Originally posted by bkcrt
Trickle down economics does work and most of the population of this country is an example of it. When my company does well, I do well. It's that
Oh and have plenty of economics classes under my belt.
Oh, and Clinton did NOT balance the budget. It was corrected BEFORE he went into office (by the previous REPUBLICAN president who need not be named)
and he rode the wave. A common misconception.
[edit on 13-11-2008 by bkcrt]
You are dead wrong about both of these statements. I will address your last statement first. Clinton did balance the budget. I know that most
conservatives like to minimize the economic accomplishments of Clinton because of the abysmal economic failures of their last three presidents,
however this is not fair. He may have gotten a BJ in the oval office but he understood the economy like nobody's business. Being a Rhodes scholar
and receiving a degree from the London School of Economics is rather beneficial, isn't it.
Clinton inherited what was then a record deficit from Bush Sr. Through tireless efforts and drastic cuts to our military's inefficiencies Clinton
was able to give us a surplus, something few presidents have accomplished. I would love to cite some sources for this as there are many, however it
is getting late and I do not have the time. However, I am sure a simple google search will yield mountains of information to back me up.
To address your disagreement with me, and 98% of economists by the way, that Trickle Down is a sham, I will have to give you some real world examples
and refresh your memory about supply and demand analysis. Here we go.
You stated that "when my company does well, I do well. It is that simple." Well, really, it is not that simple. Nothing in economics ever is,
unfortunately. I am sure you would agree that your company doing well usually coincides with an increase in the demand for your product or service.
Given that Trickle down deals with tax liability, it has little to do with your statement. This is where people get mixed up. They confuse profit
increases due to increased demand with profit increase due to more favorable tax policy. They are in no way, shape, or form, the same thing.
Trickle Down is a theory that states that giving tax breaks to a company will allow said company to expand and hire more workers or possibly pay their
workers more money. I am sure you would agree with this. However, this is FALSE.
A company will only hire more workers if the DEMAND for its product increases, PERIOD. Look at it this way, if your company needed 100 workers to
produce 1000 widgets last year, and next year you expect demand for your product to again be 1000 widgets, why, even if given a new tax break, would
you hire more workers? The 100 workers you had last year produced your 1000 widgets and they will suffice in producing your 1000 widgets next year.
Why would you expand your labor force or your facilities in this example? The answer...You would NOT. Lets move on to the other false assertion of
Trickle Down that a company would pay its workers more money in the light of an additional tax break.
The price of labor (wages) acts just like the price of any other commodity (oil, bread, computers, etc). The price paid for any commodity is directly
related to the supply of and demand for that commodity. When the supply of a particular commodity decreases, the price you pay increases. When the
demand for a particular commodity increases, so does its price. The price a company is willing to pay for labor is no different. It will only change
if the supply of labor or demand for labor in its labor market changes...PERIOD. Lets look at another example. Say you require college graduates to
produce your product or service. If for some reason the supply of college graduates decreased in your labor market, you would then be willing to pay
more for those workers. On the flip side, if the demand for college graduates increased in your labor market, say a competitor moved in who also needs
college graduates, then you again would be willing / forced to pay more for those workers. Aside from these two examples, there would be no reason for
you to pay your workers more money...PERIOD, no ifs ands or buts about it (aside from artificial increases in minimum wage or cost of living
increases). An increase in profits due to a new tax break would have no effect on wages paid for your labor.
Trickle Down theory is the perfect example of demagoguery. A demagogue by the way is a person who preaches things he knows to be false to people who
he knows do not understand. This is why the conservatives continue to spout this false theory, they know most people do not understand it (and of
course it greatly benefits the rich). Trickle down makes sense on the surface and that is all that matters to them because most people are not
willing, or able for that matter, to scratch below the surface and discover that this theory dose not work.
No true economist will ever tout Trickle Down because, as I stated in my previous post, they know a second year economics student could disprove it.
You will however, see many people tout this theory in books written by conservatives to sell to still other conservatives. However, proof is not
delivered in commercial books, it is delivered in peer reviewed economic papers written ,or published, and up to scrutiny by other economists. You
will also see many Republican politicians tout Trickle Down because it advocates lining the pockets of the entities and individuals that finance their
Your statement that "when my company does well, I do well" is correct in a way. However, you would agree that your company doing well usually
coincides with an increase in the demand for your product or service, not a decrease in your tax liability.
I hope this clears things up for you. Believe me, I do not blame you for your confusion. As I stated, Trickle Down makes sense on the surface and in
simple terms, however it collapses like a house of cards when a little scrutiny is applied.