Transfers, Not Tricke-Down, Have Improved Poor's Incomes the Most

Toro

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One way to achieve that is rising redistribution: government steadily increases the share of the economy (the GDP) that it transfers to poor households. But there is a limit to this strategy. If the pie doesn’t increase in size, a country can redistribute until everyone has an equal slice but then no further improvement in incomes will be possible. For the absolute incomes of the poor to rise, we need economic growth.

We also need that growth to trickle down to the poor. Does it? ...

[The United States and Sweden] enjoyed significant economic growth. But in the U.S. the incomes of low-end households didn’t improve much, apart from a brief period in the late 1990s. In Sweden growth was much more helpful to the poor.

In Austria, Belgium, Denmark, Finland, France, Ireland, the Netherlands, Norway, Spain, and the United Kingdom, the pattern during these years resembles Sweden’s. In Australia, Canada, Germany, Italy, and Switzerland it looks more like the American one.

What accounts for this difference in the degree to which economic growth has boosted the incomes of the poor? We usually think of trickle down as a process of rising earnings, via more work hours and higher wages. But in almost all of these countries (Ireland and the Netherlands are exceptions) the earnings of low-end households increased little, if at all, over time. Instead, ... it is increases in net government transfers — transfers received minus taxes paid — that tended to drive increases in incomes.

None of these countries significantly increased the share of GDP going to government transfers. What happened is that some nations did more than others to pass the fruits of economic growth on to the poor. ...

Should we bemoan the fact that employment and earnings aren’t the key trickle-down mechanism? No. At higher points in the income distribution they do play more of a role. But for the bottom ten percent there are limits to what employment can accomplish. ...

When is economic growth good for the poor? Consider the Evidence
 
Transfers, Not Tricke-Down, Have Improved Poor's Incomes the Most

Recently (meaning in our lifetimes) that certainly is true.

The only trickling down that's been happening is the trickling down of US wealth to foreign (read third world) workers.

They (meaning for example Chinese workers) actually have enjoyed stupendous improvements in the quality of living.

USA workers, OTOH, have experienced a decline in the quality of life thanks to REAL declines in both purchasing power and in some cases actual wages paid, too.
 
Anyone who does not find the American Way acceptable is welcome to leave.

I assume the same sentiment applies to those who live in the UK and the British way of life since, according to the study, the UK relies more on transfers than trickle-down.

I wasn't aware that the UK was the US. We have our way, they have theirs. They don't live under our Constitution. We don't live under theirs. See how that works?
 
Anyone who does not find the American Way acceptable is welcome to leave.

I assume the same sentiment applies to those who live in the UK and the British way of life since, according to the study, the UK relies more on transfers than trickle-down.

I wasn't aware that the UK was the US. We have our way, they have theirs. They don't live under our Constitution. We don't live under theirs. See how that works?

That's right. So if people are unhappy with the British way of life, they too can leave.
 

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