Supply side/Trickle down: Where's the money?

[wjmacguffin]

DISCLAIMER: Yes, I consider myself a liberal. But I also consider myself independent and this post is an honest quest for understanding. Trolls need not apply.

Trickle down theory--the idea that cutting taxes for businesses and upper-middle to rich folks, or the "job makers", will lead to economic growth and wealth "trickling down" to the lower class--seems to make sense. If the people who make business decisions have more money, they will be more likely to expand their business, thereby generating more work and wages in general. It's logical!

Today, there's plenty of signs that the job makers are doing significantly better: Dow is at record highs, business profits are up, etc. Yet wages for the average worker are stagnant. The Bush II tax cuts didn't improve the economy, at least not in the short run, and helped spur record deficits. (Not cause, but help.) The gap between the poor and the rich has widened.

So here's my question: Where is the money?

Again, I mean that sincerely. If supply side is real, money should be trickling down to the workers--but it's not. That said, the money has to be somewhere! Are the job makers hording cash in banks? Overseas investments? What???

 

[hjmick]

I consider you a spammer.

How many times and under how many different topics do you plan to start this exact same thread?

 

[Truthseeker420]

In the pockets of the Transnational corporations.

 

[wjmacguffin]

I consider you a spammer.

How many times and under how many different topics do you plan to start this exact same thread?

I posted this in Politics, then realized it doesn't belong there. So I posted it here, but when I went to delete the identical post in the other forum, I realized I couldn't. So I deleted the content and posted an apology with hopes the admins would delete it for me.

 

[wjmacguffin]

In the pockets of the Transnational corporations.

That could be true, but where are they stashing the money? In transnational banks? Or are they investing it in non-US operations, such as more factories in China or whatnot?

 

[Freemason9]

The goal of oligarchs and gilded aristocrats is power. Power comes from control, and money gives them control of workers. (Workers are, in reality, the entire source of any nation's wealth. They are extremely powerful--but unorganized.)

American oligarchs and gilded aristocrats use the political ideology of the Republican Party to acquire a voting base of religious fundamentalists, right wing "libertarians," nationalists, racists, and other anti-government organizations to push their agenda. In a nutshell, this "supply side economics" agenda provides an excuse for tax policies that favor non-labor wealth over the working class. In fact, there is no evidence whatever--or whenever--that "supply side" economics has ever worked. In fact, it tends to shatter economies--going back to the days of the French revolution, an era and a place when brave workers rose up and demanded economic justice.

American workers are very tamed and controlled compared to most of the world (except, perhaps, the Chinese). We have a heritage of slavery that somewhat defines the working conditions in America.

 

[EdwardBaiamonte]

If supply side is real, money should be trickling down to the workers--but it's not.

This Econ 101, class one, day one!! America has had lower supply side taxes than most of the world and accordingly has been richer than most of the world. So, supply side Republican capitalism is real and it works.

While Supply side capitalism is currently working somewhat well in that most people can now fly in planes and buy smart phones and flat screen TV's, etc., the government is now collecting more in taxes than ever before both in terms of a percentage of GDP and in absolute dollars so it is not working nearly as well as it might if we had more of it.


Does that answer your question??

 

[wjmacguffin]

This Econ 101, class one, day one!! America has had lower supply side taxes than most of the world and accordingly has been richer than most of the world. So, supply side Republican capitalism is real and it works.

While Supply side capitalism is currently working somewhat well in that most people can now fly in planes and buy smart phones and flat screen TV's, etc. ....

If I understand you correctly, and please correct me if I don't, you're saying that wealth has trickled down as evidenced by the purchasing power of most people. So, even though the rich have seen incomes rise over 200% in the past 40 years while most people's incomes rose 40% in the same time, that 40% increase shows wealth is trickling down. Is that what you mean? If so, what would count as evidence that supply side isn't working--a decrease?

... the government is now collecting more in taxes than ever before both in terms of a percentage of GDP and in absolute dollars so it is not working nearly as well as it might if we had more of it.

In 2001, the US collected taxes as percentage of GDP at a rate of 12.5%. In 2010, it was 9.4%. In 2011, it was 10.4%. Sorry to say, but you're incorrect on this point.

 

[Mad Scientist]

Were is the money? The same place the Socialist ideas take it: To The Banks!

Banks control everything.

Middle Class shrink under Bush AND Obama but Americans too brainwashed to see and too busy defend "party" and engage in "cult of personality" worship of leaders.

This is good thing, make America easier to bring down.

 

[EdwardBaiamonte]

If I understand you correctly, and please correct me if I don't, you're saying that wealth has trickled down as evidenced by the purchasing power of most people. So, even though the rich have seen incomes rise over 200% in the past 40 years while most people's incomes rose 40% in the same time, that 40% increase shows wealth is trickling down. Is that what you mean? If so, what would count as evidence that supply side isn't working--a decrease?

too stupid but perfectly liberal!!! if wealth was not trickling down Gates and Jobs would not have anyone to sell stuff too!! Under capitalism you can't get wealthy without making other people wealthy! You must supply to them what they can afford to buy if you want to get rich!!

