Trickle Down Sucks: The Life Out Of Our Economy

[Agnapostate]

The government can't create jobs because it has to take it's money from the private sector, which is where jobs and wealth are actually created. What government needs to do is cut taxes and their own spending, that's how you "stimulate" the economy.

Are you serious? You can make a very limited moral argument from this angle, considering the fundamental reality that the majority of wealth in the "private sector" is derived from government infrastructure. In the words of Herbert Simon:

"Access to the social capital–a major source of differences in income, between and within societies–is in large part the product of externalities: membership in a particular society, and interaction with other members of that society under practices that commonly give preferred access to particular members.

How large are these externalities, which must be regarded as owned jointly by members of the whole society? When we compare the poorest with the richest nations, it is hard to conclude that social capital can produce less than about 90 percent of income in wealthy societies like those of the United States or Northwestern Europe. On moral grounds, then, we could argue for a flat income tax of 90 percent to return that wealth to its real owners. In the United States, even a flat tax of 70 percent would support all governmental programs (about half the total tax) and allow payment, with the remainder, of a patrimony of about $8,000 per annum per inhabitant, or $25,000 for a family of three. This would generously leave with the original recipients of the income about three times what, according to my rough guess, they had earned."

 

[rayboyusmc]

It's just that the government is highly ineficient when it comes to managing money.

And your point is: AGI, Merrill Lynch, Citibank, Bank America, et. al. Non of these private firms did very well with managing money either.

The myth of the legendary CEO today is just that. A myth. We have too many CEOs who don't know their ass from a debit it seems. They see themselves as a privileged class that can take our tax dollars and then try and buy a 50 million dollar jet for themselves.

Private does not mean better or less costly. Blackwater, Haliburton, KBR

 

[Chris]

Government spending on infrastructure helps the economy. Where would we be without the interstate highway system and the Hoover Dam?

Of course government has spent money on projects. It's just that the government is highly ineficient when it comes to managing money. A clear majority of government works can be done much more inexpensively that the government does. There's no incentive for the government to be efficient and cut costs, especially when their budget goes up every year.
Government needs to support private enterprise and business because those businesses are the ones that pay the taxes so that government can even be in business. Seems many in the public and private sector have forgotten that.

Likewise there is no incentive in the private sector to do what is best for the average citizen, so left unchecked private business will rob people blind.

There has to be a balance between what government can do, and what private enterprize can do. The problem is that when the private sector completely melts down, there is no one left to pick up the pieces except the government.

 

[Zoomie1980]

The middle class is the engine that drives our economy, not the ultra rich. Since most of those on these boards are middle class, I don't understand why so many of them on the right still genuflect at the Ronny Altar of Trickle Down.

You do have to spend money to make money, so the question becomes how and where to spend it. Obviously you can’t give it to 500 people and expect a different result. Leading economists indicate that an economic investment bill would create more economic growth than the bill itself costs. For every $1 billion invested in transportation infrastructure, the U.S. creates 35,000 jobs and up to $6 billion in gross domestic product. Every $1 spent on food stamp benefits generates $1.73 in economic activity. Every $1 spent on unemployment benefits generates $1.64 in new economic demand. Every $1 in general aid to state government generates $1.36 in economic activity.

An entire generation of smart ass MBAs worked day and night to debunk this basic pillar of Capitalism. They got paid and we got laid off. Time to reverse that equation no? That’s why we need this stimulus bill. It’s not just about the money; it’s about how and where you spend it. When you invest in jobs you are creating a ton of economic activity. When people work, people spend and people pay taxes and at the end of the road, guess what? You actually have a road! Tell me how that’s bad?

Time to stop creating “securitized” promissory notes based on meaningless appraisals for toxic financing that's impossible to understand. Enough funny money please.

The Randi Rhodes Show - Radio, only smarter...

For those who hate Randi, please accompany the hate with facts to prove this wrong.

