Why trickledown economics works!

Originally posted by Crakeur

there seems to be some confusion here. Trickle Down Economics involves across the board tax cuts and breaks to BUSINESSES. Not rich people. The concept, as explained in the OP, is simple. Give them a tax break, producing more left over money and that money can (operative word) be used to expand, creating more jobs, and increase production, creating less expensive products (supply goes up, price drops with the demand) and the buyer of those products now pays less, giving him (or her) extra money. Thus, the money has trickled down.

While I don't even pretend to be anything approaching an economist. This theory seems to be undone by the reality that these same companies that took these tax cuts did so while simultaneously dismantling the infrastructure of American industry by outsourcing.

IE give business a healthy tax cut, to optimize their profits, and they move your job to India or China - thus negating the benefit to the average working American.

Again, maybe I'm naive about this but it seems to me that trickle down economics did, indeed, fail to bolster the American economy in the long term.

Originally posted by Hefficide

Originally posted by Crakeur

there seems to be some confusion here. Trickle Down Economics involves across the board tax cuts and breaks to BUSINESSES. Not rich people. The concept, as explained in the OP, is simple. Give them a tax break, producing more left over money and that money can (operative word) be used to expand, creating more jobs, and increase production, creating less expensive products (supply goes up, price drops with the demand) and the buyer of those products now pays less, giving him (or her) extra money. Thus, the money has trickled down.

While I don't even pretend to be anything approaching an economist. This theory seems to be undone by the reality that these same companies that took these tax cuts did so while simultaneously dismantling the infrastructure of American industry by outsourcing.

IE give business a healthy tax cut, to optimize their profits, and they move your job to India or China - thus negating the benefit to the average working American.

Again, maybe I'm naive about this but it seems to me that trickle down economics did, indeed, fail to bolster the American economy in the long term.

I understand your point but for the most part outsourcing is done because of the burden a company is held to by the US goverment. our company in the united states are the 2nd highest taxed in the world. They move the company to get taxed less. with lower taxes there is no reson to go to india or china.

As of right now india and china are company friendly goverments and they are booming because of it. Look at them as an example. yes they have large lower class but so did we when america started its industreal age and it will take time for them to rise up to the middle class

reply to post by Hefficide


hardly naive. you're right regarding the abuse of the system. unfortunately, there's a rather large portion of the population that is handed a good thing, a gift, and instead of saying thanks and doing what was meant to be done with said gift, they stick the other hand out and say they want more.

one aspect of my job, is to ensure that my clients pay as little as possible with regards to their taxes. If there's a loophole that can be exploited, without breaking the law, why wouldn't I suggest it?

It's no different than the folks who get gov't handouts after disasters. The money is wasted and then they want more. It happened in Florida after Andrew, it happened along the gulf after Katrina. Folks were given money, told to get back on their feet as best they can and, instead, (in both cases), money was spent on booze, guns, strip clubs etc. Sure, some people did the right thing but some did not. You're going to get a mix of that in everything. Hopefully, the good outweigh the bad.

reply to post by camaro68ss


not always the case. most manufacturing is sent overseas because you can get your widget made in asia for a fraction of the cost, even with the added cost of packaging and shipping it back here. why? because, in Asia, they want to work, they need the money and they have mouths to feed and they are willing to work to feed those mouths.

In the states, we've developed into a nation that feels we're too good for most things, deserve more than we're offered and are unwilling to accept the reality that some of us need to lower our standards, as well as open our eyes to the reality of what our time is actually worth. There was a time when the best of everything came from the United States.

I can't think of one consumer product that is made in the US and is deemed the best in the industry. Hell, I can't even think of any products that I own that are made here.

We outsource everything because it is cheaper which, in turn, is cheaper for you and me.

Originally posted by camaro68ss

Originally posted by earthdude
Nobody likes to admit it but, we have been getting a free ride for decades, rich and poor. We must raise taxes because what we have given to the IRS is not enough. It would have been enough, but we got scammed by the Bush war con job.

True bush spent almost one trillion on the war but Obama has spent almost 2.5 trillion in 18-19 months. i dont care for ether of them. bush spent to much and obama spent even more!