You don't need to be an economist to see how rich the middle class got by looking at all the new inventions they could suddenly afford in the last 10 years: suddenly we had plasma TV's, LCD TV's, DLP-TV's, iPods, iphones, CD's and CD players, DVDs and DVD players, Blue Ray and Blue Ray players, PCs, desk top PCs, DVRs, color printers, satellite radio, Advantium ovens, HD-TV, Playstations, X-Boxes, X-box live, X-box Konnect, broadband, satellite TV, cell/camera/video phones, digital cameras, OnStar, palm corders, Blackberries, smart phones, home theaters, SUVs, big houses, more houses per capita, TiVo, 3D movies and TV's, built in wine coolers, granite counter tops, $200 sneakers, color matched front loader washing machines, matching washer dryer combinations, McMansions, 6 burner commercial ranges, Sub Zero refridgerators, more cars than drivers, a $1 billion ring tone industry, a pet industry that just doubled to $34 billion, 10's of millions lining up to buy Apple's I-tablet, Wii, Netflix boxes, jet skis, low profile tires, aluminum/titanium rims, Harley Davidson and Japanese motorcycles. $700 Billion spent Christmas 2010, $10.5 billion movies 2010, 10 million ocean crusies, 44 million taking plane flights over 2012 holiday, $500 billion spent on Christmas 2012.

The list goes on and on. I hope that helps you realize you can't just parrot the communist press and expect to make sense? They have other objectives and are merely using you to promote their point of view.

 

[boedicca]

In the pockets of the Transnational corporations.

Wrong. It's being vacuumed up by our statist government.

 

[wjmacguffin]

If I understand you correctly, and please correct me if I don't, you're saying that wealth has trickled down as evidenced by the purchasing power of most people. So, even though the rich have seen incomes rise over 200% in the past 40 years while most people's incomes rose 40% in the same time, that 40% increase shows wealth is trickling down. Is that what you mean? If so, what would count as evidence that supply side isn't working--a decrease?

too stupid but perfectly liberal!!! if wealth was not trickling down Gates and Jobs would not have anyone to sell stuff too!! Under capitalism you can't get wealthy without making other people wealthy! You must supply to them what they can afford to buy if you want to get rich!!

You don't need to be an economist to see how rich the middle class got by looking at all the new inventions they could suddenly afford in the last 10 years: suddenly we had plasma TV's, LCD TV's, DLP-TV's, iPods, iphones, blah blah blah .... The list goes on and on. I hope that helps you realize you can't just parrot the communist press and expect to make sense? They have other objectives and are merely using you to promote their point of view.

I asked politely if I understood what you meant. You say I'm parroting "communist press"? I asked what evidence could there be that would show supply side not working. You say either me or my question is "too stupid". I'll try one more time to be civil.

If supply side works, then lowering taxes on the job creators does several good things:

• Job creators, e.g. the upper class, spend more money and hire more people.
• Overall economic activity increases accordingly.
• The lower and middle classes gain the money spent by the upper class.
• Tax revenue increases because more people are making money.

This all makes logical sense. Yet, when you look at recent data, taxes on the wealthy were lowered (Bush tax cuts), giving job creators more money. But unemployment rose afterwards and has only recently begun to decrease. Also, while incomes for the upper class have risen, incomes for the middle and lower classes have remained stagnant.

The money doesn't seem to be trickling down. Look at this chart:

If trickle-down works, wouldn't the median income have increased more so? Which leads me to my question: Where is all the money taken by the upper class hiding?

Maybe it's all in banks, but wouldn't banks then lend it out to make more money? Maybe it IS trickling down and this is all you get. Then why have middle class wages remained stagnant?

 

[wjmacguffin]

In the pockets of the Transnational corporations.

Wrong. It's being vacuumed up by our statist government.

How, exactly? I'm not saying you're wrong by any means. I'm simply saying, if the government is taking all of the money that the rich have, where is the government spending it? Because it's certainly not paying off the debt.

 

[wjmacguffin]

Were is the money? The same place the Socialist ideas take it: To The Banks!

But wouldn't the banks lend the money out so they can make even more money? I believe banks are much more stingy in granting loans compared to other decades, but I could be wrong.

 

[EdwardBaiamonte]

This[supply side economics] all makes logical sense. Yet, when you look at recent data, taxes on the wealthy were lowered (Bush tax cuts), giving job creators more money. But unemployment rose afterwards

too stupid!!!!! and perfectly 100% liberal. Dear, there are other variables like a massive housing recession, the worst since the Great Depression!!! Did you hear about it??? Did you hear about out- sourcing job creation in China and India???? Did you hear we have a communist president who voted to the left of Bernie Sanders and passed Obamacare???? Did you hear we have the highest corporate tax rates in the world??

