Consumers create jobs.

[Moonglow]

Says law... roughly.

Apple approached an electronics market knowing that there was demand and directed said demand onto their bottom line through the intro of their goods. How did they know? There were consumers with wants and money.

Sorry but there was no demand. Consumers didn't want cell phones before there were cell phones. Consumers didn't want pet rocks before someone came up with the idea of pet rocks. The product creates the demand. Before you know it, everyone wants a Cabbage Patch Doll!

True innovators know this. They can create a demand out of thin air. Steve Jobs, who always was a certified genius has hundreds of products he envisioned. What are they? What demand will these products fill? We don't know because they haven't been invented yet. How will these products improve your life? You don't know! As soon as they get on the market, you won't be able to live without it.

all great points!! There is no demand until Republican supply side capitalist put something on the market consumers want and can afford!!

Consumers are passive and exist in the billions so don't need to be encourged one tiny bit. Folks like Steve Jobs are one in a billion. We cant afford to lose even one like him but it is certain we already have among todays young as they listen to all hateful anti capitalist liberal rhetoric.

There are more than one successful business men in the USA, and some are even liberals. So GFY with your anti-liberal hate program.

 

[antagon]

Actually without Apple, there would be no consumers of Apple products. There was no consumer demand for a computer, or a cell phone, or an IPod before these things existed. The product created the demand.

Says law... roughly.

Apple approached an electronics market knowing that there was demand and directed said demand onto their bottom line through the intro of their goods. How did they know? There were consumers with wants and money.

Sorry but there was no demand. Consumers didn't want cell phones before there were cell phones. Consumers didn't want pet rocks before someone came up with the idea of pet rocks. The product creates the demand. Before you know it, everyone wants a Cabbage Patch Doll!

True innovators know this. They can create a demand out of thin air. Steve Jobs, who always was a certified genius has hundreds of products he envisioned. What are they? What demand will these products fill? We don't know because they haven't been invented yet. How will these products improve your life? You don't know! As soon as they get on the market, you won't be able to live without it.

Of course I understand the Say's law thing. Do you understand the role which high aggregate demand plays in a market with innovators, entrepreneurs and investors at the supply?

Do my pet rocks and apple II's debut in Namibia? Do they choose markets with strong, established AD? Do you see how we can chase our tail looking for where this circle starts? ...Like the chicken and the egg?

Do you think Jobs was a genius for coming up with things out of the clear blue, or do we laud his perception of imminent demand?

Does a crowd of starving people with money fail to constitute demand before the food's cooked? Does it require a genius to determine how to get these folks to give up their money?

 

[Katzndogz]

He came up with things out of the blue and convinced the rest of us that we needed them. Like any good businessman.

 

[Oldstyle]

I don't see the grave misnomer. Conservative rhetoric aimed at a broader less-informed voter base has indeed implied that a better economy with better outcomes for the 'working class' comes from less burden on profits as they are realized by the 'investment class'. Those effects are real, despite caveats and thresholds of diminishing returns. The benefit of lower tax rates come from a larger pool of untaxed profit. If you see the decision-makers in the investment class as 'up' and the working class or destitute folks as 'down', then indeed the flow from reinvestment flows downward. It doesn't gush in the sense of handouts which pay rent, but rather in opportunity to participate in capital investments. A trickle. I think it's an intuitive term, although pejorative. It's much like 'flooding the basement' refers to the the antithesis.

Sowell may be right that economists don't use the term, but clearly he, too, fails to understand the meaning of trickle-down, or what the term is referring to... based on the quote provided. If he also feels that the term contradicts the realization of profit from investment, he's also struggling with the scope of the term. I have only heard or seen the term used synonymously with supply-side macroeconomics, where he, like yourself, gets into some examination of how profits are realized at the micro level.

Supply-side economics is one thing. At the first insinuation that it could afford working classers or destitutes a favorable outcome, said proposal is implying trickle-down. As a pejorative, it goes further than 'supply-side' because it accounts for the problems with the theories at once with the dividends.

What economists like Sowell are saying, Antagon is since profit is what is left over AFTER paying workers that it's impossible for profits to "trickle down" to those workers because they got paid long before profits were generated. This is pretty common sense stuff here and Sowell hasn't failed to understand it. He's pointed out the inherent fallacy of trickle down theory and why it is simply political rhetoric...a misnomer in fact...that is not backed up by economic reality.

The term refers to the conversion of profit to investment, not investment into profit.

Read that again until you can wit a distinction.


Seriously, read that line one more time.

So, "long before profits were generated", "they got paid", and long before that, there was an investment. "Pretty common sense stuff here".

Trickle down refers to the dispersion of profits, Antogen. It has nothing to do with the conversion of profit to investment. It was a derogatory term used by proponents of income redistribution to deride those who advocated the providing of higher profits as a means to stimulate investment. Supposedly, under trickle down theory...money goes to wealthy "owners" and then slowly trickles down to the "workers". The economic reality is that when investors are encouraged to spend capital because they feel the potential for future profit is good...the very first group that benefits is the "workers" because they are given a job and paid a wage. THAT is why I say that "trickle down" economic theory is a misnomer...it isn't a real economic theory and it doesn't exist in the real world.

 

[Rshermr]

What economists like Sowell are saying, Antagon is since profit is what is left over AFTER paying workers that it's impossible for profits to "trickle down" to those workers because they got paid long before profits were generated. This is pretty common sense stuff here and Sowell hasn't failed to understand it. He's pointed out the inherent fallacy of trickle down theory and why it is simply political rhetoric...a misnomer in fact...that is not backed up by economic reality.

The term refers to the conversion of profit to investment, not investment into profit.

Read that again until you can wit a distinction.


Seriously, read that line one more time.

So, "long before profits were generated", "they got paid", and long before that, there was an investment. "Pretty common sense stuff here".

Trickle down refers to the dispersion of profits, Antogen. It has nothing to do with the conversion of profit to investment. It was a derogatory term used by proponents of income redistribution to deride those who advocated the providing of higher profits as a means to stimulate investment. Supposedly, under trickle down theory...money goes to wealthy "owners" and then slowly trickles down to the "workers". The economic reality is that when investors are encouraged to spend capital because they feel the potential for future profit is good...the very first group that benefits is the "workers" because they are given a job and paid a wage. THAT is why I say that "trickle down" economic theory is a misnomer...it isn't a real economic theory and it doesn't exist in the real world.