I looked into government spending from several sources. It looks like Bush's expenditures were not investments that will pay off. The only trickle down we get from his leadership was on our flag. Obama ain't that great but he seems to be using a form of trickle down that does not make the rich (biz guys) richer. Trickle down would work if we were a more socialist nation, but the rich won't re-tool their factories, they just get new speed boats.

reply to post by Hefficide


I think the biggest part of the confusion is, "trickle down" and "outsourcing", while definitely linked, can also be caused independantly.

The outsourcing, as stated above me, is to generate cheaper goods via cheaper labour.

The disparity in labour costs has a multitude of factors involved, everything from unionization to cost of living, etc.

Now, that being said, I do think that the outsourcing of America was partially caused by trickle down, but I do think that the "me" mentality of the late 80's and 90's did worse. Employers found themselves fighting more and more often with employees over many different issues, which was easily fixed (at the time) by outsourcing. And, employers (also affected by the "me" mentality) chose to outsource to maximize incomes.

Also, the rapid shift from manufacturing to service industries helped outsourcing move along. As more and more people applied for service jobs vs manufacturing jobs, there was a "business survival" instinct with outsourcing. My job was almost outsourced for this very reason, the company could not find enough applicants to fill the manufacturing positions. Traditional economics would have had my employer raise wages until applicants were found, however, as we were (and are) competing with foreign and "outsourced" competition, raising the costs of business was not an option.

To look at this issue as a rich vs poor will not lead to a solution. Both sides of the equation are responsible and it will take both sides to fix it.

A solution will have to found somewhere in the middle.

Trickle down economics, the thousand points of light.... :shk:

This has been going on for 30 years now. 30 years ago we had a middle class, trickle down economics ruined that. The fleecing of our country started when Reagan came into power. These scumbags sold out our country and made it easy for big corporate to move everything overseas. What we are living in is what has been set up long ago.

Now we reap the seeds that were sown. Get real.

Originally posted by Crakeur
reply to post by camaro68ss

 

not always the case. most manufacturing is sent overseas because you can get your widget made in asia for a fraction of the cost, even with the added cost of packaging and shipping it back here. why? because, in Asia, they want to work, they need the money and they have mouths to feed and they are willing to work to feed those mouths.
.

You don't think we are willing to work and have mouths to feed? We have empty houses that used to have American families in them. It is a very small portion of our people that want something for nothing.

That is not the reason.

The reason is they can have super cheap labor and barely any regulations to industry. We cannot compete with that unless we even the playing field. Most countries even the playing filed and protect its own people. Ours does not. We protect big corporations that have the power to dictate policy.

You think we are unable to make the best products in the world?

Then why is our military technology'manufacturing the best in the world? Because it is not allowed to be built overseas and we have a great American workforce that when paid a living wage make the best product available.

Believe in your own people first.

reply to post by camaro68ss


Obviously yu have never heard of David Stockman. He thought the same thing and it didnt work then and its
not gonna work now! What will work is trickle up economics, give the money to the people and it gets
to the rich eventually.

Originally posted by LoneGunMan
You don't think we are willing to work and have mouths to feed? We have empty houses that used to have American families in them. It is a very small portion of our people that want something for nothing.

then why do so many of our jobs wind up being filled by immigrants? I know people, friends, who have been out of work for over 2 years and, yet, they refuse to seek employment that they deem beneath them (anything not in their studied field it seems).

we're an arrogant nation and, unfortunately, our citizens are blinded by their arrogance.

Originally posted by LoneGunMan

The reason is they can have super cheap labor and barely any regulations to industry. We cannot compete with that unless we even the playing field. Most countries even the playing filed and protect its own people. Ours does not. We protect big corporations that have the power to dictate policy.

the reason they can have cheap labor is the lack of unions and the willingness to work.

Originally posted by LoneGunMan

You think we are unable to make the best products in the world?

no, I think we are very capable but, unfortunately, the cost is too high.

Originally posted by camaro68ss
reply to post by Hefficide

 

no i do not. I make $60,000 a year. what does that have to do with anything? did you not read and understand the model?