See why we are 100% sure a liberal will be slow, so very very slow? Sorry!!

 

[EdwardBaiamonte]

Were is the money? The same place the Socialist ideas take it: To The Banks!

But wouldn't the banks lend the money out so they can make even more money? I believe banks are much more stingy in granting loans compared to other decades, but I could be wrong.

Banks are reluctant to loan of course since you don't want to loan into a huge recession, just the opposite. Plus, liberal corporate taxes are highest in world thus encouraging the economies to develop else where. Plus we have a huge housing recession and communst president who voted to the left of Bernie Sanders, supports cap and trade, and single payer, and always higher taxes and more welfare entitlements.

 

[Avorysuds]

It's very odd how little people understand the FED.

When the Federal Reserve makes money overly cheap and available to the rich/super rich to loan to the middle class/poor we get mal-investment. This is because the rates or cost of money to borrow money should be rising but the FR makes it cheaper and cheaper to spur more investing. The return on investments begins to shrink because more and more bad investments are made due to artificially low rates.

What this causes is something like building more homes. Despite the market being saturated the money supply was made available, thus more and more homes being built creating and huge surplus of housing.

That's a bubble!

The bubble will inevitably burst as people simply can't afford to keep up with inflation.

The bubble bursts (2007)

Now what comes next is what the OP is asking. The Government (Bush&Obama) try and stimulate the economy by way of bail outs and "investing" more money into over saturated markets through programs like "cash for clunkers" and tax credits for buying a home or even the home appliances.

Government bailout the rich by literally handing them money or by making money even cheaper. Government also subsidies companies by giving tax credits for people to buy their products.

Government and the federal reserve then take the losses/debt that the rich had and dump it on the middle class and poor by making them pay for the bill. Inflation hits everyone even the poor when the markets really needed deflation as to offer goods/opportunities that were once out of financial reach of the poor/middle class.

Recessions are good if they are left to the markets.

Recessions are bad when Government picks winners and losers.

This is why the Rich get more rich and the middle class shrinks.

 

[wjmacguffin]

The question: If trickle-down theory is valid, why hasn't the recent gains from the rich trickled down to the poor? Where is the money hiding?

Summary of the answers so far:

1. The money is stored in banks, who don't want to loan because of the recession.
2. The money is in the pockets of transnational corporations.
3. The money is in the pockets of the government.
4. The money HAS trickled down as evidenced by the purchasing power of the lower and middle classes.

Let's tackle each answer in turn.

1. Quite possible. This assumes the upper class stores their cash in financial services (bank accounts, stocks, bonds, etc.), and while I cannot find out if bank reserves are growing, the record-breaking stock market numbers support this answer.
2. Again, possible but hard to verify. Besides, what would the corporations do with the money? Sitting on it sounds unlikely--I'm guessing they would invest it in financial markets just like #1 suggests.
3. Wrong. Between bailouts and debt, there's no evidence the government is hording money.
4. Possible but with one glaring problem: Why is there such a difference between median wage growth and upper class wage growth?

I'm starting to think that the answer is a combination of #1 and #4. Yes, wealth is trickling down and always will. To some degree, supply side is correct. But it's not as simple as, "Give the rich more money and everyone benefits" because 1) that money can get locked in an investment cycle of buying financial products, making profit/loss, and re-invest, and 2) the ratio of wealth given to upper class and wealth received by lower/middle classes is very unbalanced.

 

[EdwardBaiamonte]

Yes, wealth is trickling down and always will.

exactly!! Henry Ford made $1.49 per car but he made it possible for most families to have huge car wealth. 90% of wealth trickles down but some trickles up to folks like Ford Gates and Jobs

money can get locked in an investment cycle of buying financial products, making profit/loss, and re-invest,

Gates Buffet have money in charity. Theresa Heinz has hers in municipal bonds. People want their money to work and it always does!! Investment cycle??? Thats purely idiotic

the ratio of wealth given to upper class and wealth received by lower/middle classes is very unbalanced.

Dear, if you want to earn $one billion you must sell $100 billion to lower and middle class. That is unbalanced just not in the assbackwards liberal sense of the word.

 

[wjmacguffin]

the ratio of wealth given to upper class and wealth received by lower/middle classes is very unbalanced.

Dear, if you want to earn $one billion you must sell $100 billion to lower and middle class. That is unbalanced just not in the assbackwards liberal sense of the word.

What I mean is there isn't a 1:1 ratio. Giving $1 more to the upper class does not mean $1 reaches the poor, or if it does, there's thousands of poor for every rich person receiving the $1, which means each poor person would get $0.001. (These aren't supposed to be exact numbers, just estimates to play with.)