Why "Trickle Down" doesn't work

Discussion in 'Economy' started by rdean, May 14, 2011.

  1. rdean
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    rdean Guest

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    Why "Trickle Down" doesn't work

    A right winger inadvertently explained this to me. If you took every bit of capital and money from the top 5% and used it to run the government, the money would be burned through in less than a couple of days.

    See? If the richest Americans don't have enough money to fuel the government then what good would the even tinier amount that comes from "trickle down"?

    The same people talk about "using capitalism". Let's take a look at what "capitalism" really is.

    Definition of CAPITALISM

    : an economic system characterized by private or corporate ownership of capital goods, by investments that are determined by private decision, and by prices, production, and the distribution of goods that are determined mainly by competition in a free market

    Capitalism - Definition and More from the Free Merriam-Webster Dictionary

    Investments - you have to put money in to make money.

    Competition in a free market - Republicans think this means no rules or regulations. That's why, in their mind, it's called a "free" market. And that is where "trickle down" falls completely apart. Free market is actually following the rules of "supply and demand". Regulation plays a very small part.

    The first TV my family had as a kid was black and white and had a round screen. In the 60's, color TVs came out, but they were very expensive. Why? Because everyone wanted one and there weren't that many. Why? Because they just came on the market. Over the years, as more and more were available, the price dropped. Classic "supply and demand". When the demand is high and the supply is low, the cost is high. As the supply increases, the cost drops.

    How this can be manipulated. Oil companies are masters at "supply and demand" manipulation. When the price begins to drop, the oil companies hold back product to force countries to "pay more". The recent rise in cost isn't because production is less, that hasn't changed noticeably. This price increase is from "speculation". Speculation is another thread. Speculation comes from "de-regulation".
     
  2. sparky
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    sparky VIP Member

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    for your perusal>
    The 30-Year Growth of Income Inequality |
    [​IMG]
    http://en.wikipedia.org/wiki/Oligarchy
    Oligarchy (from Greek ὀλιγαρχία, oligarkhía[1]) is a form of power structure in which power effectively rests with a small number of people. These people could be distinguished by royalty, wealth, family ties, corporate, or military control. The word oligarchy is from the Greek words "ὀλίγος" (olígos), "a few"[2] and the verb "ἄρχω" (archo), "to rule, to govern, to command".[3] Such states are often controlled by a few prominent families who pass their influence from one generation to the next.
     
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  3. Mad Scientist
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    If you weren't just a mindless hack, you'd see that massive government is the problem.

    Let's see, GDP is 14 trillion. National debt, 14 trillion.

    Trickle down would work even better if there were no income tax.
     
  4. Mr. H.
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    The first color TVs were expensive because of the expensive R&D and technology that went into their development. The relatively few units that were initially produced were the costliest.
    Nothing's changed there.
     
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    rdunce being oh so very topical and timely:

    if this were the 1980's.
     
  6. percysunshine
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    It is a lie of liberals that 'trickle down' was ever an actual policy.

    Hayek has always been the economic policy of conservatives. Keynes was an idiot.
     
  7. editec
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    editec Mr. Forgot-it-All

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    Trickle down economic policies work in those economic circumstances when the supply side is lacking in funding to expand to meet growing demand.

    That economic theory worked beautifully, for example, when in the 19th century, money was flowing from European investors to American industry that needed capital to exploit the potential of our amazing natural resource base and meet our and Europe's rapidly growing markets.

    When the supply siders are awash with dough and demand side is lacking it (as is the case in this current economy) all supply side policies do are is create MISALLOCATIONS of CAPITAL.

    And this is EXACTLY what Bush II's and Obama's policies are still doing.

    We are PUSHING THE STRING instead of pulling it.
     
  8. rdean
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    And a couple of thread above you another right wingers says, "Trickle down would work even better if there were no income tax."

    The truth is Republicans have no viable policy. They call me names and offer nothing of substance. How can they? They don't know anything.
     
  9. Norman
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    By what standard is USA a supply side economy?

    IMO both of these fail because market already determinate the supply and demand. You don't need any further demand or supply. Sure Keynes has his paradox of thrift but TBH that is nonsense.
     
  10. rdean
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    You've confused "investment" with "trickle down".
     

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