Whatever, oldstyle. Your interpretation. Truth is, trickle down is part and parcel of supply side economics. Which has never worked in a bad economy.
What this thread started out to discuss is who creates jobs. And not wheather under some circumstance supply side econ may work. Or wheather trickle down is or is not economic theory. In todays economy, for instance, what will produce jobs? Demand creates more sales, sales create the need for more employees. Supply has almost no effect on jobs in this type of economy. Because providing more money to suppliers will not interest them in increasing production when there is not sufficient demand to sell their products. Always has worked that way. But, putting money in the hands of consumers will create demand.

So, if you want to actually understand where trickle down came from, maybe the following from David Stockman, Reagan's Budget Director when trickle down was coined:

"In the 1980’s Ronald Reagan ushered in a new era in American economics as he cut the top tax bracket from 70% down to 50% and then down again to 28%. In order to get support for doing this from the people, and also from politicians, a very crafty set of lies were produced. As David Stockman, then Reagan’s budget director, put it: giving small tax cuts across the board to all brackets was simply a “Trojan Horse” that was used to get approval for the huge top tax bracket cuts. “Trickle-Down” was a term used by Republicans that meant giving tax cuts to the rich. Stockman explains that:

"It's kind of hard to sell 'trickle down,' so the supply-side formula was the only way to get a tax policy that was really 'trickle down.' Supply-side is 'trickle-down' theory."

"Yes, Stockman conceded, when one stripped away the new rhetoric emphasizing across-the-board cuts, the supply-side theory was really new clothes for the unpopular doctrine of the old Republican orthodoxy."

"…the Reagan coalition prevailed again in the House and Congress passed the tax-cut legislation with a final frenzy of trading and bargaining. Again, Stockman was not exhilarated by the victory. On the contrary, it seemed to leave a bad taste in his mouth, as though the democratic process had finally succeeded in shocking him by its intensity and its greed. Once again, Stockman participated in the trading -- special tax concessions for oil -- lease holders and real-estate tax shelters, and generous loopholes that virtually eliminated the corporate income tax. Stockman sat in the room and saw it happen."

"'Do you realize the greed that came to the forefront?' Stockman asked with wonder. 'The hogs were really feeding. The greed level, the level of opportunism, just got out of control.'"

The Education of David Stockman 1981:

Home Page. theatlantic. com/politics/budget/stockman.htm

Reagan's policies did more than simply cut income taxes. A large number of tax loopholes were written into the tax code that catered to special corporate interests. In fact many of the current scandals involving companies such as Enron are rooted in laws that were passed during the Reagan administration that gave these companies more legal legroom to work with and less oversight.

In addition, the small “income-tax cuts” that were given to the middle and lower income tax brackets were countered with new taxes that were directed at middle and low income individuals, as former House Speaker Jim Wright said:

Reagan's tax increases fell mainly on consumers, low- and middle-income people. Sales and excise levies. Reagan didn't call these taxes. They were, in his euphemistic lexicon, "user fees" and "revenue-enhancers."

The most important issue though is that even if you take the Reagan “Trickle-Down” policy at face value it’s still horribly flawed as a policy that will provide economic growth that benefits all Americans.

There is no realistic way for "Trickle-Down" economics to work to increase the income of the working classes of America. In fact I am certain that the developers of the theory of "Trickle-Down" economics were fully aware of this and that "Trickle-Down" has in fact worked as intended. This means that the intent behind implementing "Trickle-Down" was to benefit the wealthiest Americans at the expense of working class Americans. "Trickle-Down" hasn't failed, as many modern economists have suggested, it has succeeded in its goals, which is the increase of economic inequality and the shift of a greater portion of America's wealth into the hands of the wealthiest Americans."
Trickle Down economics was a Trojan Horse
Conservatives have tried to reinvent the history of trickle down, but the above is from the horses mouth. And Stockman explains why the concept does not work.

 

[antagon]

What economists like Sowell are saying, Antagon is since profit is what is left over AFTER paying workers that it's impossible for profits to "trickle down" to those workers because they got paid long before profits were generated. This is pretty common sense stuff here and Sowell hasn't failed to understand it. He's pointed out the inherent fallacy of trickle down theory and why it is simply political rhetoric...a misnomer in fact...that is not backed up by economic reality.

The term refers to the conversion of profit to investment, not investment into profit.

Read that again until you can wit a distinction.


Seriously, read that line one more time.

So, "long before profits were generated", "they got paid", and long before that, there was an investment. "Pretty common sense stuff here".

Trickle down refers to the dispersion of profits, Antogen. It has nothing to do with the conversion of profit to investment.

Hey, ya got it! It's down to petty word choices now... dispersion is not a necessary outcome of profit because you can just keep the shit. It's why I've tried 'disposition' some time earlier.

It was a derogatory term used by proponents of income redistribution to deride those who advocated the providing of higher profits as a means to stimulate investment. Supposedly, under trickle down theory...money goes to wealthy "owners" and then slowly trickles down to the "workers". The economic reality is that when investors are encouraged to spend capital because they feel the potential for future profit is good...the very first group that benefits is the "workers" because they are given a job and paid a wage. THAT is why I say that "trickle down" economic theory is a misnomer...it isn't a real economic theory and it doesn't exist in the real world.

I don't see the misnomer now that you've figured out that wages and capitalization are investments. What you've described above's quite different than you and Sowell's earlier focus on the emergence of profit from investment. Here you finally describe the effects of supply-side macroeconomics.

The trickle part comes from the likelihood of hoarding if profits are exceptional (because of gov't interference like a tax cut, rather than exceptional business) yet opportunity (your potential for future profit) is slim.

Rshermr said that tax relief aimed at the supply side when an economy is 'bad' doesn't seem to bear fruit. I say that it trickles (rather than flows) down due to poor forecasts in a bad economy. Trimming or liquidating investments is indicated just as without the supply-side stimulus. After all, per the OP, demand determines forecasts for future profit.

 

[Oldstyle]

The term refers to the conversion of profit to investment, not investment into profit.

Read that again until you can wit a distinction.


Seriously, read that line one more time.

So, "long before profits were generated", "they got paid", and long before that, there was an investment. "Pretty common sense stuff here".

Trickle down refers to the dispersion of profits, Antogen. It has nothing to do with the conversion of profit to investment.

