotic mortgages where folks paid little or nothing on the home for that period of time and then flipped it for a higher price.

Your business interests are not served well with cuts in the capital gains tax. Your business would be better served if there were a single payer health insurance system which would mean lower healthcare costs for your employees.

[ChoppinBroccoli]

22. Here's What You And All Supply-Siders Fail To Understand

And I find myself saying this more and more often these days. EVERYONE IS NOT LIKE YOU!!! Everybody that espouses Libertarianism has that fatal flaw. They can't imagine a scenario where someone isn't exactly like themselves. They can't imagine a person who has bad circumstances thrust upon him through no wrongdoing of his own. They can't imagine a person who flat-out isn't ABLE to obey their mantra, and "pull himself up by his bootstraps." OK, now that that rant is over, I'll get back to the point.

You run your own small business and, being a libertarian, naturally just assume that EVERY business is like yours. They're not. You think, "Well, if I get more money into the business, I'll pump it right back into the business by hiring more workers, buying new equipment, etc." But, once again, not every small business owner is like you. I am a small business myself. And when I say that, it's exactly what I mean. The business is ME. I don't have any employees. And given the specifics of my business, I don't NEED employees, nor do I particularly want them. Now, if you give me a few extra dollars or a few extra BILLION dollars, it doesn't matter. I'm still not going to create job one, nor am I able to "expand" my business by buying any new "thing" (I have all the tools of the trade I need in order to do anything I want within my particular realm). Saving a few bucks on my taxes won't net me a single new client (and I run a business that is 100% client-based--if the phone doesn't ring, and if I don't get hired, I don't make money). That extra money will not make me any more productive or expand the tax base in any way. It will go right into my pocket, which is what happens with pretty much every big business (and that's why we're in the financial hole we're in now--tax giveaways are not trickling anywhere but into the CEOs' pockets). And THERE'S your fatal flaw. At some point, EVERY small business will reach a "critical mass" where they are no longer able to expand, and don't have any desire to. That's why the simplistic equation of More Money = More Jobs fails miserably.

And I think that's the sentiment that everyone is expressing in this thread. Politicians want you to believe that the money that is given to the people at the very top will somehow "trickle down" to the "little folks" at the bottom. It doesn't. There is decades and decades of proof that it doesn't. And if you still don't believe it, just look at the Oil Companies. During the Bush Years, they had larger profits than any corporation in the HISTORY OF TIME. How many new jobs did the oil industry create? There's your Trickle Down Economics theory laid to waste.

[ConstitutionalLib]

31. And I have to say...

Most business are not like YOU. Most businesses are in situations where they can expand or maintain their business without new equipment, employees, training, or other expenses.

And yes, I HAVE been unemployed through no fault of my own, that is how I came to BE in business for myself, because I could not find work, and would not accept, simply pounding on doors begging for work. I instead turned to banging on doors looking for contracts. I went from a plant manager of a major manufacturer, to being a self employed janitor, to gaining enough contracts to require two people working for me, allowing me to handle all the carpet and tile and grout jobs. I, by the time, I finally made any money, was on the verge of losing my house, and 7 months behind on my car, and dodging the repo man. So, yes, I KNOW what is like to lose everything, to be on the verge of losing everything, through no fault of your own. BTW, the reason I lost the plant manager job was 9-11. Construction died off and the company did not need a 2nd and 3rd shift anymore, and therefore didnt need a plant manager for them. The difference is how you view your circumstances and your options.

[ChoppinBroccoli]

40. OK, Since You Seem To Subscribe To The Theory Of Perpetual Growth.......

........then let me ask you this question: how much money would your cleaning business need to make in order for you to employ ONE MILLION people? My guess is THERE IS NO AMOUNT because the "critical mass" for your type of business is probably less than 100. At some point, you have all the employees, all the equipment, all the this, that, and the other that your business needs, and then you start turning the corner into the area of wasteful, unnecessary spending. Sure, you COULD hire someone to follow you around carrying your nuts around in a silver spoon, but that's not cost-effective.

So again, I ask you this: when your business is at "critical mass," and you have no room for expansion, what happens to the extra money that will be thrown at you by Supply-Side Jesus? You know as well as I do where that money will go. Directly into your pocket. It won't trickle ANYWHERE. And since the vast, vast, VAST majority of businesses in this country are not in flux, and not subject to growth, guess where all that money you're GIVING AWAY to them will go. Into THEIR pockets.

And people wonder why Trickle-Down Economics fails everytime it's tried.

Trickle-Down Economics is the equivalent of wanting to send a message to someone, and rather than using a DIRECT method, like the postal service or e-mail, you put a note in a bottle and toss it into the ocean. Hey, MAYBE, SOMEDAY that note will actually get to the person who needs it. But the odds are your message-delivery method will be every bit as effective as Trickle-Down Economics. Hey, here's a novel idea. Why not give the money DIRECTLY to the people who NEED it for a change? Or do you think that the best way to end hunger is to give food to fat people? After all, the fat people won't eat it, and they'll probably just throw it away, so the homeless people who are starving to death (who are probably eating out of the garbage anyway) will find it there and be happy, right? Don't give it to them DIRECTLY. Funnel it through the fat person, make sure it's good and rotten, and then make them fish it out of a garbage can. You just have to hope that the fat person doesn't have a freezer in the basement where he stores food, thus ensuring that the excess food never makes it to his garbage.

[Political Heretic]

46. Follow up to your second paragraph:

This is an example of how not all businesses are the same. Part of the problem of the piss on theory of economics is that once businesses reach the critical mass of their existing infrastructure rather than expanding from regional to national, from national to global, or from lightly populated at any of those market levels to heavily saturated - instead of doing that, the pocket the money.

