Do trickle-down economic theories work?

[Zoltan_Cobalt]

So where does this free market utopia you describe exist? When, if ever, did it exist?

It existed from the day we declared our independence from Great Britain to the passage of the Sherman Anti Trust Act. It has been down hill since then.

It would be nice to start it up again, don’t you think?

 

[Mickey_Finn]

It existed from the day we declared our independence from Great Britain to the passage of the Sherman Anti Trust Act. It has been down hill since then.

It would be nice to start it up again, don’t you think?

What existed after we declared our independence from Britain was a war which we almost lost. A war which saw Soldiers marching bare foot in the snow leaving their bloody tracks to mark their passage. Is this truly what you pine for?

ATB

 

[Mickey_Finn]

Dear Portrait:

Happy days to you also.

I am not much of a student of the current British economic condition so I rely on your posted views.

However, I believe I can state truthfully that unbridled Capitalism DOES NOT exist in the United Kingdom. It did during the “Pax Britannica” and the standards of living were at their highest. I think it was WWI and the increase of socialist statism that began your economic slide.

Capitalism is not designed to “lift the poor out of poverty”— it PREVENTS poverty.

Your pal
Zoltan

What is current in the UK is Austerity. Which leaves the poor to suffer so the wealthy can remain fat. I assume Islam will correct this eventually.

ATB

 

[freeRadical]

The context in which I first answered you was your response to oldcelt, who posted:

to which you responded:

Since you were using this to refute oldcelt’s criticism of Laissez Faire capitalism, it is natural to assume that you are justifying Laissez Faire capitalism, which is:

This clearly does not include regulation to limit air pollution, for example, since that is not strictly a violation of property rights, but is a violation of everyone’s right to breath clean air.

So I think I was quite justified in assuming that you were against regulation other than what is necessary to protect property rights. If that is not what you are saying about regulation, then please clarify.

As for your second question, who is in a better position than a legitimate government to determine regulations for the common good? Of course one may disagree with specific regulations and argue that they are ill-advised. But he would have to do that on the merits of the particular case, and not on some general principle that government cannot ever institute proper regulation. There are clearly some cases in which it has.

It seems to me that most people to talk about laissez-faire, on both sides, have never read Adam Smith.

Of course I support air pollution regulation, pollution affects third parties who have not voluntarily agreed to enter in the transaction. There is always a case to be made for government intervention when third parties are affected by what other people do. I don’t see how that is mutually exclusive to a free market.

The problem with government intervention is that government tends to regulate too much or the regulation has a different effect then the one they were trying to achieve. And of course there is always the problem with political incentives when government is involved.

 

[nmgauss]

Rush Limbaugh is an overpaid talking head. I can’t help but notice that the people who act like the privileged are the victims are themselves rich, white male i.e. priviledged. Income inequality is NOT some noble system where the people who deserve it get the benefits since the wealthy are rarely of independant means. They inherit their money connections and influence. If working hard led to financial success every woman in sub Saharan Africa would be a millionaire.

Rush Limbaugh is a self-made man. There is no inherited wealth there. In large part, success depends on taking advantage of opportunities when they present themselves and putting emphasis on goals that enhance a person’s likelihood of achieving success. If you are living in a rural backwater with limited opportunities, then moving to an urban center with multiple opportunities makes sense. Being exploratory about alternative ways to improve yourself can make a world of difference.

Poor people who lament their poverty and don’t take concrete steps to alleviate that poverty are the first ones to be jealous of people who do succeed. Look at the rural agriculture areas where farm workers remain farm workers all their lives, while others figure out ways to earn more money and still be involved in agriculture. Opportunities are there. One just has to look for them.

 

[LeafByNiggle]

Rush Limbaugh is a self-made man. There is no inherited wealth there. In large part, success depends on taking advantage of opportunities when they present themselves and putting emphasis on goals that enhance a person’s likelihood of achieving success. If you are living in a rural backwater with limited opportunities, then moving to an urban center with multiple opportunities makes sense. Being exploratory about alternative ways to improve yourself can make a world of difference.