Hey, ya got it! It's down to petty word choices now... dispersion is not a necessary outcome of profit because you can just keep the shit. It's why I've tried 'disposition' some time earlier.

It was a derogatory term used by proponents of income redistribution to deride those who advocated the providing of higher profits as a means to stimulate investment. Supposedly, under trickle down theory...money goes to wealthy "owners" and then slowly trickles down to the "workers". The economic reality is that when investors are encouraged to spend capital because they feel the potential for future profit is good...the very first group that benefits is the "workers" because they are given a job and paid a wage. THAT is why I say that "trickle down" economic theory is a misnomer...it isn't a real economic theory and it doesn't exist in the real world.

I don't see the misnomer now that you've figured out that wages and capitalization are investments. What you've described above's quite different than you and Sowell's earlier focus on the emergence of profit from investment. Here you finally describe the effects of supply-side macroeconomics.

The trickle part comes from the likelihood of hoarding if profits are exceptional (because of gov't interference like a tax cut, rather than exceptional business) yet opportunity (your potential for future profit) is slim.

Rshermr said that tax relief aimed at the supply side when an economy is 'bad' doesn't seem to bear fruit. I say that it trickles (rather than flows) down due to poor forecasts in a bad economy. Trimming or liquidating investments is indicated just as without the supply-side stimulus. After all, per the OP, demand determines forecasts for future profit.

With all due respect, Antogen...you're wrong. That money is ALWAYS going to go first to workers no matter what shape the economy is in. It has to. If opportunity for future profits are slim then workers are not hired to perform labor in the first place...that investment capital is held back which is basically the situation we find ourselves in now. The Private Sector is sitting on trillions of dollars because they don't see enough potential for future profit to risk their capital. When that is the case you don't get "trickle" going up, down or even sideways. What you get is stagnation.

The reason that Rshermr is completely off the mark with his claim that tax relief in a bad economy doesn't "bear fruit" is that anything that improves the potential for future profit will be an incentive for investors to invest. The very idea that raising taxes on capital gains will increase investment and then spur growth is so counter to the basic principles of economics that it's almost laughable. It's the exact OPPOSITE of what you should be doing if you want to grow the economy.

And once again I remind you that demand by itself does not guarantee future profits. You can have all the people in the world drooling to get their hands on a product but if the making of that product does not afford someone a profit then it will not be produced. That is the basis of the free market system.

 

[Oldstyle]

The term refers to the conversion of profit to investment, not investment into profit.

Read that again until you can wit a distinction.


Seriously, read that line one more time.

So, "long before profits were generated", "they got paid", and long before that, there was an investment. "Pretty common sense stuff here".

Trickle down refers to the dispersion of profits, Antogen. It has nothing to do with the conversion of profit to investment. It was a derogatory term used by proponents of income redistribution to deride those who advocated the providing of higher profits as a means to stimulate investment. Supposedly, under trickle down theory...money goes to wealthy "owners" and then slowly trickles down to the "workers". The economic reality is that when investors are encouraged to spend capital because they feel the potential for future profit is good...the very first group that benefits is the "workers" because they are given a job and paid a wage. THAT is why I say that "trickle down" economic theory is a misnomer...it isn't a real economic theory and it doesn't exist in the real world.

Whatever, oldstyle. Your interpretation. Truth is, trickle down is part and parcel of supply side economics. Which has never worked in a bad economy.
What this thread started out to discuss is who creates jobs. And not wheather under some circumstance supply side econ may work. Or wheather trickle down is or is not economic theory. In todays economy, for instance, what will produce jobs? Demand creates more sales, sales create the need for more employees. Supply has almost no effect on jobs in this type of economy. Because providing more money to suppliers will not interest them in increasing production when there is not sufficient demand to sell their products. Always has worked that way. But, putting money in the hands of consumers will create demand.

So, if you want to actually understand where trickle down came from, maybe the following from David Stockman, Reagan's Budget Director when trickle down was coined:

"In the 1980’s Ronald Reagan ushered in a new era in American economics as he cut the top tax bracket from 70% down to 50% and then down again to 28%. In order to get support for doing this from the people, and also from politicians, a very crafty set of lies were produced. As David Stockman, then Reagan’s budget director, put it: giving small tax cuts across the board to all brackets was simply a “Trojan Horse” that was used to get approval for the huge top tax bracket cuts. “Trickle-Down” was a term used by Republicans that meant giving tax cuts to the rich. Stockman explains that:

"It's kind of hard to sell 'trickle down,' so the supply-side formula was the only way to get a tax policy that was really 'trickle down.' Supply-side is 'trickle-down' theory."

"Yes, Stockman conceded, when one stripped away the new rhetoric emphasizing across-the-board cuts, the supply-side theory was really new clothes for the unpopular doctrine of the old Republican orthodoxy."

"…the Reagan coalition prevailed again in the House and Congress passed the tax-cut legislation with a final frenzy of trading and bargaining. Again, Stockman was not exhilarated by the victory. On the contrary, it seemed to leave a bad taste in his mouth, as though the democratic process had finally succeeded in shocking him by its intensity and its greed. Once again, Stockman participated in the trading -- special tax concessions for oil -- lease holders and real-estate tax shelters, and generous loopholes that virtually eliminated the corporate income tax. Stockman sat in the room and saw it happen."

"'Do you realize the greed that came to the forefront?' Stockman asked with wonder. 'The hogs were really feeding. The greed level, the level of opportunism, just got out of control.'"

The Education of David Stockman 1981:

Home Page. theatlantic. com/politics/budget/stockman.htm

Reagan's policies did more than simply cut income taxes. A large number of tax loopholes were written into the tax code that catered to special corporate interests. In fact many of the current scandals involving companies such as Enron are rooted in laws that were passed during the Reagan administration that gave these companies more legal legroom to work with and less oversight.

In addition, the small “income-tax cuts” that were given to the middle and lower income tax brackets were countered with new taxes that were directed at middle and low income individuals, as former House Speaker Jim Wright said:

Reagan's tax increases fell mainly on consumers, low- and middle-income people. Sales and excise levies. Reagan didn't call these taxes. They were, in his euphemistic lexicon, "user fees" and "revenue-enhancers."

The most important issue though is that even if you take the Reagan “Trickle-Down” policy at face value it’s still horribly flawed as a policy that will provide economic growth that benefits all Americans.