Makes sense, if someone was handing you a bunch of money, and you could completely supply your existing business and have money to spare, a great many people of the top-fifth category primarily benefiting from piss on economics would choose to consider the scale and scope of their business "good enough" and start taking the "surplus" of government generosity and spending it on enhancing their own personal wealth or profit.

That's fine, except that this real option that really happens is not at all accounted for in piss on economic theory.

[ConstitutionalLib]

56. First of all, EVERY Business

in America is constantly in flux. Either growing or declining, expanding services, or training for employees, changing directions as new markets open, new equipment and procedures, new operations, etc.

As to your critical mass argument, yes most cleaning companies have much less than 100 employees, but the biggest in New England has 9,200. And even if my business had no room for either growth or improvement, and I can't imagine that in any business, and any increase in profits DID fall directly into my pocket, after the IRS takes their cut, It would STILL stimulate the economy as I spend it. The things I buy create and perpetuate jobs, they create profits for those who produce what I buy, and as I try to buy local when I can, and American all the time, my money, is always working to benefit Americans.

Let me pose a question to you;

By what right do you or anyone else have the authority to tell me how much I should make, spend, invest? and what gives anyone the right to take a portion of my families earnings to give to someone else?

Don't mistake that question, I am all in favor of charity, and probably give a higher percentage of my earnings to charity than most, in both good times and bad, but what I am asking is why do you or anyone have the right to TAKE it against my will?

I see an interesting discussion on the horizon, lol

[ChoppinBroccoli]

60. The United States Constitution

You might try reading it sometime.

And if you're still laboring under the myth that your money belongs to you, pull out a dollar bill and tell me what it says.

[ChoppinBroccoli]

61. So Many Myths........

"The things I buy create and perpetuate jobs, they create profits for those who produce what I buy"

OK, I'm first going to operate under the premise that this old chestnut HASN'T been thoroughly disproven time and time and time again. Even if we assume that what you say is true, your argument is that in order for money to stimulate the economy, it has to be SPENT. That much we agree on. So since we both agree that in order for money to stimulate the economy, it has to be spent, we should also naturally both agree that the best way to stimulate the economy is to give that money to the people at the BOTTOM of the socio-economic ladder.

Because what happens when you give money to a poor person? He/she spends it. What happens when you give money to a rich person? He/she hides/hordes it. Just like the whole giving food to fat people argument. Give a starving person food, and he eats it. Give a well-fed person food, and it goes into his basement freezer and sits.

So, since we both agree that the best way to stimulate the economy is to give the extra money to the people at the BOTTOM, then we certainly must both agree that Trickle-Down Economics is a steaming pile of equine excrement.

And that's even if we assume that your statement is true.

[ConstitutionalLib]

67. WRONG! Economics is all about incentives

If someone is out of work, especially if it is for an extended period and you keep simply giving him money, you may be keeping him from starvation but you are also increasing his dependency the longer he keep subsisting on charity. Work ethic, like muscles atrophy from lack of use. It would be much kinder to provide money to him for training in a career of his choice(within reason) that would sustain him and his family than to effectively tell him that he needs your generosity because he can't possibly do it himself.

Upon what FACTS do you base your assertion that the rich simply horde or hide money. The rich are more adept at putting money to work than you or I, that is how they maintain or grow their wealth. And when exactly did achievement become an indictment, it used to be the foundation of the American Dream.

[ChoppinBroccoli]

62. Yet Another Point

You claim that every business is in flux, which means that every business is either growing or shrinking. So if we accept that as true, then EVERY business is either hiring or firing RIGHT NOW. Now, you and I both know that isn't true. How many times has YOUR business put a "Help Wanted" sign in the window, seeking NEW employees (i.e. not replacing employees who have left)? Once a year........MAYBE.......on a GOOD year? No, the vast, vast, VAST majority of businesses are exactly the size they want to be, and are not hiring or firing.

Also, I wanted to address your assertion that if you manage to make more money, you'll hire more workers. Once again, even if we assume that this statement is true (and again, since you admitted that "critical mass" is a reality, we know that it's not, but we'll roll with it anyway), your belief in Trickle-Down Economics STILL doesn't achieve the goal you say it does.

Let's use an example. For whatever reason (let's say that Supply-Side Jesus has been elected President and you have to pay ZERO taxes this year), your business is in the position of hiring 10 new employees. Who are you going to hire? The best and the brightest available, right? Let's say you've filled 9 of your available 10 spots, and that final spot comes down to a decision between two candidates. The first candidate parks his BMW in the lot, walks in wearing a brand new Armani suit, hands you a resume showing that he's an intelligent kid working his way through school and is getting excellent grades. The second candidate stumbles in from the bus stop wearing rags, and he hasn't bathed in days because he's homeless. Now I ask you: who are you going to hire?

With all due respect to your anticipated response of, "I wouldn't hire the rich kid because he probably wouldn't have the attitude to handle blue-collar work and he's probably only in it for the short-term, etc., etc., etc." response, everyone here knows exactly who gets the job, and it wouldn't even be a head-scratcher. So, by YOUR OWN ACTIONS, the money given to you "at the top" DIDN'T trickle down to the homeless man "at the bottom," did it? It arguably went even further UP the socio-economic ladder. At any rate, it never made it to the bottom. And it never does. And it never will. And that's why Trickle-Down Economics fails EVERY TIME.

[ConstitutionalLib]

68. WOW, I have been indicted and convicted without even being allowed a defnese

You apparently have not read what I wrote, so I will address your points;

1.) I have NOT said that I believe in "trickle down economics", merely that some of the OP's statements were incorrect, and as I cherish debate, I sought to begin a conversation on them.