In terms of what I can afford to purchase I guess I make about as much as you because of our higher costs of living across the board, FS probably less thinking about it, I have to do my bit to support the land owning class I suppose.

Any way I don't want my piece of a trickle I want my fair share of my nations wealth, if higher taxes scare off the supposedly wealth creating wealthy where exactly will they all go where the same opportunities to enwealthen themselves exist.

Some may say it's a mental illness I say it's a state of being I was born into, I truly believe I am a rich man born into the body of a poor man and I demand the same treatment as a transsexual, as a transwealthual I should have the right to a wealth transplant on the NHS!

US citz should check whether they have this right under Obamacare.

Well, with everyone complaining about what the OP has put forth, what is YOUR idea?

Are you just going to spew the same rhetoric you hear off the news networks?

Are you going to say that you do not know economics that well but still going to quote something read off a teleprompter, by some bimbet that has no idea about economics?

Do you want the government to takeover all business and provide you with a job? I am sure they will if enough of you call for it.

Only problem is, that does not work. It has never worked. It is not going to work this time either.

The government is spending right now, approximately 42% of the created GDP of the nation, while taking about 50-75% of the individuals income in the middle class wage range.

Do you understand the numbers I just stated? We are going backwards in debt even though they have pretty much strapped the middle class, and the uber rich are not really taxed like us.

Those making from 250k to about 1 million a year are not rich. Most of them are paying off debts that they created to make that money.

I just find it sad that people believe they deserve what OTHERS have created. I worked my tail off for 10 years running a business. There was not that much assets to the company, except for the name and contracts I had created. I could not find a buyer. I asked the workers if they wanted to purchase the company.

They all said no, they did not want the responsibility. Even though they could have made over 100k compared to the 50k they averaged each a year, they said no. So I closed the business, sold the assets and they all had to look for other work. Happy to just be a cog in another company making low wages with no thought of their future. Now that the economy is down I bet they are all whining just like everyone else.

I hope you enjoy the 3rd world country you people are going to create here in the US.

The government creates NOTHING. They can only take from the economy. It is pretty basic. The bigger the government becomes, the less their is for the rest of us. Basic economics their folks.

reply to post by camaro68ss


Try to explain it all you want but the plain and simple truth is, that it doesn't work and if it did, we wouldn't be where we are today.

Reagan called it "trickle down economics" and Bush Sr. called the very same theory "voodoo economics," so which one is it?

reply to post by camaro68ss


The problem is that businesses hate starting new, risky ventures. They invest as little as possible in the hopes of making the greatest possible profit. That's why trickle-down economics always fail the little people, because businesses hoard their money and try to employ as few little people as possible.

reply to post by saltheart foamfollower

Are you just going to spew the same rhetoric you hear off the news networks? . . . The government creates NOTHING. They can only take from the economy. It is pretty basic. The bigger the government becomes, the less their is for the rest of us. Basic economics their folks.

The irony is strong with this one!

It was a nice attempt at deflection, foamfollower (not foamleader?) but this thread isn't about alternatives to supply-side economics (or, Benevolent Oligarchy). Let's not derail it!

Oh it does, it does so work... for the chinese that is. It'll trickle from US corporations to chinese labors. As long as 'free market capitalism' is in effect you could expect the continuation of jobless "recovery" in america. The old jobs will not return.. ever. Because the chinese are willing to work for far less money than their american counterparts. The chinese has the capability to produce wide range of consumer goods, from low quality to high quality.. yes high quality consumer stuff cheaply. Even with lower taxes or even no labor regulation in the US, I just don't see it that the americans are willing to lower their current living standards.

Originally posted by Jazzyguy
Even with lower taxes or even no labor regulation in the US, I just don't see it that the americans are willing to lower their current living standards.

Why should we lower our standards when we raised the worlds standards?

What we need to do is tariff the hell out of any imports that are made by cheap labor forces. We still have the buying power that if we were to buy just American made products our factories would come back. It would take a lot of sacrifice until our jobs came back but it would be worth it.

The number one selling automobile/truck in the worlds history is the Ford F-150.

99.9% are sold in the USA only.

That is buying power.

reply to post by camaro68ss


Trickle-down economics is simply economic doublethink.

