Trickle down theory, did it work?

YoungJoonKim · Oct 26, 2008

I've seen couple arguments in this forum regards to the trickle down theory.
They claim that with the tax deductions for the rich, the economy will see prosperity and the government will ultimately benefit. They have raised a good point here and provided evidence which suggests that with the tax deduction, the government had seen boost to their tax revenue.

But was it all "awesome" as fiscal conservative would claim? Here are my argument against trickle down theory.

1. Though the nation raised its GDP to a formidable degree, the average income for Americans stayed the same or even less ($1000/yr average). All the while, the rich increased their wealth by triple or double digit.
(No excuse for Canada as well. Its pathetic)

2. Declining manufacturing sector (automobiles etc) went unnoticed.

3. Average individuals credit debt spiked (and the housing credit l.o.l)

TheNewWorldMan · Oct 26, 2008

The short answer is no, trickle down didn't work, but the neoconservative masses will go on waiting for Bill Gates and the Walton clan to sprinkle some crumbs from their table onto the rest of America.

At least as long as the food and the toilet paper hold out...

Bootstrap · Oct 26, 2008

http://en.wikipedia.org/wiki/Trickle-down_economics

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."

Bootstrap · Oct 26, 2008

There's a great Op-Ed piece by Paul Krugman, Noble-prize winning economist, called "Where's My Trickle?":

http://query.nytimes.com/gst/fullpa...3A2575AC0A9619C8B63&sec=&spon=&pagewanted=all

What's really remarkable, however, is that four years of economic growth have produced essentially no gains for ordinary American workers.
Wages, adjusted for inflation, have stagnated: the real hourly earnings of nonsupervisory workers, the most widely used measure of how typical workers are faring, were no higher in July 2007 than they were in July 2003.
Meanwhile, benefits have deteriorated: the percentage of Americans receiving health insurance through employers, which plunged along with employment during the early years of the Bush administration, continued to decline even as the economy finally began creating some jobs.
And one of the few seeming bright spots of the Bush-era economy, rising homeownership, is now revealed as the result of a bubble inflated in part by financial flim-flam, which deceived both borrowers and investors.

The absence of any gains for workers in the years since the 2003 tax cut is a pretty convincing refutation of trickle-down theory. So is the fact that the economy had a much more convincing boom after Bill Clinton raised taxes on top brackets. It turns out that when you cut taxes on the rich, the rich pay less taxes; when you raise taxes on the rich, they pay more taxes -- end of story.
But it's not just trickle-down that has been refuted: the whole idea that a rising tide raises all boats, that growth in the economy necessarily translates into gains for the great majority of Americans, is belied by the Bush-era experience.

Guaranteed health insurance, which all of the leading Democratic contenders (but none of the Republicans) are promising, would eliminate one of the reasons for this disconnect. But it should be only the start of a broader range of policies -- a new New Deal -- designed to turn economic growth into something more than a spectator sport.

Jonathan

Lockguy3000 · Oct 26, 2008

yeah, it "trickle" all right we were all tricked.
It trickled over to China

ArnautDaniel · Oct 26, 2008

I said it before and I'll say it again - exactly what one would have expected would happen happened -

The rich got more money and instead of spending it on creating jobs they spent it on more and bigger houses, more and bigger cars, more and bigger yachts and more and bigger parties.

Wolseley · Oct 26, 2008

Well, there's always Obama's alternative of "share the wealth". One guy tried it and it didn't work too well......

In a local restaurant my server had on a "Obama 08" tie, again I laughed as he had given away his political preference--just imagine the coincidence.

When the bill came I decided not to tip the server and explained to him that I was exploring the Obama redistribution of wealth concept. He stood there in disbelief while I told him that I was going to redistribute his tip to someone who I deemed more in need--the homeless guy outside. The server angrily stormed from my sight.

I went outside, gave the homeless guy $10 and told him to thank the server inside as I've decided he could use the money more. The homeless guy was grateful.

At the end of my rather unscientific redistribution experiment I realized the homeless guy was grateful for the money he did not earn, but the waiter was pretty angry that I gave away the money he did earn even though the actual recipient deserved money more.

I guess redistribution of wealth is an easier thing to swallow in concept than in practical application.

http://robertbluey.com/blog/2008/10/25/redistribution-of-wealth-experiment-3/

Braunwyn · Oct 26, 2008

Wolseley said:
Well, there's always Obama's alternative of "share the wealth". One guy tried it and it didn't work too well......

In a local restaurant my server had on a "Obama 08" tie, again I laughed as he had given away his political preference--just imagine the coincidence.

When the bill came I decided not to tip the server and explained to him that I was exploring the Obama redistribution of wealth concept. He stood there in disbelief while I told him that I was going to redistribute his tip to someone who I deemed more in need--the homeless guy outside. The server angrily stormed from my sight.

I went outside, gave the homeless guy $10 and told him to thank the server inside as I've decided he could use the money more. The homeless guy was grateful.

At the end of my rather unscientific redistribution experiment I realized the homeless guy was grateful for the money he did not earn, but the waiter was pretty angry that I gave away the money he did earn even though the actual recipient deserved money more.

I guess redistribution of wealth is an easier thing to swallow in concept than in practical application.

http://robertbluey.com/blog/2008/10/25/redistribution-of-wealth-experiment-3/http://robertbluey.com/blog/2008/10/25/redistribution-of-wealth-experiment-3/

Didn't you get pwned on this copy/paste a week or so ago?

Wolseley · Oct 26, 2008

Check my posting history.

YoungJoonKim · Oct 26, 2008

Wolseley said:
Well, there's always Obama's alternative of "share the wealth". One guy tried it and it didn't work too well......