2.) When I said "constantly in flux", I defined that as not only growing or shrinking, but also changing services, new training, new procedures, or equipment, for example, although I it has not yet significantly expanded my business, I have purchased equipment to allow me to expand into Air Duct cleaning, and tile and grout cleaning. I have gotten my company "green certified". And I have trained and become certified to do Crime/Trauma scene cleanup. These expanded service will pan out, they are already netting me some new customers, but as I said, the growth has not yet offset the expense, but it will. This an example of being in flux. I have spent money and time to be able to expand the services I offer, and when that pans out, I will hire people to do that work, training them myself, as I do with even the basic janitors. Yes, even though I own the company I still clean toilets every night.

3.) You assert that I will take the BMW driving man over the homeless guy because of some prejudice on my part, without even knowing me. Here are my hiring criteria;
a.) Person must be clean, neat, and polite with my customers. He/she must treat them as if they were his/her own.

b.) Person must be teachable.

c.) Person must have a work ethic, ie: show up on time, be professional, treat customers, and my equipment with respect. If for some unknown reason you are going to be late, have the courtesy to call me so I can call the customer and explain.

d.) Follow the training and procedures that I have taught you.

Other than this, I don't care if you are black, white, rich, poor, live in a house, or homeless, male, female, or something in between. All I care about is that you do the work you are assigned in a competent, professional manner, and make my customers happy. If not, there are other places for you to work.

I don't believe that working means your employer is exploiting you. I believe that all work is a trade. I agree to give my employer the best of my abilities in return for an agreed upon some of money per hour/ per year, whatever. I owe my employer my best, and in return he owes me the agreed upon compensation package. That is fair isn't it?

[ConstitutionalLib]

69. PS: I NEVER subscribed to your "critical mass" argument

I stated that I could not believe that happening

[ChoppinBroccoli]

78. The Point Of The Example.......

........was NEVER to call into question your hiring procedures or to call you biased in any way. The POINT was to show you that YOU, YOURSELF, a proponent of Trickle-Down Economics would not allow the extra money you were given to actually trickle down to the bottom. You and I and everyone who reads this knows you're not going to hire the homeless guy. Your own hiring criteria confirm it. a) It's hard to be clean and neat when you sleep in a box and have no access to bathing facilities. b) A lot of poor people are unemployed because they aren't teachable (another reason why I dislike Libertarianism--it provides no solutions for the mentally challenged or those with brain injuries or defects). c) Refer back to the argument about people with birth defects, mental conditions, injuries, or who just plain never had parents who taught them what a work ethic was (under Libertarianism, these people deserve to die). d) Again, what about the people who CAN'T follow procedures due to learning disabilities, etc.?

So again I ask, if YOU won't hire the people on the bottom rung of the ladder, why do you assume anyone else will? They won't. And they don't. And that's why the money never makes it to "the bottom." And that's why the Libertarian mantra of, "Are you poor? Just get a job!" falls flat on its face.

And what about those people who are on the bottom of the barrell? People who CAN'T "pull themselves up by their bootstraps." Contrary to every Libertarian's belief, not everyone is poor because they're lazy. Some people have ACTUAL problems that can't be solved by a pep talk and a boot in the ass. As I said above, who's going to hire someone who's mentally unstable? Who's going to hire someone who suffered an injury and now can do very little even to sustain himself/herself? Who's going to hire the person who came from a broken home and didn't receive ANY instruction in the life skills you and every Libertarian take for granted? Libertarians have no answers for those people. They're unemployable, as you freely admit, but you don't believe in giving them handouts either (again, based on this Libertarian myth that charity makes people lazy--you might want to check a lot of the studies conducted in this area that conclude just the opposite--this old chestnut came courtesy of good old Ronnie Reagan and his tall tale of "welfare queens who pick up their monthly checks in their new Cadillacs." A blatant and provable lie, but a lot of people still believe it). And you don't want any of YOUR tax money going toward job training programs either (which also ignores the fact that a lot of the people couldn't gain anything from job training due to their mental faculties). So what happens to them? Libertarians don't have any answers for them because they can't conceive of a scenario where a person isn't EXACTLY like themselves.

[ConstitutionalLib]

79. Ok, While I understand your points, let me tell you a little about myself..

maybe that will help you understand.. In 1992 I was homeless and unemployed. The hardest part of that was not having a telephone number for employers to call back. I got around that by donating plasma and buying a cheap pager(cell phones were not all that prevalent in those days) Before a job interview, If I couldn't use a friend or aquaintances bathroom, I would go to a gas station and do a thorough wash up, and pretty myself up as best I could. I walked into the interview with my head held high, and explained not only my situation, but how I could be of value to the company. I eventually got a job through Manpower, and help it through the probationary temp to hire period, and became a factory employee. 5 years later I was shift leader, then work cell foreman, then production manager. I organized the UAW into the plant, was elected Chairman of the bargaining unit, we were part of a larger local, after being promoted to management, I then had the opportunity to negotiate the same contract from the management side that I had negotiated three years prior from the union side.

My point is that because you are homeless, does not mean you have to remain there. That is up to you. Just because you are poor, does not mean you have to remain there.

[ChoppinBroccoli]

80. You Did It, So That Means Everyone Else Can Too

OK, let me throw a little monkey wrench into the works. Let's say that while you were on your way to your job interview, a city bus plowed into you, leaving most of you on the pavement. Now you can't walk. Or you have a brain injury that leaves you unable to do much of anything. Or let's say now that you're a woman whose husband left her with no income and a house full of kids. How are you going to go to these job interviews now? Let's say one of the kids has a birth defect and requires 24-hour-a-day care (and has to go to the doctor once a week or more). You don't have health insurance (your husband had that, but he's gone now), and you don't have the money to hire someone. What's more, you got married right out of high school, have almost no practical education and no job skills. Who will hire you? And who will care for your child while you go off to work every day (assuming you can even GET a job)? And who will allow you to KEEP any job with all the time off you require?