Because it works. Bush was not a Supply sider at all...

 

[Zoomie1980]

Government spending on infrastructure helps the economy. Where would we be without the interstate highway system and the Hoover Dam?

Of course government has spent money on projects. It's just that the government is highly ineficient when it comes to managing money. A clear majority of government works can be done much more inexpensively that the government does. There's no incentive for the government to be efficient and cut costs, especially when their budget goes up every year.
Government needs to support private enterprise and business because those businesses are the ones that pay the taxes so that government can even be in business. Seems many in the public and private sector have forgotten that.

Likewise there is no incentive in the private sector to do what is best for the average citizen, so left unchecked private business will rob people blind.

There has to be a balance between what government can do, and what private enterprize can do. The problem is that when the private sector completely melts down, there is no one left to pick up the pieces except the government.

Just the opposite. The private sector exists because it caters to the average citizen. The average citizen IS the private sector.

Outside of maintaining an effective Armed Force there is not much else the government has ever done well. Government is inept is almost everything it does so I always wonder why so many think the government can solve anything.

 

[auditor0007]

For 8 years we have heard about the tax cuts.

What happened to their mystical powers to cure the economy?

Do you deny the data in the article?

The tax cuts only delayed the inevitable. I read an interesting article, but don't have a link. The author, as an investment advisor, saw this coming a long time ago, but not for any of the reasons one might think. He predicted back in the 90's that 2007 would be the turning point and things would get pretty bad. His take is that we are in for a very long haul of bad news followed by more bad news.

His conclusions are based on the simple fact that the baby boomer generation has peaked past it's highest earning years, and that the baby boomer generation has everything they need at this point. Therefore, consumption, which drives our economy, is going to head downward and continue on a downward spiral as the baby boomer generation continues to age. In other words, we are looking at a shrinking ecomony. At best, growth will be very slow for some time to come.

I don't know if I agree with his assessment or not, but it does leave me wondering if he might not have hit the nail on the head.

 

[auditor0007]

The middle class is the engine that drives our economy, not the ultra rich. Since most of those on these boards are middle class, I don't understand why so many of them on the right still genuflect at the Ronny Altar of Trickle Down.

You do have to spend money to make money, so the question becomes how and where to spend it. Obviously you can’t give it to 500 people and expect a different result. Leading economists indicate that an economic investment bill would create more economic growth than the bill itself costs. For every $1 billion invested in transportation infrastructure, the U.S. creates 35,000 jobs and up to $6 billion in gross domestic product. Every $1 spent on food stamp benefits generates $1.73 in economic activity. Every $1 spent on unemployment benefits generates $1.64 in new economic demand. Every $1 in general aid to state government generates $1.36 in economic activity.

An entire generation of smart ass MBAs worked day and night to debunk this basic pillar of Capitalism. They got paid and we got laid off. Time to reverse that equation no? That’s why we need this stimulus bill. It’s not just about the money; it’s about how and where you spend it. When you invest in jobs you are creating a ton of economic activity. When people work, people spend and people pay taxes and at the end of the road, guess what? You actually have a road! Tell me how that’s bad?

Time to stop creating “securitized” promissory notes based on meaningless appraisals for toxic financing that's impossible to understand. Enough funny money please.

The Randi Rhodes Show - Radio, only smarter...

For those who hate Randi, please accompany the hate with facts to prove this wrong.

While I agree with this, the one part that is not taken into account is that the cost of putting $1 billion into infrastucture spending actually costs much more than $1 billion, so the return isn't quite as great as would be expected.