There is no realistic way for "Trickle-Down" economics to work to increase the income of the working classes of America. In fact I am certain that the developers of the theory of "Trickle-Down" economics were fully aware of this and that "Trickle-Down" has in fact worked as intended. This means that the intent behind implementing "Trickle-Down" was to benefit the wealthiest Americans at the expense of working class Americans. "Trickle-Down" hasn't failed, as many modern economists have suggested, it has succeeded in its goals, which is the increase of economic inequality and the shift of a greater portion of America's wealth into the hands of the wealthiest Americans."
Trickle Down economics was a Trojan Horse
Conservatives have tried to reinvent the history of trickle down, but the above is from the horses mouth. And Stockman explains why the concept does not work.

At this point your claim that you were an economics major in college and actually TAUGHT at the college level has reached the point of farce. You know nothing about the subject. You quote things from Wikipedia that people who know almost as little as yourself about economics have posted there.

Let me explain to you once again, you brain dead cretin! THERE IS NO SUCH ECONOMIC THEORY AS TRICKLE DOWN THEORY...IT DOES NOT EXIST!!!

 

[DSGE]

Let me explain to you once again, you brain dead cretin! THERE IS NO SUCH ECONOMIC THEORY AS TRICKLE DOWN THEORY...IT DOES NOT EXIST!!!

Aghion, P and P. Bolton (1997) “A Theory of Trickle-Down Growth and Development” The
Review of Economic Studies 64, 151-172. (pdf)

Or maybe try going to ideas.repec.org and searching "trickle down"?

IDEAS Search: trickle down

 

[Rshermr]

Oldstyle says:
At this point your claim that you were an economics major in college and actually TAUGHT at the college level has reached the point of farce. You know nothing about the subject. Again, oldstyle, I do so value your opinion. You quote things from Wikipedia that people who know almost as little as yourself about economics have posted there.
The quotes you are looking at are NOT FROM WIKIPEDIA. Apparently you can not read, oldstyle.

Let me explain to you once again, you brain dead cretin! THERE IS NO SUCH ECONOMIC THEORY AS TRICKLE DOWN THEORY...IT DOES NOT EXIST!!! Keep saying it, oldstyle, over and over and over. Then, maybe you will convince some poor ignorant person. In the interim, every independent sourse out there says you are wrong. So, what are we to do. Believe you, the great self described economics expert, or should we believe, oh, say, the sourse that I just posted. I know that he can not compete with your vast knowledge, oh great con. He was just Reagans BUDGET DIRECTOR. Or you could look at the references by DSGE, just posted. They seem to say, though I know you are an economic expert, that you are full of crap. You loose, oldstyle, again. Because you lie. And you then try to defend your lie against truth.

 

[Oldstyle]

Let me explain to you once again, you brain dead cretin! THERE IS NO SUCH ECONOMIC THEORY AS TRICKLE DOWN THEORY...IT DOES NOT EXIST!!!

Aghion, P and P. Bolton (1997) “A Theory of Trickle-Down Growth and Development” The
Review of Economic Studies 64, 151-172. (pdf)

Or maybe try going to ideas.repec.org and searching "trickle down"?

IDEAS Search: trickle down

I did not make the claim that you will not find the term "Trickle Down Theory" used extensively...because it is a term that is tossed around repeatedly as we argue over the best methods to manage economies. What I have argued is that the term does not exist in actual economic theory because it's basic premise that profits flow from the top down is inherently flawed. It isn't valid economic theory because it doesn't exist.

Let's take a business...any business. Everything starts with a decision being made that there is enough potential for future profit that an investment should be made to produce a product or service.

But before that profit can be realized...before the person or persons who have invested towards that FUTURE profit actually see a profit (if they ever do, which is not a given) workers are paid to produce that product or that service and THEIR wages precede the taking of profits by anyone else. How can you possibly have a "trickle down" effect when the people getting paid first, despite whether or not a profit has been realized, ARE the workers? Trickle down is a misnomer. It's a derogatory "political expression" that has been coined by proponents of income redistribution going all the way back to Will Rogers but it is NOT an economic theory.

 

[antagon]

Trickle down refers to the dispersion of profits, Antogen. It has nothing to do with the conversion of profit to investment.

Hey, ya got it! It's down to petty word choices now... dispersion is not a necessary outcome of profit because you can just keep the shit. It's why I've tried 'disposition' some time earlier.

It was a derogatory term used by proponents of income redistribution to deride those who advocated the providing of higher profits as a means to stimulate investment. Supposedly, under trickle down theory...money goes to wealthy "owners" and then slowly trickles down to the "workers". The economic reality is that when investors are encouraged to spend capital because they feel the potential for future profit is good...the very first group that benefits is the "workers" because they are given a job and paid a wage. THAT is why I say that "trickle down" economic theory is a misnomer...it isn't a real economic theory and it doesn't exist in the real world.

I don't see the misnomer now that you've figured out that wages and capitalization are investments. What you've described above's quite different than you and Sowell's earlier focus on the emergence of profit from investment. Here you finally describe the effects of supply-side macroeconomics.

The trickle part comes from the likelihood of hoarding if profits are exceptional (because of gov't interference like a tax cut, rather than exceptional business) yet opportunity (your potential for future profit) is slim.

Rshermr said that tax relief aimed at the supply side when an economy is 'bad' doesn't seem to bear fruit. I say that it trickles (rather than flows) down due to poor forecasts in a bad economy. Trimming or liquidating investments is indicated just as without the supply-side stimulus. After all, per the OP, demand determines forecasts for future profit.

With all due respect, Antogen...you're wrong. That money is ALWAYS going to go first to workers no matter what shape the economy is in.

Oh, oh... he's regressing. The quote seemed to have worked last time...

The term refers to the conversion of profit to investment, not investment into profit.

After reading that a few more times you'll remember that investment is circular and the topic covers what precedes investment on that circle.

You've got the idea, though. Here you go on to explain to me what I had explained in the very previous post... for the second time:

If opportunity for future profits are slim then workers are not hired to perform labor in the first place...that investment capital is held back which is basically the situation we find ourselves in now. The Private Sector is sitting on trillions of dollars because they don't see enough potential for future profit to risk their capital.