Again, Libertarianism has no answers for you. And that's because Libertarians can't imagine a scenario where someone is not exactly like themselves. They'll just look at you and say, "Get a job."

[ConstitutionalLib]

81. Wrong again.

You are making assumptions about everyone you just illustrated, I am not. I never said everyone can do it. Although I DO believe that EVERYONE has the potential for greatness inside of them. You just fell back into naming all the situations that assistance was made to help, but if you can be honest for a moment, you and I BOTH know that the majority of those who receive assistance do not fall into those neat little pigeonholes. In fact BLS stats show that 68% of those who receive assistance are long term recipients, not people who fell into a bad patch, and need temporary help until they can provide for themselves.

It is easy, and intellectually dishonest to make your argument about those for whom the system was designed, and ignore those who predominantly utilize it.

You are so busy stuffing me into the little box you have designed to describe your impression of Libertarians, that you can not even discuss the points I raised, without rancor.

[HughBeaumont]

77. "B" . . SIX!

:eyes: :rofl:

[AllentownJake]

23. Lol

So the Paultards came for a visit.

Congrats on your CPAC victory.

[Elwood P Dowd]

24. It seems like every time we try "Trickle Down"

we have boom/bust economic cycles, recessions, increased budget deficits, and a growing gap between the rich and the poor. If Trickle Down worked as advertised, there would be increases in Real Wages for middle class and poor workers. The opposite has been happening, especially when you use REAL CPI numbers and not the fake ones from the government. Reagan, Bush I, and Bush II have all tried it and look at the disaster it's been. Nothing has trickled down on the middle class and poor except bullshit from the top.

You're applying Trickle Down to your own small business -- not to some fat cat millionaire who sets on his fat ass making money playing with paper. 70% of our economy comes from demand for goods and services, and the vast majority of that demand comes from the middle class and the poor and not from the wealthy class. Giving away trillions of dollars in tax breaks to the rich in the name of Trickle Down or Supply Side Economics has royally fuck up this country.

[dysfunctional press]

25. you seem to be a complete idiot.

"This is why when JFK cut taxes, and when Reagan cuts taxes, and even when the hated W. cut taxes actual money collected by the treasuries in ensuing years increased.

you don't think that inflation and population growth account for any of it...?

i'll let paul krugman try and explain how it ACTUALLY works to you.

http://krugman.blogs.nytimes.com/2008/01/17/reagan-and-revenue/

For the econowonks out there: business cycles are an issue here — revenue growth from trough to peak will look better than the reverse. Unfortunately, business cycles don’t correspond to administrations. But looking at revenue changes peak to peak is still revealing. So here’s the annual rate of growth of real revenue per capita over some cycles:

1973-1979: 2.7%
1979-1990: 1.8%
1990-2000: 3.2%
2000-2007 (probable peak): approximately zero

Do you see the revenue booms from the Reagan and Bush tax cuts? Me neither.

[ConstitutionalLib]

33. The numbers you show are

Peak to trough. in other words you are showing the downside of the business cycle only. It is disengenuous to both leave out the upside, and miss my point about Actual revenues.

According to the Treasury's own website; in 1983, 1984, 1985, and 1986 the US Treasury enjoyed record revenues from taxes in each of those years following the Tax cuts of 1981.

http://www.usgovernmentrevenue.com/downchart_gr.php?year=1960_2008&view

Even the Treasury's own website credits both the tax cuts of the 80's and the tax reforms with creating the longest post war economic boom in the nations history, see the Income Tax fact sheet at ustreas.gov

[dysfunctional press]

47. i trust paul krugman's take on the numbers more than yours OR the treasury's.

:shrug:

[ConstitutionalLib]

55. I prefer to see the data

and draw my own conclusions, rather than have them spelled out for me by someone pushing an agenda. I do not trust Paul Krugman because from what I have read in his articles, he only uses numbers to support his already adopted political conclusions. I would much rather see an objective analysis of the numbers before they are spun into a political calculus.

BTW; his numbers come from the Treasury too, except that he only looks at a very specific data point that supports his pre-drawn conclusion, and omits any data that challenges it.

Sorry, but MHO

[dysfunctional press]

59. "he only uses numbers to support his already adopted political conclusions..."

which of course libertarian asswipes NEVER do...:eyes:

[ConstitutionalLib]

74. Name calling is so unnecessary...

I simply prefer the more open and honest approach of telling the whole story, rather than taking only the tight close up that shows favorably for my cause, and excluding the wealth of information undermining my cause.

[quaker bill]

27. You have missed the entire point

of recent history. You do so with this specific statement:

"As to your assertion that the wealthy, by investing their money, simply inflate the cost of goods and commodities, to make a profit, that is absurd. The market effectively prices goods and commodities daily in reaction to an incredible variety of news and information from the world over."

If asset valuation bubbles did not exist, tech stocks would not have exploded then imploded in the 1990s, and home values would not have crashed over the last 2 years. The valuation of tech stocks, where the people creating and running the company never showed a profit and had no effective plan to do so, would properly have been worth pennies a share, not the hundreds of dollars that they were. The Hunt brothers would not have been able to drive the price of silver up toward $20 dollars an ounce in the 1980s, by market manipulation, before they sold and it crashed back to $5. The price of the house across the street from me would never have vastly exceeded the $160K you might get for it today. Even Alan Greenspan eventually figured this out and has thrown the towel in on the notion of a magic "invisible hand" of the market.