 

[Zoomie1980]

Alan Reynolds: $646,214 Per Government Job - WSJ.com

House Democrats propose to spend $550 billion of their two-year, $825 billion "stimulus bill" (the rest of it being tax cuts). Most of the spending is unlikely to be timely or temporary. Strangely, most of it is targeted toward sectors of the economy where unemployment is the lowest.
The December unemployment rate was only 2.3% for government workers and 3.8% in education and health. Unemployment rates in manufacturing and construction, by contrast, were 8.3% and 15.2% respectively. Yet 39% of the $550 billion in the bill would go to state and local governments. Another 17.3% would go to health and education -- sectors where relatively secure government jobs are also prevalent.
If the intent of the plan is to alleviate unemployment, why spend over half of the money on sectors where unemployment is lowest? Another 22.5% of the $550 billion would go to social programs, such as expanding food stamps and extending benefits for the unemployed and subsidizing their health insurance.

More:

Mr. Zandi's current estimates have government employment growing by 330,400 over two years as a result of the House bill (compared with 244,000 in Bernstein-Romer paper). Yet even that updated figure still amounts to only 8.3% of total jobs added, even though state and local governments are to receive 39% of the funds ($214.5 billion). Spending $214.5 billion to create or save 330,400 government jobs implies that taxpayers are being asked to spend $646,214 per job.

647k per job huh? You wanna' tell us again Rayboy how government spending is gonna' help the economy? Seems all you did was complain about trickle down but you never debunked it. Try again.

Randy Rhoads was not available to comment on this article because she's drunk and face down in a ditch somewhere.

Quite a lot of the house bill is dead in the Senate. Senate is basically going to rewrite the bill from scratch and that will be the one Obama signs. Tax cuts will stay, probably added to, and if it's not direct stimulus, it's gone. Overall size will be close, but much more targeted to stimulus and not to social agenda spending. Already gone are:

1) $4 billion to Acorn style community outreach
2) $1 billion to Amtrak
3) Spending on the Smithsonian
4) Carbon capture
5) National endowment for arts
6) upgrading federal cars
7) Global warming research.

Those are already gone, more may come once conservative dems and repubs get hold of it.

Most of the highway and sewer system monies will remain, even though most of those are 8-10 year programs. It takes that long to overhaul big city sewers and those appropriations are always long term commitments.

 

[oreo]

For 8 years we have heard about the tax cuts.

What happened to their mystical powers to cure the economy?

Do you deny the data in the article?

All roads of this recession/depression lead back to Fannie & Freddie Mac. Article New York Times Sept. 30, 1999 "Fannie reduces standards to aid mortgage lending" for those who care to take a look. It was government intervention into our banking system, allowing for those who could not afford to buy homes, buy them anyway. Along with that we had a republican congress that spent like a bunch of drunken sailors.

The only way we come out of this is to do it ourselves. We cannot depend on government who takes money from us to manage that money. The exact same people who brought this upon us--are still in their same seats--claiming they are coming to the "rescue".

The fact is, most of these politicians--democrats/republicans alike have never had to balance a checkbook in their entire lives, yet they are telling us that they're going to fix this. Of course, again with our money, now our children & grandchildrens money.

"The Titanic is sinking & the Federal Government has jumped in to give us all swimming lessons."

 

[Skull Pilot]

It's just that the government is highly ineficient when it comes to managing money.

And your point is: AGI, Merrill Lynch, Citibank, Bank America, et. al. Non of these private firms did very well with managing money either.

The myth of the legendary CEO today is just that. A myth. We have too many CEOs who don't know their ass from a debit it seems. They see themselves as a privileged class that can take our tax dollars and then try and buy a 50 million dollar jet for themselves.

Private does not mean better or less costly. Blackwater, Haliburton, KBR

But there are plenty of banks and investment firms that ARE doing just fine.

you can't compare no bid government contracts and sweetheart deals full of government graft and corruption to real enterprise.

And until the government stepped in, those poorly managed companies were only playing with stockholder and their customer's money. Now they have our tax dollars too. Real smart, give the people who fucked up even more money waste. But that's government for ya.