For reference and avoidance of doubt, here is the exact same information which I had articulated above:

The trickle part comes from the likelihood of hoarding if profits are exceptional (because of gov't interference like a tax cut, rather than exceptional business) yet opportunity (your potential for future profit) is slim.

When that is the case you don't get "trickle" going up, down or even sideways. What you get is stagnation.

'Trickle' is the pejorative which accounts for most businesses hoarding exceptional profits in a shit economy. There is a benefit to this tax relief, and the business investment cycle does continue so long as the shop keeps its doors open in the first place. The economic conditions are not seen as a growth opportunity, however. Supply-siders would advocate dropping gains taxes as a stimulus, inspiring aggressive profittaking (downsizing), moreover.

The reason that Rshermr is completely off the mark with his claim that tax relief in a bad economy doesn't "bear fruit" is that anything that improves the potential for future profit will be an incentive for investors to invest.

Rshermr makes his point on this emperically, but I dont think that you've addressed that. Moreover your conjecture here (not empirically supported) makes you sound like a trickle-downer: claiming that low taxes have messianic effects on business people when tax cuts don't alter profit outlook to any degree as much as perceived demand. No business person ever says, "Hey, with these lower taxes, I can afford XXX". That is the silly shit which inspires the pejoratives re: supply-side economics.

The very idea that raising taxes on capital gains will increase investment and then spur growth is so counter to the basic principles of economics that it's almost laughable. It's the exact OPPOSITE of what you should be doing if you want to grow the economy.

I disagree... but I only think taxes should be raised to raise gov't revenue. Capital gains is a tax on profit-taking, so high gains taxes do encourage reinvestment, whereas low gains taxes are opportunities to deinvest with the biggest dividends. Investors know that these stimulus capgains tax cuts are short-lived, and they lobby for them when they're trying to downsize in a shit economy. If you believe the lobbyists' spin, you are wrong on real application.

And once again I remind you that demand by itself does not guarantee future profits. You can have all the people in the world drooling to get their hands on a product but if the making of that product does not afford someone a profit then it will not be produced. That is the basis of the free market system.

This is your first reminder to me regarding this matter. You and I agree here. For the record, nothing 'guarantees' profits... its an investment after all, w/ the associated risk.

 

[DSGE]

Let me explain to you once again, you brain dead cretin! THERE IS NO SUCH ECONOMIC THEORY AS TRICKLE DOWN THEORY...IT DOES NOT EXIST!!!

Aghion, P and P. Bolton (1997) “A Theory of Trickle-Down Growth and Development” The
Review of Economic Studies 64, 151-172. (pdf)

Or maybe try going to ideas.repec.org and searching "trickle down"?

IDEAS Search: trickle down

I did not make the claim that you will not find the term "Trickle Down Theory" used extensively...because it is a term that is tossed around repeatedly as we argue over the best methods to manage economies. What I have argued is that the term does not exist in actual economic theory because it's basic premise that profits flow from the top down is inherently flawed. It isn't valid economic theory because it doesn't exist.

Let's take a business...any business. Everything starts with a decision being made that there is enough potential for future profit that an investment should be made to produce a product or service.

But before that profit can be realized...before the person or persons who have invested towards that FUTURE profit actually see a profit (if they ever do, which is not a given) workers are paid to produce that product or that service and THEIR wages precede the taking of profits by anyone else. How can you possibly have a "trickle down" effect when the people getting paid first, despite whether or not a profit has been realized, ARE the workers? Trickle down is a misnomer. It's a derogatory "political expression" that has been coined by proponents of income redistribution going all the way back to Will Rogers but it is NOT an economic theory.

Except there's at least one academic paper so far in an economic journal establishing such an economic theory. It would be correct to say it's not a textbook theory.

 

[Oldstyle]

Hey, ya got it! It's down to petty word choices now... dispersion is not a necessary outcome of profit because you can just keep the shit. It's why I've tried 'disposition' some time earlier.


I don't see the misnomer now that you've figured out that wages and capitalization are investments. What you've described above's quite different than you and Sowell's earlier focus on the emergence of profit from investment. Here you finally describe the effects of supply-side macroeconomics.

The trickle part comes from the likelihood of hoarding if profits are exceptional (because of gov't interference like a tax cut, rather than exceptional business) yet opportunity (your potential for future profit) is slim.

Rshermr said that tax relief aimed at the supply side when an economy is 'bad' doesn't seem to bear fruit. I say that it trickles (rather than flows) down due to poor forecasts in a bad economy. Trimming or liquidating investments is indicated just as without the supply-side stimulus. After all, per the OP, demand determines forecasts for future profit.

With all due respect, Antogen...you're wrong. That money is ALWAYS going to go first to workers no matter what shape the economy is in.

Oh, oh... he's regressing. The quote seemed to have worked last time...



After reading that a few more times you'll remember that investment is circular and the topic covers what precedes investment on that circle.

You've got the idea, though. Here you go on to explain to me what I had explained in the very previous post... for the second time:
For reference and avoidance of doubt, here is the exact same information which I had articulated above:



'Trickle' is the pejorative which accounts for most businesses hoarding exceptional profits in a shit economy. There is a benefit to this tax relief, and the business investment cycle does continue so long as the shop keeps its doors open in the first place. The economic conditions are not seen as a growth opportunity, however. Supply-siders would advocate dropping gains taxes as a stimulus, inspiring aggressive profittaking (downsizing), moreover.


Rshermr makes his point on this emperically, but I dont think that you've addressed that. Moreover your conjecture here (not empirically supported) makes you sound like a trickle-downer: claiming that low taxes have messianic effects on business people when tax cuts don't alter profit outlook to any degree as much as perceived demand. No business person ever says, "Hey, with these lower taxes, I can afford XXX". That is the silly shit which inspires the pejoratives re: supply-side economics.

The very idea that raising taxes on capital gains will increase investment and then spur growth is so counter to the basic principles of economics that it's almost laughable. It's the exact OPPOSITE of what you should be doing if you want to grow the economy.

I disagree... but I only think taxes should be raised to raise gov't revenue. Capital gains is a tax on profit-taking, so high gains taxes do encourage reinvestment, whereas low gains taxes are opportunities to deinvest with the biggest dividends. Investors know that these stimulus capgains tax cuts are short-lived, and they lobby for them when they're trying to downsize in a shit economy. If you believe the lobbyists' spin, you are wrong on real application.