The problem with the entire theory you expouse is the assumption of a rational market. Under this assumption it is believed that while a person may not act rationally, the collection of us will overall behave in a rational manner, and that goods, commodities, and asset prices will reflect this rationality. The simple fact that P/E (price/earnings) ratios occasionally go through the roof is all the proof one needs of irrational behavior. Stated simply a P/E ratio of 20 means that the company is earning enough to pay you back your investment in 20 years. During bubbles occasionally P/E ratios will bubble up to levels exceeding 100. No one in their right mind calls this rational, it is gambling.

The fact is that government, to a certain extent, inexorably controls the economy, everywhere. The question is not whether this should happen, but how do you want it done. Our government has been an inflation hawk for 30 years. They do this by intentionally raising interest rates and restricting money supply any time unemployment reaches a point near 4 percent. This is done to "cool" the economy and prevent excess demand for labor from driving wages up. Here they manage the economy to keep a certain portion of us unemployed all the time, to prevent inflation. It has largely worked, but at considerable social cost.

You only truly get to pick how the market is managed, you don't get to deny that it is, because that is and has been false for a very long time.

[ConstitutionalLib]

34. You, Sir, are correct!

at least partially. Yes "irrational exuberance" , in Alan Greenspan's words, does occur, we are human and susceptible to emotional excesses. but the market also corrects these excesses, that is the bursting of the "tech bubble" as well as other downturns in cycles.

[Political Heretic]

37. Define "correct."

A cycle of excessive booms followed by severe recessions leading to follow-up jobless recovery's is not a recipe for sustainability. It is an example of a system that is unsustainable, as the increasing scope and magnitude of these economic "bottoming outs" indicates.

If things get economically worse by long term indicators after every "correction" - that is a path to no where good. The market "resets" alright - it just resets at a less health level every time.

[ConstitutionalLib]

51. what is missing from this discussion

is WHY their are booms and busts beyond the norm.

[quaker bill]

44. True

and it did so far more frequently and violently prior to implementation of the federal reserve and overt monetary policy. What libertarians seem to fail to understand is that the "Great Depression" was only "Great" because it was bigger than all the depressions that came before it. It was not unprecedented.

Further, on every such "correction", real wages for the working class fell, and never fully recovered in the upswing.

In short, there was a "war on poverty" because the free market system left alot of people very poor. If libertarianism was the answer, the problem would not have existed.

[Political Heretic]

45. The depressions of the 1870s and 1890s are known to social work historians

Because the economic unrest created by them led to major shifts in public mood about poverty.

[Political Heretic]

36. Actually, I don't think you are not differing, you just don't realize it yet.

What you are describing is not a defense of trickle down economics. In trickle down economics you would be part of the "everyone else" who theoretically benefits by policy aimed and providing economic socialism for the top fifth quintile income earners and multi-billion dollar corporations.

What you are describing is a progressive tax code, in which people making lesser money pay lesser taxes. Thus, in your situation as probably an upper-middle class American (I'm assuming you make under 250,000$ a year, give or take) economic policies of so-called free-market advocates do not benefit you as much as they benefit those above you.

Those above you are not passing the rewards of these benefits down to you in substantively discernible ways. Among this top fifth quintile group of financial elite - it's also helpful and accurate to refer to them as the investor class - money going back into their pockets does not flow directly back into the economy in the form of jobs. Instead, its passed around in bought and sold debt, futures, credit default swaps, derivatives trading and the like - which have all taken massive, stunning amounts of money out of the economy.

You are a constitutional libertarian. That's great. I'm not one who's going to come unhinged by your self-identification. But I would think that, as a constitutional libertarian, you would get sick and tired of being used by Republicans. Decade after decade they refer to you - "small businesses" or "small business owners" - as their political talking point. And yet, after using you like a sucker for cheap political points, their policies do not primarily benefit you.

I'll be honest, I can't speak for JFK tax cuts off the top of my head. But Ronald Reagan's tax cuts overwhelmingly went to the top fifth income quintile, while middle class taxes stayed almost flat. Under Bush Sr., middle class taxes - your taxes - rose. (You said you are not wealthy, remember? In describing yourself you also indicate that you are not "poor." Thus, you are middle class.) Bush Jr. cut both some middle class taxes and top-fifth taxes. But his tax package overwhelmingly favored big businesses and the top-fifth, and that's where that money stayed.

We can measure that last statement. Wages for the middle class were effectively flat from the 1980s onward, there were minor gains one year followed by minor dips the next year. Prior to this, wages for the middle class were slowly but steadily rising, coupled with productivity. Starting with Reagan, productivity and wages decoupled. The former skyrocketed, while the latter flat-lined. In some sectors, and among the "lower" middle class, wages have actually fallen. You can see more information on this here: http://www.stateofworkingamerica.org/tabfig.html

Now contrast that with this Democratic president. Believe me, I am not a blind loyalist to Obama. I'm sure I probably don't have the same objections that you might have, but I certainly feel very critical of his term so far.

But the fact remains, and this is not in dispute by any Republican no any Democrat nor any Constitutional Libertarian, that this President passed the largest middle class tax cut in history. Were these less dire economic times, this fact would resonate much more clearly in the minds of America. But in the midst of this Bush facilitated economic disaster, many middle class Americans are unemployed, or seriously struggling even with more of their money in their wallet. Nevertheless, the fact remains that this Democratic President passed tax cuts that put you first - the largest one of its kind.

"Small" business owners are not, and never have been, part of the top-fifth quintile that is the focus of "trickle down" economics. They are part of the group of people that benefits are supposed to "trickle down" to. And again, I would think that you must be getting sick of being played and used by Republicans, who endlessly flout your name around to score political points and then enact policy that prioritizes the wants and whims of wall street, super-big business, lobbyists and the financial elite (being that top-fifth) over your needs.

That's not to say that you experience no benefits of any kind at any point. But which would you rather have: economic policy that puts your need second, and the whims of the richest people in America first (every Republican Administration in the last twenty years) or economic policy that puts your needs first (this Democratic administration, with the largest middle class tax cut in history?)

