Do trickle-down economic theories work?

[sallybutler]

SInce the beginning of the industrial revolution the standard of living has continually increased.

I would say that lots of things contributed to the increase in the living standards. The need for more workers than were available, the removal of children from the labor pool, the regulations regarding workplace safety, disability payments that allowed people to stay home and fully recover from workplace injuries, the GI bill, minimum wage, limits on how many hours a day/week people could be forced to work, the building of bridges, dame and the interstate highway system, the WPA, etc.

 

[sallybutler]

Portrait, it is happening here in the United States also. Taxes are cut for large businesses, not for small. Property is taken from individuals and given to multinational companies. People who earn money pay more than people who manage other people’s money.

And people who have some money and are afraid of losing it look at those with less as the enemy instead of watching the ones with more who are already taking it from them.

When Warren Buffett said there was a class war and we’ve won, he meant the billionaires and 100millionaires, not the lowly millionaires. Regular millionaires aren’t in the class he meant.

 

[Ridgerunner]

Portrait, it is happening here in the United States also. Taxes are cut for large businesses, not for small. Property is taken from individuals and given to multinational companies. People who earn money pay more than people who manage other people’s money.

And people who have some money and are afraid of losing it look at those with less as the enemy instead of watching the ones with more who are already taking it from them.

When Warren Buffett said there was a class war and we’ve won, he meant the billionaires and 100millionaires, not the lowly millionaires. Regular millionaires aren’t in the class he meant.

“REgular millionaires” are as common as dirt. I know dozens of them personally. Almost anybody with a small manufactory or moderate farm or ranch is a small-time millionaire. Lots of people who bought early into some of the “wonder stocks” are too. Just about any garden-variety stockbroker is, if he’s either middle-aged or young and quick-minded. A handful of millionaires run every community bank. All kinds of “middle class” people are millionaires.

Something I, at least, don’t know, is the degree to which super wealth is today any different in terms of a percentage of the whole as it has been in the past. Wasn’t it J.P. Morgan who was reputed to own more assets than everybody else in the country combined? Is our age that much different from the age of Rockefeller, Carnegie, Morgan, Vanderbilt and others, in terms of wealth concentration?

Maybe someone can cite us a study to persuade one way or the other on that.

The “great leveler” is actually death, not government. Government serves those who serve it, and I don’t know that we’re going to see anything different in this generation, at least. It’s pretty clear who benefits from Obama’s blocking of the Keystone Pipeline, for instance. The current regime can talk socialistic talk all it wants, but it still serves the magnates.

No, death does not destroy all fortunes, but it does divide them. The Walmart heirs are among the wealthiest in the world, but not one of them is as wealthy as Sam Walton was, and as generation succeeds generation, it will get further subdivided.

 

[CHRISTINE77]

If the 2% are not supporting the non-working…who is?

The middle class, duh. The weathly need to pay more taxes. They have too much money. Not only the money, but the power that money wields. They influence the government and the media. They can buy their way out of trouble. Etc.!

 

[stinkcat_14]

“REgular millionaires” are as common as dirt. I know dozens of them personally. Almost anybody with a small manufactory or moderate farm or ranch is a small-time millionaire. Lots of people who bought early into some of the “wonder stocks” are too. Just about any garden-variety stockbroker is, if he’s either middle-aged or young and quick-minded. A handful of millionaires run every community bank. All kinds of “middle class” people are millionaires.

Actually, even most working people could become millionaires much more easily than they realize. If someone put away $500 a month at 8%, something easily doable with index funds, one would have a million dollars after 35 years. Of course this was well known thirty years ago as well and the surprising thing is how few millionaires there are. In my opinion this is one of the major failings of our school system is that kids learn very little about managing money. If you start putting money aside when you are young, it is simple, if you wait till you are in your fifties it is much more difficult.

 

[Zoltan_Cobalt]

How nice for him. But why didn’t he pay them the full price? It sounds like he cheated them. Just because they were happy does not make it right.

Trickle down sounds like a reason to cheat in this case.

" But why didn’t he pay them the full price? "…

Let me ask you…if you had a small business with two employees and that business grossed $5000.00 per month would you pay your employees $2500.00 each, per month?

Being happy and satisfied with one’s employment is always right. Wanting more would make the employee seem greedy.

I didn’t use the story of the programmer as an example of trickle down. I used it as an example of off shore out sourcing.

 

[Zoltan_Cobalt]

The middle class, duh. The weathly need to pay more taxes. They have too much money. Not only the money, but the power that money wields. They influence the government and the media. They can buy their way out of trouble. Etc.!

Oh, come on…

The wealthy pay more taxes than the entire middle class.

The point is that taxation of the wealthy AND the middle class is in fact a form of trickle down economics. If the wealthy and the middle class did not pay taxes the government could not support the dependent class.

Wealth, from the middle class and the wealthy, “trickles down” !

 

[Ridgerunner]

Actually, even most working people could become millionaires much more easily than they realize. If someone put away $500 a month at 8%, something easily doable with index funds, one would have a million dollars after 35 years. Of course this was well known thirty years ago as well and the surprising thing is how few millionaires there are. In my opinion this is one of the major failings of our school system is that kids learn very little about managing money. If you start putting money aside when you are young, it is simple, if you wait till you are in your fifties it is much more difficult.

You’re quite right. There is no necessary corellation between high earnings and wealth. I have certainly known people who accumulated very significant wealth by investing it instead of spending it.

But I will also say that young people graduating with massive school debt are under a disability most of their parents did not face at that point in life.

 

[sallybutler]

" But why didn’t he pay them the full price? "…

Let me ask you…if you had a small business with two employees and that business grossed $5000.00 per month would you pay your employees $2500.00 each, per month?

