Is trickle down a policy, or a fact of economics.

[iluvatar5150]

I just expanded the meaning a bit i.e. "sideways".

You didn't merely expand it.

"Trickle down" or "supply side" is a philosophy that focuses on cutting taxes and regulation to juice the supply of goods in the economy. That's not "movement of money up, down, and sideways"; it's a specific focus on pushing economic growth through a certain set of activities.

 

[OldWiseGuy]

You didn't merely expand it.

"Trickle down" or "supply side" is a philosophy that focuses on cutting taxes and regulation to juice the supply of goods in the economy. That's not "movement of money up, down, and sideways"; it's a specific focus on pushing economic growth through a certain set of activities.

But with no specific target in mind regarding wealth building. That's up to the individual when money is in their hands. We all spend up and down. The poor can build wealth, albeit more slowly than others, but they choose not to which is their right.

The term "trickle' implies movement through the economy. Not the same as economic policy.

 

[iluvatar5150]

The term "trickle' implies movement through the economy.

The term trickle implies movement in a specific direction. It doesn't refer to all movement.

Not the same as monetary policy.

Call it a particular flavor or school of fiscal policy.

 

[OldWiseGuy]

The term trickle implies movement in a specific direction. It doesn't refer to all movement.



Call it a particular flavor or school of fiscal policy.

We need to get to the point, which is what do people do with the money that finds it's way into their hands. Do they build wealth or just buy junk food and little shiny things.

 

[iluvatar5150]

We need to get to the point, which is what do people do with the money that finds it's way into their hands. Do they build wealth or just buy junk food and little shiny things.

The idea behind trickle down is that it's better to give subsidies to the wealthy because they will invest it in ways that grow the economy more - either through hiring more people or developing cheaper products or some other mechanism that increases the supply available to workers.

This is the system that doesn't work. There are certainly ways in which fiscal policy can target certain industries or certain behaviors to encourage activity in a certain direction, but as a broad, overarching philosophy, it fails because the wealthy tend to sit on their money whereas the poor tend to spend it.

 

[Ricky M]

The idea behind trickle down is that it's better to give subsidies to the wealthy because they will invest it in ways that grow the economy more - either through hiring more people or developing cheaper products or some other mechanism that increases the supply available to workers.

This is the system that doesn't work. There are certainly ways in which fiscal policy can target certain industries or certain behaviors to encourage activity in a certain direction, but as a broad, overarching philosophy, it fails because the wealthy tend to sit on their money whereas the poor tend to spend it.

And if no one has money to spend on things, all the supply in the world ain't going anywhere.

That's why it is consumers, and not rich people, who create demand and jobs.

 

[OldWiseGuy]

The idea behind trickle down is that it's better to give subsidies to the wealthy because they will invest it in ways that grow the economy more - either through hiring more people or developing cheaper products or some other mechanism that increases the supply available to workers.

This is the system that doesn't work. There are certainly ways in which fiscal policy can target certain industries or certain behaviors to encourage activity in a certain direction, but as a broad, overarching philosophy, it fails because the wealthy tend to sit on their money whereas the poor tend to spend it.

I disagree that the wealthy sit on their money. A lawyer that I knew invested every dollar he made in real estate, to the point that he often borrowed money from his partners to buy groceries for his family (true story told by one of his partners).

 

[iluvatar5150]

I disagree that the wealthy sit on their money.

Disagree all you want, you'll still be wrong.

A lawyer that I knew invested every dollar he made in real estate, to the point that he often borrowed money from his partners to buy groceries for his family (true story told by one of his partners).

Investing it like that is sitting on it (or at least it can be - real estate isn't as great an example as, say, the stock market). Unless he's doing a lot of developing, he's not using it to buy goods that other people manufacture.

 

[Ricky M]

I disagree that the wealthy sit on their money. A lawyer that I knew invested every dollar he made in real estate, to the point that he often borrowed money from his partners to buy groceries for his family (true story told by one of his partners).

I think real estate qualifies as 'sat on', since the money changes hands once and not again until it's resold. It is 'parked' as they say. Used to create jobs is admirable, but jobs that employ slave labor and indentured servitude don't count.

 

[OldWiseGuy]

Disagree all you want, you'll still be wrong.



Investing it like that is sitting on it (or at least it can be - real estate isn't as great an example as, say, the stock market). Unless he's doing a lot of developing, he's not using it to buy goods that other people manufacture.

He may not be but someone else is. That's why banks don't have all the money that is "on deposit" there. Google "fractional reserve banking".

 

[OldWiseGuy]

I think real estate qualifies as 'sat on', since the money changes hands once and not again until it's resold. It is 'parked' as they say. Used to create jobs is admirable, but jobs that employ slave labor and indentured servitude don't count.

Money is never "parked" unless you stuff it in a mattress.

 

[jgarden]

Several here have decried the notion of trickle down economics as a 'failed government policy'. But is it? Isn't the movement of money up, down, and sideways just a fact of economics in general? Thoughts?

"Trickle down" otherwise known as "Voodoo economics" were the terms used to describe the Republican tax cuts that started during the Reagan Administration!