Trickle down economics is about giving to the very top (not to you) with the claim that those benefits will then flow down hill to you and from you then to those who make less than you. Responsible economics is about giving to you - and to the middle class, as the engine that drives our prosperity, with the proven evidence that doing so creates wealth and lifts people from poverty.

Cheers,
PH

[ConstitutionalLib]

54. Interesting discussion, but....

No, sadly, I am not in the "upper middle class" I used to make about $100,000/yr. less expenses, but in 2009 my business lost money, meaning I only made what I could take as expenses, like gas.

I do not believe in class warfare. I think "fair" means everybody pays the same rate, without loopholes. That way somebody who makes $1,000,000/yr. pays 10x as much as someone who makes $100,000/yr. This is fair to me.

As for tax cuts going mainly to the rich, OF COURSE they go mainly to the rich, the rich pay a higher proportion of the total federal income tax collected, by the Treasurys own stats. How can you give a "federal income tax cut" to the bottom quintile when the bottom quintile not only pays no federal income tax, many in that group receive money back from taxes that they didn't pay in the form of EITC. According to the treasury, the top 25% of income earners paid 86.59% of all federal income taxes collected. The top 50% paid 97.11%. So of course when there are tax cuts they get most of it. However it is the income earners in these catagories that also create the jobs in this country. When was the last time you saw a poor man create a job? I am not knocking poor people,but trying to illustrate a fact.

Reagans tax cuts were across the board. He lowered ACTUAL INCOME TAX RATES for everybody. And Actual dollars received by the treasury in the following years rose dramatically. Same thing happened with JFK in 1962, and followed in 1963, and 64. Same thing happened in 2002, 2003, 2004, 2005. The Treasury, by their own figures set successive records in revenue form income taxes in those years. I am preaching an ideology here, merely regurgitating USGov stats.

Also we were discussing tax cuts, but you say "we can measure that last statement" and your measurement is "wages were flat". First of all, wages are not directly tied to tax cuts. Tax cuts are about people keeping more of what they make. And about creating new jobs. Therefore you can not use a persons wage to measure the effectiveness of a tax rate cut.

As to President Obama's tax policy, where exactly was the middle class tax cut he passed? Tax Rates have not changed at all. So where is the cut? Giving you an average of $8.00/wk. more in your paycheck due to a change in the withholding rate, is not a tax cut, because it is still balanced out at the end of the year when you file your taxes on the same rates, it will only affect the size of your refund, if you get one, because you are receiving some of it during the year in the form of the $8.00/wk.

As to being "sick of the republicans" I am sick of both parties. I am sick of the republicans preaching about "smaller government, less taxes, less regulation" while increasing spending, and regulation, and the general size of government. And I am also sick of the Democrats drunken spending spree as well, and their incessant feeling that they know better than me how to provide for my family. I, and I said this when I was making $18,000/yr. as a temp. When I was making $100,000/yr. and now when I am floating around 30% of that, neither need nor want the government's help, or instruction. I simply want them to get out of my way. I will provide for my family, that is my job, not theirs. If I do not have the skills I need I will go out and get them. If I don't have the income I need, I will find a legal way to get it.

Thank you for the intellectual discussion. It is much more refreshing than the name calling I see so often.

[Political Heretic]

58. You want a "ME" society. I want a "WE" society.

Before I elaborate, first some corrections (both ways):

Reagans tax cuts were across the board. He lowered ACTUAL INCOME TAX RATES for everybody. And Actual dollars received by the treasury in the following years rose dramatically. Same thing happened with JFK in 1962, and followed in 1963, and 64. Same thing happened in 2002, 2003, 2004, 2005. The Treasury, by their own figures set successive records in revenue form income taxes in those years. I am preaching an ideology here, merely regurgitating USGov stats.

http://www.cbpp.org/cms/?fa=view&id=507">Center on Budget and Policy Priorities: Evidence Shows that Tax Cuts Lose Revenue

Also we were discussing tax cuts, but you say "we can measure that last statement" and your measurement is "wages were flat". First of all, wages are not directly tied to tax cuts. Tax cuts are about people keeping more of what they make. And about creating new jobs. Therefore you can not use a persons wage to measure the effectiveness of a tax rate cut.

This is only true if you live in a "ME" society mindset. If you live in a "WE" society mindset, tax policy is about what is making society as a whole most healthy and sustainable, not about individuals keeping or losing more or less of their own money.

As to President Obama's tax policy, where exactly was the middle class tax cut he passed? Tax Rates have not changed at all. So where is the cut? Giving you an average of $8.00/wk. more in your paycheck due to a change in the withholding rate, is not a tax cut, because it is still balanced out at the end of the year when you file your taxes on the same rates, it will only affect the size of your refund, if you get one, because you are receiving some of it during the year in the form of the $8.00/wk.

You know what, fair enough. I'm gonna concede that point. I'm convinced.

So in summary, I don't believe I'm oversimplifying too much (even though your post was quite detailed and thoughtful, thank you) by saying this paragraph boils it all down to the essence:

As to being "sick of the republicans" I am sick of both parties. I am sick of the republicans preaching about "smaller government, less taxes, less regulation" while increasing spending, and regulation, and the general size of government. And I am also sick of the Democrats drunken spending spree as well, and their incessant feeling that they know better than me how to provide for my family. I, and I said this when I was making $18,000/yr. as a temp. When I was making $100,000/yr. and now when I am floating around 30% of that, neither need nor want the government's help, or instruction. I simply want them to get out of my way. I will provide for my family, that is my job, not theirs. If I do not have the skills I need I will go out and get them. If I don't have the income I need, I will find a legal way to get it.