In a local restaurant my server had on a "Obama 08" tie, again I laughed as he had given away his political preference--just imagine the coincidence.

When the bill came I decided not to tip the server and explained to him that I was exploring the Obama redistribution of wealth concept. He stood there in disbelief while I told him that I was going to redistribute his tip to someone who I deemed more in need--the homeless guy outside. The server angrily stormed from my sight.

I went outside, gave the homeless guy $10 and told him to thank the server inside as I've decided he could use the money more. The homeless guy was grateful.

At the end of my rather unscientific redistribution experiment I realized the homeless guy was grateful for the money he did not earn, but the waiter was pretty angry that I gave away the money he did earn even though the actual recipient deserved money more.

I guess redistribution of wealth is an easier thing to swallow in concept than in practical application.

http://robertbluey.com/blog/2008/10/25/redistribution-of-wealth-experiment-3/

That doesn't issue the flaws of trickle down theory.
Its just another blah to continue trickle down theory.

DoubtingThomas29 · Oct 26, 2008

The economy trickled down to nothing!

Braunwyn · Oct 26, 2008

Wolseley said:
Check my posting history.

Then I guess another poster was pwned for the copy/paste. If you have a well-thought argument, please lay it out. Inaccurate/ill-thought email spams are pretty weak. Have some faith in yourself. You can do better.

TheNewWorldMan · Oct 26, 2008

The problem is that our economic system doesn't reward the behaviors that the Right wants us to believe it rewards.

The Right is all about how people who work hard should get rewarded, while those who are lazy and don't bother to improve themselves should be poor as "punishment" for sloth. That's a serviceable if somewhat oversimplified idea.

Trouble is, the hard workers aren't who have benefited from free trade, globalization, and the other forces the Right touts as necessary for Capitalism As We Know It® to function. Those who have gotten wealthier are primarily heirs, arbitrageurs, CEOs, and other paper-pushers who really aren't doing the heavy lifting to make the economy run. (In fact, one could make a cogent argument that some of these people have been downright destructive, like those who securitized the subprime mortgages that are significantly responsible for the "paper economy" sliding into the ditch.)

The Right's rhetoric about rewarding work would carry more weight with me if the GOP pursued policies that actually, well, reward work.

tulc · Oct 26, 2008

...is it just me or does anyone else get a picture of a two story outhouse in their head when you hear the words "trickle down theory"
tulc(sipping some great coffee)

Braunwyn · Oct 26, 2008

Wolseley said:
Check my posting history.

Ok, I figured it out. Sorry, I did confuse you with another poster.

http://christianforums.com/showthread.php?p=49132478#post49132478

Wyzaard · Oct 26, 2008

Wolseley said:
Check my posting history.

It's meaningless spam; address the evidence provided by the opening posters, please.

Allegory · Oct 26, 2008

Wolseley said:
Well, there's always Obama's alternative of "share the wealth". One guy tried it and it didn't work too well......

In a local restaurant my server had on a "Obama 08" tie, again I laughed as he had given away his political preference--just imagine the coincidence.

When the bill came I decided not to tip the server and explained to him that I was exploring the Obama redistribution of wealth concept. He stood there in disbelief while I told him that I was going to redistribute his tip to someone who I deemed more in need--the homeless guy outside. The server angrily stormed from my sight.

I went outside, gave the homeless guy $10 and told him to thank the server inside as I've decided he could use the money more. The homeless guy was grateful.

At the end of my rather unscientific redistribution experiment I realized the homeless guy was grateful for the money he did not earn, but the waiter was pretty angry that I gave away the money he did earn even though the actual recipient deserved money more.

I guess redistribution of wealth is an easier thing to swallow in concept than in practical application.

http://robertbluey.com/blog/2008/10/25/redistribution-of-wealth-experiment-3/

This is one of the most idiotic things I've ever read.

Lockguy3000 · Oct 26, 2008

Wolseley said:
Well, there's always Obama's alternative of "share the wealth". One guy tried it and it didn't work too well......

In a local restaurant my server had on a "Obama 08" tie, again I laughed as he had given away his political preference--just imagine the coincidence.

When the bill came I decided not to tip the server and explained to him that I was exploring the Obama redistribution of wealth concept. He stood there in disbelief while I told him that I was going to redistribute his tip to someone who I deemed more in need--the homeless guy outside. The server angrily stormed from my sight.

I went outside, gave the homeless guy $10 and told him to thank the server inside as I've decided he could use the money more. The homeless guy was grateful.

At the end of my rather unscientific redistribution experiment I realized the homeless guy was grateful for the money he did not earn, but the waiter was pretty angry that I gave away the money he did earn even though the actual recipient deserved money more.

I guess redistribution of wealth is an easier thing to swallow in concept than in practical application.

In McCain's economic policy,
the restaurant is closed
restaurant goer is out of work,
the waiter is now homeless
and the homeless guy is dead from starvation.

In Obama's policy;
the owner can now retire
the waiter buys the restaurant
the homeless guy now has a job at the restaurant
and the restaurant goer gets a bigger steak at the same cost as before

DaisyDay · Oct 26, 2008

Bush Sr derided the Trickle Down Theory as Voodoo Economics. At the time, pundits & politicians were complaining about the growing equality in income. What's the point of working hard if you can't get ahead of the Jones? Americans voted Reagan, then Bush, into office, so that was part of what the people wanted.

Maren · Oct 26, 2008

Lockguy3000 said:
yeah, it "trickle" all right we were all tricked.
It trickled over to China

Hmm... maybe kids should go around in 5 days saying "Trickle or Treat".

Trickle down theory, did it work?

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