And once again I remind you that demand by itself does not guarantee future profits. You can have all the people in the world drooling to get their hands on a product but if the making of that product does not afford someone a profit then it will not be produced. That is the basis of the free market system.

This is your first reminder to me regarding this matter. You and I agree here. For the record, nothing 'guarantees' profits... its an investment after all, w/ the associated risk.

This is seriously like banging my head against a wall! Let's try this one more time...

First of all let's define what we are discussing. The term "trickle down" was something that the proponents of income redistribution coined to be used in a derogatory fashion when they accused those in favor of supply side economic's of only wanting to help the rich...with the poor getting a slow "trickling down" of benefit to them. It doesn't exist as a "real" economic theory. It is a political term...pure and simple.

The following quote is from Thomas Sowell's Basic Economics:

"There have been many economic theories over the centuries, accompanied by controversies among different schools of economists. But one of the most politically prominent economic theories today is one that has never existed among economists -- the "trickle-down" theory.
People who are politically committed to policies of redistributing income and who tend to emphasize the conflicts between business and labor, rather than their mutual interdependence, often accuse those opposed to them of believing that benefits must be given to the wealthy in general or to business in particular, in order that these benefits will eventually "trickle-down" to the masses of ordinary people. But no recognized economist of any school of thought has ever had any such theory or made any such proposal. It is a straw man. It cannot be found in even the most voluminous and learned histories of economic theories."

Copyright 2007 by Thomas Sowell
Published by Basic Books

 

[Rshermr]

Oldstyle says:
This is seriously like banging my head against a wall! Is this what your problem is. Stop it, oldstyle. You are making no rational sense. Let's try this one more time...

First of all let's define what we are discussing. The term "trickle down" was something that the proponents of income redistribution coined to be used in a derogatory fashion when they accused those in favor of supply side economic's of only wanting to help the rich...Oldstyle, I think you know that is a lie.with the poor getting a slow "trickling down" of benefit to them. It doesn't exist as a "real" economic theory. It is a political term...pure and simple. Lets define? Are you the teacher now. You told us earlier that you have 2 quarters of college econ. Where is your proof, oldstyle. Because your statement is wrong, per the statement that I gave to you in a previous post, by Reagans Budget Director. Stop the spin, stop the lying, and deal with a little truth. So, here you go again. Here is the info from before that you ignored:

So, if you want to actually understand where trickle down came from, maybe the following from David Stockman, Reagan's Budget Director when trickle down was coined:

"In the 1980’s Ronald Reagan ushered in a new era in American economics as he cut the top tax bracket from 70% down to 50% and then down again to 28%. In order to get support for doing this from the people, and also from politicians, a very crafty set of lies were produced. As David Stockman, then Reagan’s budget director, put it: giving small tax cuts across the board to all brackets was simply a “Trojan Horse” that was used to get approval for the huge top tax bracket cuts. “Trickle-Down” was a term used by Republicans that meant giving tax cuts to the rich. Stockman explains that:

"It's kind of hard to sell 'trickle down,' so the supply-side formula was the only way to get a tax policy that was really 'trickle down.' Supply-side is 'trickle-down' theory."

"Yes, Stockman conceded, when one stripped away the new rhetoric emphasizing across-the-board cuts, the supply-side theory was really new clothes for the unpopular doctrine of the old Republican orthodoxy."

"…the Reagan coalition prevailed again in the House and Congress passed the tax-cut legislation with a final frenzy of trading and bargaining. Again, Stockman was not exhilarated by the victory. On the contrary, it seemed to leave a bad taste in his mouth, as though the democratic process had finally succeeded in shocking him by its intensity and its greed. Once again, Stockman participated in the trading -- special tax concessions for oil -- lease holders and real-estate tax shelters, and generous loopholes that virtually eliminated the corporate income tax. Stockman sat in the room and saw it happen."

"'Do you realize the greed that came to the forefront?' Stockman asked with wonder. 'The hogs were really feeding. The greed level, the level of opportunism, just got out of control.'"

The Education of David Stockman 1981:

Home Page. theatlantic. com/politics/budget/stockman.htm

Reagan's policies did more than simply cut income taxes. A large number of tax loopholes were written into the tax code that catered to special corporate interests. In fact many of the current scandals involving companies such as Enron are rooted in laws that were passed during the Reagan administration that gave these companies more legal legroom to work with and less oversight.

In addition, the small “income-tax cuts” that were given to the middle and lower income tax brackets were countered with new taxes that were directed at middle and low income individuals, as former House Speaker Jim Wright said:

Reagan's tax increases fell mainly on consumers, low- and middle-income people. Sales and excise levies. Reagan didn't call these taxes. They were, in his euphemistic lexicon, "user fees" and "revenue-enhancers."

The most important issue though is that even if you take the Reagan “Trickle-Down” policy at face value it’s still horribly flawed as a policy that will provide economic growth that benefits all Americans.

There is no realistic way for "Trickle-Down" economics to work to increase the income of the working classes of America. In fact I am certain that the developers of the theory of "Trickle-Down" economics were fully aware of this and that "Trickle-Down" has in fact worked as intended. This means that the intent behind implementing "Trickle-Down" was to benefit the wealthiest Americans at the expense of working class Americans. "Trickle-Down" hasn't failed, as many modern economists have suggested, it has succeeded in its goals, which is the increase of economic inequality and the shift of a greater portion of America's wealth into the hands of the wealthiest Americans."
Trickle Down economics was a Trojan Horse"


The following quote is from Thomas Sowell's Basic Economics:

"There have been many economic theories over the centuries, accompanied by controversies among different schools of economists. But one of the most politically prominent economic theories today is one that has never existed among economists -- the "trickle-down" theory.
People who are politically committed to policies of redistributing income and who tend to emphasize the conflicts between business and labor, rather than their mutual interdependence, often accuse those opposed to them of believing that benefits must be given to the wealthy in general or to business in particular, in order that these benefits will eventually "trickle-down" to the masses of ordinary people. But no recognized economist of any school of thought has ever had any such theory or made any such proposal. It is a straw man. It cannot be found in even the most voluminous and learned histories of economic theories."
So, oldstyle, if your tiny brain would recognize what you just quoted above, which says that recognized economist do not believe in the trickledown idea, theory, or whatever, that is correct. WHO DEVELOPED the term and the concept is described above by David Stockman, Reagans Budget Director at the time of coining the term.
So again, we can believe you, or we can believe Stockman. And since you routinely push con dogma, I think I would take the person eminently qualified to discuss the matter. Rather than you, who wants to change history. You see, I do not need to be polite with you. I can prove you are a liar.