Being happy and satisfied with one’s employment is always right. Wanting more would make the employee seem greedy.

I didn’t use the story of the programmer as an example of trickle down. I used it as an example of off shore out sourcing.

If you have no overhead costs and they are doing all the work, why not give them each 2000 a month and keep 1000 for being the pass thru.

Heaven forbid employees should be greedy.

Most people who had their jobs outsourced are not in your friend’s position. Although I suspect the people who did the outsourcing do what he did. Hire twice the workers for 1/4 the price and continue to charge the customer full price.

 

[Zoltan_Cobalt]

So you agree that giving people tax deductions for buying houses is theft.

Not at all.

Allowing people to KEEP their own money is far from theft.

 

[stinkcat_14]

Not at all.

Allowing people to KEEP their own money is far from theft.

I wouldn’t call it theft, but I would say that it is probably the dumbest tax deduction we have. There is really no good economic justification for lowering the tax burden of people who borrow money to buy houses. If the government wants to lower the tax burden, it should be done for everyone, not for one favored group.

 

[CHRISTINE77]

The wealthy pay more taxes than the entire middle class.

Yes but the middle class are paying a much higher percentage of their income in taxes than the wealthy. The wealthy can afford to give back a lot more.

The share of total income earned by the wealthy has increased steadily over the past 25 years. Since 1980, the share of income earned by the richest 1 percent has more than doubled, from 9 percent to 19 percent. The share of the income going to the poorest income quintile has declined. Income disparities, in absolute dollars, have grown substantially.

 

[CHRISTINE77]

How can the trickle down theory work if the wealthy hoard all the money?

 

[Zoltan_Cobalt]

If you have no overhead costs and they are doing all the work, why not give them each 2000 a month and keep 1000 for being the pass thru.

That would work if you could maintain you own standard of living on $1000.00 per month.
Then again, remember that employment is a contractual agreement. An employer offers to pay an employee a certain amount for his time. An employee agrees to that amount and goes to work. An employer may increase an employee’s pay for whatever reason he wants…but he is not obligated to do so.

Heaven forbid employees should be greedy.

Some are.

Most people who had their jobs outsourced are not in your friend’s position. Although I suspect the people who did the outsourcing do what he did. Hire twice the workers for 1/4 the price and continue to charge the customer full price.

Now that would not work in a real, true, Free Market. Soon competition would force a reduction in price. Look who benefits…the consumer.

 

[Zoltan_Cobalt]

Zoltan Cobalt;11977035:

The wealthy pay more taxes than the entire middle class.

Yes but the middle class are paying a much higher percentage of their income in taxes than the wealthy. The wealthy can afford to give back a lot more.

The wealthy pay a tax rate of 39.6%
The middle class has a rate between 25% and 33% (depending on your concept of middle class)

What is unfair about that? The wealthy pay more than the middle class.

The share of total income earned by the wealthy has increased steadily over the past 25 years. Since 1980, the share of income earned by the richest 1 percent has more than doubled, from 9 percent to 19 percent. The share of the income going to the poorest income quintile has declined. Income disparities, in absolute dollars, have grown substantially.

Now we are talking about “income disparities”…another non-issue.

The economic classes are not static. They are very dynamic. A rich person can become poor overnight. Poor people work their way up to the middle class all the time…and the middle class fluctuates both ways.

Now, if the opportunity to increase one’s income did not exist, I would say we have a problem.

 

[Zoltan_Cobalt]

I wouldn’t call it theft, but I would say that it is probably the dumbest tax deduction we have. There is really no good economic justification for lowering the tax burden of people who borrow money to buy houses. If the government wants to lower the tax burden, it should be done for everyone, not for one favored group.

I tend to agree with you.

I believe that lowering ANY tax burden is a good thing. Lowering it for one group may not be exactly fair.

Same with tax supported government programs. Government programs that focus on one group at the expense of others is not fair.

 

[Zoltan_Cobalt]

How can the trickle down theory work if the wealthy hoard all the money?

They hoard because they have nothing to spend it on.

“Business is sitting on loads of cash that could be invested and get things rolling again in no time. BUT without any idea of future tax policies and the fear of over-regulation looming…it would be INSANE for Business to invest in anything productive with the current political atmosphere.”

 

[CHRISTINE77]

They hoard because they have nothing to spend it on.

“Business is sitting on loads of cash that could be invested and get things rolling again in no time. BUT without any idea of future tax policies and the fear of over-regulation looming…it would be INSANE for Business to invest in anything productive with the current political atmosphere.”

They could also donate some of it to the starving people in other countries.

 

[CHRISTINE77]

They hoard because they have nothing to spend it on.

“Business is sitting on loads of cash that could be invested and get things rolling again in no time. BUT without any idea of future tax policies and the fear of over-regulation looming…it would be INSANE for Business to invest in anything productive with the current political atmosphere.”

Just wondering, are you rich?

 

[Robert_Sock]

I tend to agree with you.

I believe that lowering ANY tax burden is a good thing. Lowering it for one group may not be exactly fair.

Same with tax supported government programs. Government programs that focus on one group at the expense of others is not fair.

What in this miserable and corrupt world is fair? Was the industrial revolution fair to the Third-World? Did the top 2% of the richest people obtain their money fairly? Surly not from the perspective of those living extreme poverty. We steal resources from the impoverished countries, such as those in Africa. It’s time justice is served and severe poverty get eliminated, even if it costs the well-to-do some of their riches. In considering what is fair and just, remember that there are 9,500 children who die of starvation every day. **Please, I ask you, is it fair? **

LOVE!