 

[garyd]

No the point is geniuses that most of those outfits wouldn't have been in trouble in the first place had it not been for governemnt rules and regulations that hamstrung them. Keep in mind that most of our highway system has been a private/public cooperative effort in which the Government state local and federal provided the money and private companies built them to specifications. No one here idiots is arguing whether or not the govenment has a role to play in builkding infrastructure or national defense some government is always necessary. It's the other 70% of the Budget in which the problem exists.

By the way this country went from 13 states to 48 and became arguably the second most powerful country in the world after Great Britain by 1907 with out the Feds having more than minor involvement in much of anything to do with infrastructure.

 

[Gunny]

The middle class is the engine that drives our economy, not the ultra rich. Since most of those on these boards are middle class, I don't understand why so many of them on the right still genuflect at the Ronny Altar of Trickle Down.

You do have to spend money to make money, so the question becomes how and where to spend it. Obviously you can’t give it to 500 people and expect a different result. Leading economists indicate that an economic investment bill would create more economic growth than the bill itself costs. For every $1 billion invested in transportation infrastructure, the U.S. creates 35,000 jobs and up to $6 billion in gross domestic product. Every $1 spent on food stamp benefits generates $1.73 in economic activity. Every $1 spent on unemployment benefits generates $1.64 in new economic demand. Every $1 in general aid to state government generates $1.36 in economic activity.

An entire generation of smart ass MBAs worked day and night to debunk this basic pillar of Capitalism. They got paid and we got laid off. Time to reverse that equation no? That’s why we need this stimulus bill. It’s not just about the money; it’s about how and where you spend it. When you invest in jobs you are creating a ton of economic activity. When people work, people spend and people pay taxes and at the end of the road, guess what? You actually have a road! Tell me how that’s bad?

Time to stop creating “securitized” promissory notes based on meaningless appraisals for toxic financing that's impossible to understand. Enough funny money please.

The Randi Rhodes Show - Radio, only smarter...

For those who hate Randi, please accompany the hate with facts to prove this wrong.

You mean like you always do? Need a little neon lighting for that hypocrisy you're displaying?

The alternative, taxing the middle class into bankruptcy to support a nanny state is harder on the middle class. Simple fact and a simple choice of the lesser of two evils.

 

[rayboyusmc]

Funny, Gunny, but what you said I said is not what I said.

I never said anything about more taxes on the middle class. The title of thread if you read it should point that out.

My point is if we create good paying jobs for the middle class, they will buy the services and products and grow the economy. Tax cuts alone will not create the jobs. If I have already lost my job and have no salary, what the hell good is a tax cut on nothing.

They have eliminated the jobs and sent them overseas. They have raised executive salaries by about a 100 fold and decreased our wages while still getting increased productivity.

My point is that giving the rich more money to spend only helps the rich and not the economy. It doesn't trickle down. Shit, you have had all the years since the Great Constipator began this obscene aristocratic approach of pissing on the middle and poor class and it hasn't worked. Ronny began the war on the middle class, a group of US that didn't exist back before WWII. There are some rich MFers who are so blind and selfish they don't realize that the working class is the people who make them rich. Because they have the power to hire and fire at will when there is no union, they have become the American Aristocracy in their mind.

All the fucking republicans have now to put up against Obama's stimulus plans are more tax cuts. That's all they ever seem to have. It's become almost a religious mantra.

Please give me some data that says I am wrong that when we have a strong middle class, we will have a strong economy.

How anyone in the Republican party, who doesn't make over a million, doesn't gag on the words "trickle down" is the most amazing proof of lemming love.

 

[rayboyusmc]

P.S. I am middle class economically and the taxes haven't driven me into bankruptcy. Bullcrap.

 

[Skull Pilot]

And who will create the jobs for the middle class?

Will they all be government make work redundancies or will the vast majority of jobs spray painting bridges and resurfacing roads suddenly be the most sought after jobs?

 

[Care4all]

For 8 years we have heard about the tax cuts.

What happened to their mystical powers to cure the economy?