 

[Oldstyle]

Aghion, P and P. Bolton (1997) “A Theory of Trickle-Down Growth and Development” The
Review of Economic Studies 64, 151-172. (pdf)

Or maybe try going to ideas.repec.org and searching "trickle down"?

IDEAS Search: trickle down

I did not make the claim that you will not find the term "Trickle Down Theory" used extensively...because it is a term that is tossed around repeatedly as we argue over the best methods to manage economies. What I have argued is that the term does not exist in actual economic theory because it's basic premise that profits flow from the top down is inherently flawed. It isn't valid economic theory because it doesn't exist.

Let's take a business...any business. Everything starts with a decision being made that there is enough potential for future profit that an investment should be made to produce a product or service.

But before that profit can be realized...before the person or persons who have invested towards that FUTURE profit actually see a profit (if they ever do, which is not a given) workers are paid to produce that product or that service and THEIR wages precede the taking of profits by anyone else. How can you possibly have a "trickle down" effect when the people getting paid first, despite whether or not a profit has been realized, ARE the workers? Trickle down is a misnomer. It's a derogatory "political expression" that has been coined by proponents of income redistribution going all the way back to Will Rogers but it is NOT an economic theory.

Except there's at least one academic paper so far in an economic journal establishing such an economic theory. It would be correct to say it's not a textbook theory.

Did you read that "theory", DSGE? It uses the phrase "trickle down" because that's an eye catching phrase these days but the academic paper that was written had little to do with what is purported to be "trickle down theory" as it is being portrayed by Rshermr or Antogen.

 

[Oldstyle]

Oldstyle says:
This is seriously like banging my head against a wall! Is this what your problem is. Stop it, oldstyle. You are making no rational sense. Let's try this one more time...

First of all let's define what we are discussing. The term "trickle down" was something that the proponents of income redistribution coined to be used in a derogatory fashion when they accused those in favor of supply side economic's of only wanting to help the rich...Oldstyle, I think you know that is a lie.with the poor getting a slow "trickling down" of benefit to them. It doesn't exist as a "real" economic theory. It is a political term...pure and simple. Lets define? Are you the teacher now. You told us earlier that you have 2 quarters of college econ. Where is your proof, oldstyle. Because your statement is wrong, per the statement that I gave to you in a previous post, by Reagans Budget Director. Stop the spin, stop the lying, and deal with a little truth. So, here you go again. Here is the info from before that you ignored:

So, if you want to actually understand where trickle down came from, maybe the following from David Stockman, Reagan's Budget Director when trickle down was coined:

"In the 1980’s Ronald Reagan ushered in a new era in American economics as he cut the top tax bracket from 70% down to 50% and then down again to 28%. In order to get support for doing this from the people, and also from politicians, a very crafty set of lies were produced. As David Stockman, then Reagan’s budget director, put it: giving small tax cuts across the board to all brackets was simply a “Trojan Horse” that was used to get approval for the huge top tax bracket cuts. “Trickle-Down” was a term used by Republicans that meant giving tax cuts to the rich. Stockman explains that:

"It's kind of hard to sell 'trickle down,' so the supply-side formula was the only way to get a tax policy that was really 'trickle down.' Supply-side is 'trickle-down' theory."

"Yes, Stockman conceded, when one stripped away the new rhetoric emphasizing across-the-board cuts, the supply-side theory was really new clothes for the unpopular doctrine of the old Republican orthodoxy."

"…the Reagan coalition prevailed again in the House and Congress passed the tax-cut legislation with a final frenzy of trading and bargaining. Again, Stockman was not exhilarated by the victory. On the contrary, it seemed to leave a bad taste in his mouth, as though the democratic process had finally succeeded in shocking him by its intensity and its greed. Once again, Stockman participated in the trading -- special tax concessions for oil -- lease holders and real-estate tax shelters, and generous loopholes that virtually eliminated the corporate income tax. Stockman sat in the room and saw it happen."

"'Do you realize the greed that came to the forefront?' Stockman asked with wonder. 'The hogs were really feeding. The greed level, the level of opportunism, just got out of control.'"

The Education of David Stockman 1981:

Home Page. theatlantic. com/politics/budget/stockman.htm

Reagan's policies did more than simply cut income taxes. A large number of tax loopholes were written into the tax code that catered to special corporate interests. In fact many of the current scandals involving companies such as Enron are rooted in laws that were passed during the Reagan administration that gave these companies more legal legroom to work with and less oversight.

In addition, the small “income-tax cuts” that were given to the middle and lower income tax brackets were countered with new taxes that were directed at middle and low income individuals, as former House Speaker Jim Wright said:

Reagan's tax increases fell mainly on consumers, low- and middle-income people. Sales and excise levies. Reagan didn't call these taxes. They were, in his euphemistic lexicon, "user fees" and "revenue-enhancers."

The most important issue though is that even if you take the Reagan “Trickle-Down” policy at face value it’s still horribly flawed as a policy that will provide economic growth that benefits all Americans.

There is no realistic way for "Trickle-Down" economics to work to increase the income of the working classes of America. In fact I am certain that the developers of the theory of "Trickle-Down" economics were fully aware of this and that "Trickle-Down" has in fact worked as intended. This means that the intent behind implementing "Trickle-Down" was to benefit the wealthiest Americans at the expense of working class Americans. "Trickle-Down" hasn't failed, as many modern economists have suggested, it has succeeded in its goals, which is the increase of economic inequality and the shift of a greater portion of America's wealth into the hands of the wealthiest Americans."
Trickle Down economics was a Trojan Horse"


The following quote is from Thomas Sowell's Basic Economics:

"There have been many economic theories over the centuries, accompanied by controversies among different schools of economists. But one of the most politically prominent economic theories today is one that has never existed among economists -- the "trickle-down" theory.
People who are politically committed to policies of redistributing income and who tend to emphasize the conflicts between business and labor, rather than their mutual interdependence, often accuse those opposed to them of believing that benefits must be given to the wealthy in general or to business in particular, in order that these benefits will eventually "trickle-down" to the masses of ordinary people. But no recognized economist of any school of thought has ever had any such theory or made any such proposal. It is a straw man. It cannot be found in even the most voluminous and learned histories of economic theories."
So, oldstyle, if your tiny brain would recognize what you just quoted above, which says that recognized economist do not believe in the trickledown idea, theory, or whatever, that is correct. WHO DEVELOPED the term and the concept is described above by David Stockman, Reagans Budget Director at the time of coining the term.
So again, we can believe you, or we can believe Stockman. And since you routinely push con dogma, I think I would take the person eminently qualified to discuss the matter. Rather than you, who wants to change history. You see, I do not need to be polite with you. I can prove you are a liar.