In theory, tax cuts to the wealthy would "prime the pump" by stimulating reinvestment in the economy that would create a "multiplier" effect was supposed to more than offset the loss of tax revenue as it made its way through American society!

Apparently the wealthiest 1% never got the memo because it only served to concentrate their wealth, created wage stagnation for the middle/working classes and resulted in massive federal deficits, because it was all being financed with borrowed money!

This was a "faith based" economic model which provided tax cuts with no mechanism to ensure that the wealthy recipients would reinvest their financial windfalls in America and no guarantees that any of it would "trickle down" to the working classes who have been patiently waiting for the past 50 years!

 

[OldWiseGuy]

This was a "faith based" economic model which provided tax cuts with no mechanism to ensure that the wealthy recipients would reinvest their financial windfalls in America and no guarantees that any of it would "trickle down" to the working classes who have been patiently waiting for the past 50 years!

Probably because there was no way to ensure that consumers would buy domestically produced products.

 

[jgarden]

Probably because there was no way to ensure that consumers would buy domestically produced products.

There has been wage stagnation amongst the middle/working classes for decades - wages that fail to keep pace with inflation reduces disposable income and increases consumer debt which in turn negatively impacts the nation's retail market, that has traditionally served as America's "economic engine!"

 

[lordjeff]

Several here have decried the notion of trickle down economics as a 'failed government policy'. But is it? Isn't the movement of money up, down, and sideways just a fact of economics in general? Thoughts?

It's not a scientific law of economic science rather it is more of a hopeful moral concept that will not come with all mankind. Now in smaller terms, some corporations pay their people good salaries & have sorts of fringe benefits, some even discount company products to them, or do some profit sharing but the first obligation is to the shareholder. Some money must be set aside for research, insurance, infrastructure. I think people today expect the ceo to turn literally all their money over to them on the totem pole. The employer just rents you; you don't have to work there. By the same token why society has to be in the swing of asking for things. In a moral sense it would have nice if a ceo who had 300,000 workers & made compensation of say $30 million could have said gee I can survive well with $5 million so I'm going to hire more people & donate some money to disease research or some to supplies for a natural disaster.

 

[OldWiseGuy]

It's not a scientific law of economic science rather it is more of a hopeful moral concept that will not come with all mankind. Now in smaller terms, some corporations pay their people good salaries & have sorts of fringe benefits, some even discount company products to them, or do some profit sharing but the first obligation is to the shareholder. Some money must be set aside for research, insurance, infrastructure. I think people today expect the ceo to turn literally all their money over to them on the totem pole. The employer just rents you; you don't have to work there. By the same token why society has to be in the swing of asking for things. In a moral sense it would have nice if a ceo who had 300,000 workers & made compensation of say $30 million could have said gee I can survive well with $5 million so I'm going to hire more people & donate some money to disease research or some to supplies for a natural disaster.

I've seldom been paid enough by my employers. That's why I have almost always had a second job or an investment.

 

[ananda]

Several here have decried the notion of trickle down economics as a 'failed government policy'. But is it? Isn't the movement of money up, down, and sideways just a fact of economics in general? Thoughts?

The core problem is with the underlying corporate capitalistic system and its fiat currency foundation over which "trickle down economics" is based upon.

It's like arguing how to position chairs for a game of musical chairs. The game itself is the problem, and debating where to place the chairs is one of the ways the rest of us are distracted from the real, underlying problem.

 

[OldWiseGuy]

The core problem is with the underlying corporate capitalistic system and its fiat currency foundation over which "trickle down economics" is based upon.

It's like arguing how to position chairs for a game of musical chairs. The game itself is the problem, and debating where to place the chairs is one of the ways the rest of us are distracted from the real, underlying problem.

I agree. But it must be noted that "money" is a creation of the rich and powerful. If we play in their sandbox we must play by their rules.

 

[ananda]

I agree. But it must be noted that "money" is a creation of the rich and powerful. If we play in their sandbox we must play by their rules.

Agreed, but perhaps us peons should pursue the implementation of a new sandbox.

We have the numbers, but (generally speaking) we as a People do not possess the insightful intelligence and wisdom to comprehend & realize that that's the actual problem. It seems many political candidates spoke on this matter, but - in my personal experience - it went right over most people heads, sadly.

This is a personal conflict for me: I believe I understand the underlying problem, and how to utilize their game to enrich myself, but it feels unethical and immoral, which is why I'm relatively "poor" (just making do).

 

[OldWiseGuy]

Agreed, but perhaps us peons should pursue the implementation of a new sandbox.

We have the numbers, but (generally speaking) we as a People do not possess the insightful intelligence and wisdom to comprehend & realize that that's the actual problem. It seems many political candidates spoke on this matter, but IMO it went right over most people heads, sadly.

Bullseye! The rich know what they are doing... the "peons" don't. The dilemma is easily solved however. Just put down the beer and pizza, get off the couch, and do what rich people do and you'll be ok.

"There's plenty of money to go around, because money is always going around." -OldWiseGuy