Do you deny the data in the article?

The tax cuts only delayed the inevitable. I read an interesting article, but don't have a link. The author, as an investment advisor, saw this coming a long time ago, but not for any of the reasons one might think. He predicted back in the 90's that 2007 would be the turning point and things would get pretty bad. His take is that we are in for a very long haul of bad news followed by more bad news.

His conclusions are based on the simple fact that the baby boomer generation has peaked past it's highest earning years, and that the baby boomer generation has everything they need at this point. Therefore, consumption, which drives our economy, is going to head downward and continue on a downward spiral as the baby boomer generation continues to age. In other words, we are looking at a shrinking ecomony. At best, growth will be very slow for some time to come.

I don't know if I agree with his assessment or not, but it does leave me wondering if he might not have hit the nail on the head.

Maybe this is why both the left and the right want to give amnesty to the 20 million illegal immigrants here....and change our immigration policy to increase the amount of immigrants allowed in, to make up for the boomers eventually biting the dust?

 

[editec]

No the point is geniuses that most of those outfits wouldn't have been in trouble in the first place had it not been for governemnt rules and regulations that hamstrung them. Keep in mind that most of our highway system has been a private/public cooperative effort in which the Government state local and federal provided the money and private companies built them to specifications. No one here idiots is arguing whether or not the govenment has a role to play in builkding infrastructure or national defense some government is always necessary. It's the other 70% of the Budget in which the problem exists.

By the way this country went from 13 states to 48 and became arguably the second most powerful country in the world after Great Britain by 1907 with out the Feds having more than minor involvement in much of anything to do with infrastructure.

Yes, that's right we went from a poor agrarian society to a major industrial power in about 125 years.

And basically where did our government get the money during that period?

TARIFFS. We didn't HAVE an income tax except for a brief period during the vcivil war and even then it only taxed the stupendously welathy idnustrialists!

And why did we evolve from a poor agrarian society into a mighty industrial power?

Because of TARIFFS. Behind that protective barriar we gave our industries time to become mighty, and effecient and the industrial powerhouse of the world.

The USA had a positive BALANCE OF TRADE for the entire time it was BECOMING WEALTHY AND POWERFUL.

Now notice what the balance of trade looks like...please take a gander at how FREE TRADE is sucking the vitality out of this nation.

We don't have a TRICKLE DOWN economy...we NOW have a BLEEDING OUT economy.

 

[rayboyusmc]

This isnt the first time they tried this shit. Then they were more honest about what it was called.

Criticisms

The economist John Kenneth Galbraith noted that "trickle-down economics" had been tried before in the United States in the 1890s under the name "horse and sparrow theory". He wrote, "Mr. David Stockman has said that supply-side economics was merely a cover for the trickle-down approach to economic policy—what an older and less elegant generation called the horse-and-sparrow theory: If you feed the horse enough oats, some will pass through to the road for the sparrows." Galbraith claimed that the horse and sparrow theory was partly to blame for the Panic of 1896.[16] Proponents of Keynesian economics and related theories often criticize tax cuts for being "trickle down"; however, Keynesian theory actually holds that tax cuts can be used as an economic stimulus. Keynesians generally argue for broad fiscal policies that are direct across the entire economy, not toward one specific group. Supply-siders, on the other hand, argue that tax cuts for the rich promotes investment, which in turn promotes growth.

If the rich don't invest in their business -----

FDR brought US out of the depression and the right is still pissed that maybe Obama might also succeed. Their country comes second to party.

 

[Kevin_Kennedy]

Actually FDR prolonged the Great Depression by roughly 10 years.

 

[garyd]

The tarrifs sir were fairly minor and were one of the chief secondary causes of the Civil War and the primary one for the vast majority of Southerners who didn't own slaves and were unlikely ever in their lifetimes to own slaves. The main reason this country became an economic power house was simply that the US government let Business take care of itself for most of that first 125 years.