Since David Stockman's college education consisted of a BA in History and graduate studies at Harvard Divinity School (Yes, you heard right...DIVINITY SCHOOL!) you're going to have to first convince me why it is that he should be our "authority" on economics. Perhaps "God" told him about "trickle down" theory? (eye-roll) Stockman was a politician...not an economist. Somehow that makes him "eminently qualified" to you. As usual...you are talking out of your nether regions. As for who I believe? I had the great pleasure of HAVING Thomas Sowell as one of my professors...I choose to believe him.

 

[antagon]

This is seriously like banging my head against a wall!

This is because you don't read through or respond to arguments, Oldstyle.

Let's try this one more time...

First of all let's define what we are discussing. The term "trickle down" was something that the proponents of income redistribution coined to be used in a derogatory fashion when they accused those in favor of supply side economic's of only wanting to help the rich...with the poor getting a slow "trickling down" of benefit to them. It doesn't exist as a "real" economic theory. It is a political term...pure and simple.

No contest. This is the same thing I had said earlier. At that time, your angle was that the critics didn't know anything about economics. I will spare myself the color-coded quotes this third time you've changed your argument to match mine.

That is a very strange way of conceding a point, Oldstyle, but thanks anyhow.

The following quote is from Thomas Sowell's Basic Economics:

*sigh* ... now I've got to read some Fucla/Stanford guy's opinion...

"There have been many economic theories over the centuries, accompanied by controversies among different schools of economists. But one of the most politically prominent economic theories today is one that has never existed among economists -- the "trickle-down" theory.
People who are politically committed to policies of redistributing income and who tend to emphasize the conflicts between business and labor, rather than their mutual interdependence, often accuse those opposed to them of believing that benefits must be given to the wealthy in general or to business in particular, in order that these benefits will eventually "trickle-down" to the masses of ordinary people. But no recognized economist of any school of thought has ever had any such theory or made any such proposal. It is a straw man. It cannot be found in even the most voluminous and learned histories of economic theories."

Copyright 2007 by Thomas Sowell
Published by Basic Books

Sowell's bullshitting himself with that (bolded). Every election cycle for as long as I could remember has featured economists arguing for or against trickle-down proposals. There's no straw-man, Tom...Oldstyle, they call out x amount of jobs, x.x% of median household income change, etc. When these projections by the E&Y's of this world bear no fruit, you get the pejoratives said with a roll of the eyes.

Labor/investor conflict in labor-intensive industries like the automotive industry casts a shadow on interdependency. No emphasis required, Sowell.

He needs to get off campus more based on your quotes of his.

 

[antagon]

Did you read that "theory", DSGE? It uses the phrase "trickle down" because that's an eye catching phrase these days but the academic paper that was written had little to do with what is purported to be "trickle down theory" as it is being portrayed by Rshermr or Antogen.

Whether or not it is a theory is semantic to its definition and association with the many supply-side theories out there.

A-N-T-A-G-O-N.

 

[Oldstyle]

This is seriously like banging my head against a wall!

This is because you don't read through or respond to arguments, Oldstyle.

Let's try this one more time...

First of all let's define what we are discussing. The term "trickle down" was something that the proponents of income redistribution coined to be used in a derogatory fashion when they accused those in favor of supply side economic's of only wanting to help the rich...with the poor getting a slow "trickling down" of benefit to them. It doesn't exist as a "real" economic theory. It is a political term...pure and simple.

No contest. This is the same thing I had said earlier. At that time, your angle was that the critics didn't know anything about economics. I will spare myself the color-coded quotes this third time you've changed your argument to match mine.

That is a very strange way of conceding a point, Oldstyle, but thanks anyhow.

The following quote is from Thomas Sowell's Basic Economics:

*sigh* ... now I've got to read some Fucla/Stanford guy's opinion...

"There have been many economic theories over the centuries, accompanied by controversies among different schools of economists. But one of the most politically prominent economic theories today is one that has never existed among economists -- the "trickle-down" theory.
People who are politically committed to policies of redistributing income and who tend to emphasize the conflicts between business and labor, rather than their mutual interdependence, often accuse those opposed to them of believing that benefits must be given to the wealthy in general or to business in particular, in order that these benefits will eventually "trickle-down" to the masses of ordinary people. But no recognized economist of any school of thought has ever had any such theory or made any such proposal. It is a straw man. It cannot be found in even the most voluminous and learned histories of economic theories."

Copyright 2007 by Thomas Sowell
Published by Basic Books

Sowell's bullshitting himself with that (bolded). Every election cycle for as long as I could remember has featured economists arguing for or against trickle-down proposals. There's no straw-man, Tom...Oldstyle, they call out x amount of jobs, x.x% of median household income change, etc. When these projections by the E&Y's of this world bear no fruit, you get the pejoratives said with a roll of the eyes.

Labor/investor conflict in labor-intensive industries like the automotive industry casts a shadow on interdependency. No emphasis required, Sowell.

He needs to get off campus more based on your quotes of his.

What argument have I NOT responded to? Don't make bullshit accusations like that please. I've done nothing BUT respond to arguments and I will continue to.

My "argument" has not changed one bit from the start of this discussion until now. How have I CHANGED my argument to match yours when I haven't changed ANYTHING?

As for Sowell "bullshitting" himself? Please, just because you've heard economists debating the merits of Supply Side economics and you've heard politicians and pundits debating the merits of "Trickle Down" economics don't confuse yourself into believing that you're heard economists debating the merits of an economic theory that doesn't exist. Sowell is 100% correct when he states that trickle down theory is a "straw man". As for his "getting off of campus" more? Thomas Sowell is one of the more respected economists on the planet. He doesn't need to get out more!