First off- giving more money to the rich is NOT the same as simply giving more money to the poor. If the poor need more money... they would be BETTER served by higher minimum wages/living wages. What we've seen for the past couple decades (including after the beginning of Reaganomics) is wage stagnation even while GDP rose and worker productivity rose. Essentially... the rich kept their money, increased inflation, and kept workers' wages down EVEN AS their taxes were decreased and their workers became more productive.

Second off- the richest people in America have so much wealth that tax rates don't REALLY affect them much as far as still remaining filthy rich. The rich can also grow their money MUCH more easily than the poor. Even if we ignore the multitude of wealth-growing/investment/asset doors that extreme wealth opens up and simply take the example of a simple bank savings account- at 1% APY (interest), if a millionaire simply invested $6 million in a decent yield savings account, he/she could literally make an average SALARY (of roughly 60 grand a year) off the interest alone! This system IS a system of the rich get richer and the poor get poorer. The fact is that for every rags-to-riches story, there are a thousand (or ten-thousand perhaps) rags-to-still-rags stories, and to no fault of their own. Our civilization THRIVES off of a virtual slave underclass and could not function with out it. The poor are not a system defect but are actually a system requirement. If everybody became rich or even very prosperous, the system would collapse. The closest we can get to the greatest prosperity for all within our society is via Social Democracy (via properly implemented social programs). Trickle-down economics is not the answer and is based on very poor, self-serving logic.

Originally posted by camaro68ss

Originally posted by Hefficide

Originally posted by Crakeur

there seems to be some confusion here. Trickle Down Economics involves across the board tax cuts and breaks to BUSINESSES. Not rich people. The concept, as explained in the OP, is simple. Give them a tax break, producing more left over money and that money can (operative word) be used to expand, creating more jobs, and increase production, creating less expensive products (supply goes up, price drops with the demand) and the buyer of those products now pays less, giving him (or her) extra money. Thus, the money has trickled down.

While I don't even pretend to be anything approaching an economist. This theory seems to be undone by the reality that these same companies that took these tax cuts did so while simultaneously dismantling the infrastructure of American industry by outsourcing.

IE give business a healthy tax cut, to optimize their profits, and they move your job to India or China - thus negating the benefit to the average working American.

Again, maybe I'm naive about this but it seems to me that trickle down economics did, indeed, fail to bolster the American economy in the long term.

I understand your point but for the most part outsourcing is done because of the burden a company is held to by the US goverment. our company in the united states are the 2nd highest taxed in the world. They move the company to get taxed less. with lower taxes there is no reson to go to india or china.

As of right now india and china are company friendly goverments and they are booming because of it. Look at them as an example. yes they have large lower class but so did we when america started its industreal age and it will take time for them to rise up to the middle class

edit on 24-9-2010 by camaro68ss because: (no reason given)

Yeah... and most of the biggest companies don't really pay any taxes. Do you have any idea how many legal loopholes they exploit to avoid taxes?? Essentially what we have in this country is a series of speed limits (corporate tax rates) which are not really enforced, so everybody's essentially speeding way over the limit because they can. Tax rates are relatively high here for some... but nobody really pays em.

Originally posted by Crakeur

Originally posted by LoneGunMan
You don't think we are willing to work and have mouths to feed? We have empty houses that used to have American families in them. It is a very small portion of our people that want something for nothing.

then why do so many of our jobs wind up being filled by immigrants? I know people, friends, who have been out of work for over 2 years and, yet, they refuse to seek employment that they deem beneath them (anything not in their studied field it seems).

we're an arrogant nation and, unfortunately, our citizens are blinded by their arrogance.

Don't you think that's because after spending 4+ years in college and racking up crazy debt that people have a reasonable expectation to find work in their field? I mean... that's one of the biggest fibs being told in this country- go to college, get a degree, forget the debt, and you're set. Also... considering the deep recession we just faced, how can you deny that so many people DID work in positions lower than their qualifications? I mean you literally had former suited execs looking for jobs at Blockbuster and being turned down... people do what they need to do while looking for the best options (if they're smart). By the same token, immigrants aren't stupid, that's why they came to America... better jobs/money for their efforts than in their home country.