The reason why there's always a limit to how far discussions like this can go is because we have a fundamental disagreement at the very core. You want to live in a "ME" society. I want to live in a "WE" society.
I want to live in a we society because I believe that focus on the social is what keeps our economy sustainable in the long term, rather than explosively profitable to a few in the short run, but unsustainable over all.

I believe we are in this together, not alone. And I believe the needs of my neighbor should matter to me and I value community more than I value americanized "rugged" individualism.

Obviously, we disagree on that. Which seems to leave us with little to talk about. :shrug:

[ConstitutionalLib]

75. possibly but the conversation is still interesting. The essence

of a "free market" or "capitalist" economy is that if everyone acts in their own self interest, in the aggregate it DOES benefit society as a whole. For example; I live by my own means, earning what I need to provide for my family, abiding by the law, providing for my retirement, and not being a burden to society, I have, by looking after my own interests benefitted society, by paying my taxes, not taking from society, being a contibuting member, and providing capital, labor, and economic activity to the level of my achievement.

It is not in my self interest to steal because it will deprive my family of my earnings when I am in jail. It is not in my self interest to cheat my customers, for then I will lose them. It IS in my self interest to go above and beyond to provide the absolute best customer service that my customers can find so that they will return and tell their friends as well.

[Hello_Kitty]

39. So, about the people who work for you:

Any of them getting the EITC? How about Medicaid? Reduced or free school lunches for their kids? Food stamps?

IOW, are you paying your employees a living wage and providing them and their families with benefits so that they aren't turning to the taxpayers to supplement their wages? Because if you're paying them as little as you can get away with and then crying about taxes you are really a giant hypocrite. And a leech.

[proudohioan]

73. Thank you!!!!

[Political Heretic]

43. A follow-up to my previous post: when you say "it works," we define "work" differently

During the last thirty years of supply-side economics, here's the state of working America:

Most Americans are relatively worse off in many ways than people in 19 other industrialized powerhouse countries (Japan, Germany, United Kingdom, France, Italy, Canada, Australia, Austria, Belgium, Denmark, Finland, Greece, Ireland, Netherlands, New Zealand, Norway, Spain, Sweden, and Switzerland). These countries are the United States’ industrial peers, and part of the Organization for Economic Cooperation and Development (OECD).

Let’s take a look at the details:

Per Capita Income: U.S. Second
Income Inequality: U.S. First (meaning worst)
Overall Poverty Rate: U.S. Highest
Child Poverty Rate: U.S. Highest
Elderly Poverty Rate: U.S. Highest
Infant Mortality Rate: U.S. First (meaning worst)
Leisure Time: U.S. Last (meaning worst)
Maternity Leave: U.S. Last (meaning worst)

http://practical-vision.blogspot.com/2009/03/we-are-losing-america-right-before-our.html

The data used for this information comes from the Governments own reports, and has been adjusted to normalize things like poverty calculations (where some countries calculate differently, this has been accounted for.) I do not accept that economic policy that leads to these results can be described as "working."

An economic system that "works" must successfully narrow the gap between richest and poorest society member. It must successfully address national poverty, and be at least as effective as that of peer nations, if not more so. It must have worker's work conditions and benefits at least on par with national peers.

Now, many of those peer nations also provide additional benefits to society members - such as free education through undergraduate level, universal health care, paternity leave (you hear me, paternity leave in addition to maternity leave) in some places up to six months or more, and lower unemployment.

We may have ideological disagreements on these additional things - about whether or not the government should tax people to then provide those services or whether or not we should give that money to individuals and let them decide what to do with it. But the former things detailed as "musts" for claiming that an economic systme "works" are simply non-negotiable.

So, I dispute your definition of "works."

[Political Heretic]

49. A Specific Rebuttal to Paragraph 4:

You wrote:

You are right wealthy(and I am not one) do not give money away for free, nor are they supposed to, BUT, it is a fact, that the top 1% of wage earners pay 40.42% of the Federal Income Taxes collected in 2007. The top 5%, paid 60.63%, the top 10% paid 71.22%, the top 25% paid 86.59%, and the top 50% paid 97.11% of ALL federal Income taxes collected. (data from the IRS)So it is fair to say that the Rich do pay their fair share of taxes.

This only tells us one thing. The top 1-10% of the country own the overwhelming majority of the nation's wealth. That's not something that particularly helps your point, though it does not necessarily work against it either.

The only statistic that matters is the tax rate individual filers are paying, not the total amount of money collected from a tax bracket. Unfortunately, the most current data I have available comes from 2004 as reported in the Christian Science Monitor, citing a 2004 GAO (Government Accountability Office) report. However at that time, while the official corporate tax rate was 34% the effective tax rate, meaning the average tax rate after exemptions, exceptions, and credits paid by all corporations in the same bracket, was 11%. Eleven. The individual tax rate is similar. Most people and businesses within the top-fifth quintile pay less taxes than individuals or true "small" businesses in the middle class. That's not the market of an economically sustainable society. And so what we see happening is not a normal cycle of some modest market inflations and modest corrections, instead we're seeing an escalating cycle of more frequent hyper-inflations and less substantive corrections that leave us in economically worse shape than we were before.

Take a look:

[Raineyb]

53. "I predominantly believe that the government can only screw things up by controlling an economy."

If that is the only lesson you've taken from your economics class then I'd have to say that you must have been absent when the professor discussed the concept of public goods.

There are some things that are just not profitable or is of such a necessity to survival that the profit motive is not sufficient to cover the need and is by definition provided by government.

JFK cut taxes then got rid of loopholes to make sure that the taxes were actually collected rather than having a larger percentage of a smaller pot due to people hiring accountants to find ways to reduce taxable income.

Reagan's tax cuts is exactly why the country is in the mess that it's in in the first place. He lowered the taxes on the wealthy (while raising the taxes on working people) and the rich took their windfalls and went looking for places to put their money and instead of investing in businesses which put people to work they went looking for means to make more money without doing any work which basically lead to a stock market bubble as people paid more and more money for stocks whose prices were being inflated by too much demand. We've been dealing with the aftermath for 30 years and until we roll back the Reagan tax cuts it'll continue with this bubble and bust economy.

Most of the high wager earners are NOT business owners. The are the CEO's of publicly traded companies, they are employees not owners.

What it sounds like is you want to benefit from that which a government can provide but as per usual for libertarians you don't want to actually pay for it.

[KG]

28. not sure it was ever meant to 'work'. it was another bullshit story sold to the working class.

[FormerDittoHead]

29. Fantastic summary but missing the PUNCHLINE.

AllentownJake, you NAIL it up and down, but you're not closing the loop.

Your EXCELLENT essay above is the MIDDLE PART. Why did it start? Who paid to PROMOTE it? Why does it persist?

THE WHOLE (trickle down) THING IS A *L*I*E*. A C*O*N*S*P*I*R*A*C*Y - financed by the rich, promoted by the rich, supported by the rich, THEIR TAXES REDUCED (contributions to the Heritage/CATO/Liberty University etc. are tax deductible), propaganda machines running AT A LOSS (e.g.: Washington Times). And of course don't forget political donations.

But let's be CLEAR:

It's not an "error" or "mistake". They fucking KNOW trickle down is bullshit. The went to the same (and better) colleges and learned economics and history, and trickle down is UPSIDE DOWN from everything taught in college.

The whole thing is to support a MACHINE which shapes our economy in a way to keep the middle class working all of their lives and have nothing to show for it at the end, leaving the same people IN CONTROL.

It's been called trickle down, but in the future it may be called something else. The bottom line is the issue between the rich and the middle class, and the LIES they use to keep the poor and middle class from rising up and the rich having to share power.

Great essay, but I'm afraid people won't put the pieces together.

[Orsino]

57. It's not a conspiracy. It's open warfare. n/t

[Political Heretic]

32. If it's failed it would be nice if Democrats would stop advocating it, don't you think?

I'm just sayin...

[fascisthunter]

35. it has failed for the Majority of Americans while Rewarding the

and since this is a democracy and wealth has such an impact on democracy itself, I think it's not only a failure but it is destroying our democracy.

[Lil Missy]

38. It failed because there's not much left other than crap after it passes through the elephant.

[RainDog]

41. well, the game isn't really over once one person controls all the assets

just ask Marie Antoinette.

[Tierra_y_Libertad]

42. The Capitalists have strong fingers, weak bladders.

[johnaries]

50. As many times as we have tried it and it failed,

I simply can't believe people still believe in it. They keep resurrecting it with different names, but it still fails.

Nixon tried it, and it failed. Reagan renamed it "Supply-Side Economics" but it was still the same thing. The irony of Reagan's policies is that the Fed used modified Keynesian economics to pull us out of "stagflation", and then Reagan abused Keynesian economics to create a boom to implement his "Supply-Side" policies, and then left it for Bush I to deal with the economic mess that Reagan left. Clinton used Keynesian principles to get us back on track, but Clinton and Gore both warned us that we were in a "bubble" and that we should prepare for the bubble to burst.

After that bubble burst, Bush II tried it again, and that is basically why we are in the mess we are in today.

Supply-siders keep talking about the "free market", but they always forget the basics of the free market: Supply AND Demand.

I keep hearing pundits saying "we should concentrate on the people who create jobs". Well, I agree. But they are talking about the "companies" or the "supply side" of the equation. I am talking about the "consumer" or the "demand" side of the equation.

If you put funds in the hands of the supplier, they are going to hoard it. If there is no demand, they are not going to create new jobs until there is a demand.

If you put funds in the hands of the consumer, they are going to buy more products and increase the demand. This will force the supplier to create more jobs to meet the demand. This will create more consumers with more disposable income which will increase demand which will increase profits .... it is an endless loop.

We actually saw this happen after WW2. A period of prosperity unequaled in history. And it happened because of Keynesian economics on steroids. It happened because common people like you and me could afford to buy the products that the Rich People had to sell.

Rich people got richer, but the average person also got richer. Unlike today when rich people get richer and the average person gets poorer. But here's a message to those rich people - you'll actually make more money in the future if you help the rest of us afford what you are selling today.

[JHB]

52. But every time they try it, it makes a LOT of money for some people...

...and those people are able to drive the political agenda.

[moondust]

63. It's a tax evasion con job.

Robin Hood in reverse, the fleecing of the American taxpayer: standard Republican economics.

[hfojvt]

65. that got a little hard to follow

also it should be 'wary' at the end rather than 'weary'.

One thing about the dictatorship of the non-proletariat is that the dictator is not all powerful, except to the proletariat. He is a hired gun.

The is why the democracy dictatorship works so well. If the store-bought guy from one party starts acting like he does not know who owns him, then the opposition can always be funded.

[Yavin4]

83. Your Post Is A Great Critique To Libertarian Economics

"Trickle down" is a marketing phrase for Libertarian, laissez-faire, economics. In sum, it allows the rich and the powerful to use their wealth to prey on the non-rich and the non-powerful. After a while, you wind up with very few rich and powerful and a whole lot of poor and struggling. Soon, the poor will use the only strength that they have, their numbers, to overwhelm the rich and take it by force.

This is why the only sustainable system that works is a balanced economy. One where there are strong social safety net protections in place that allow the masses to have a stake in the system. Strong public education, healthcare, a pension guarantee for the elderly, etc. These programs give the masses a sense of economic security because without that security, they have no stake in the system and resorting to extreme measures is the only logical next step.