Poor people who lament their poverty and don’t take concrete steps to alleviate that poverty are the first ones to be jealous of people who do succeed. Look at the rural agriculture areas where farm workers remain farm workers all their lives, while others figure out ways to earn more money and still be involved in agriculture. Opportunities are there. One just has to look for them.

Such a theory may ease your conscience about your own prosperity, but it is a fiction. People who are economically successful are primarily that way because of unequal opportunity. Of course you need a certain amount of initiative to take advantage of opportunities that present themselves, but it is a mistake to think that everyone has the same amount of opportunities. Many people have health problems (physical and mental) that limit their opportunities. Many people have family obligations that limit them. Not everyone is born with a voice like Rush Limbaugh. Who knows how he would have turned out had his vocal cords been a little shorter and higher pitched? No, Rush is not a self-made man. God made him. And his success is due to an incredible amount of good luck (i.e. God’s graces).

 

[sallybutler]

Those of us who live in the United States live in a corporate based economy, not in a capitalist economy.

And that will lead to fascism (where the corporations and government are difficult to tell apart, they work so closely together).

Corporations are given benefits that citizens are not given. They can do things that lead to people being harmed, even killed. What are their penalties? A fine. You or I do something along those lines, we lose everything.

Owning shares in a company does not mean you have helped build that company. It does, however, mean that you are benefiting from other people’s ideas and hard work and initial investment. So, in that case, maybe trickle down economics works.

 

[nmgauss]

Those of us who live in the United States live in a corporate based economy, not in a capitalist economy.

And that will lead to fascism (where the corporations and government are difficult to tell apart, they work so closely together).

Corporations are given benefits that citizens are not given. They can do things that lead to people being harmed, even killed. What are their penalties? A fine. You or I do something along those lines, we lose everything.

Owning shares in a company does not mean you have helped build that company. It does, however, mean that you are benefiting from other people’s ideas and hard work and initial investment. So, in that case, maybe trickle down economics works.

A corporation is simply a company established so that the principal owner’s personal assets (home, car, bank account, etc.) cannot be used to satisfy company debts. Attracting capital for expansion is done by selling stock. The principal stock holder can be the effective owner if he owns over 50%. Other types of ownership include partnerships and sole proprietorships in which the owners put their personal assets at risk. Given this type of arrangement of not being wiped out as a result of a failed business, this country has a huge number of corporations, most of them small. The corporation is the epitome of capitalism in action.

Buying shares in a corporation indeed helps build that organization. Attracting capital this way is excellent because it does not obligate the company to return anything to the investor. This is an excellent way to accumulate wealth and is the foundation of our economy.

Where you are confused is that the vast majority of corporations are small operations, and have little excess cash to hire lobbyists and lawyers. Some of the profits, if they have any, can be used to expand business or be given back to investors in the form of dividends. This is capitalism at work.

When I was 40 years old in 1975, I was flat broke. I learned about capitalism by taking an extension course in the stock market and working for a mutual funds company. My wife and I scraped enough money together to make a down payment on a $48,000 house in West Los Angeles. I sold the house in 2004 for $640,000. In the meantime I had bought shares in several mutual funds, contributed to them regularly, mapped out a retirement plan, managed my wife’s small inheritance, and opened up 401(k) accounts with my employers. For a while I worked as an independent and opened up a Keogh Retirement Plan where I put tax free money away for the future. Now that I have been retired for fourteen years, I can afford to pay for my wife’s care in an Alzheimer’s Nursing Home. I had nothing given to me. I worked my way through college. Should I feel apologetic toward poor people just because I have been successful? That is stupid.

 

[ishii]

A corporation is simply a company established so that the principal owner’s personal assets (home, car, bank account, etc.) cannot be used to satisfy company debts. Attracting capital for expansion is done by selling stock. The principal stock holder can be the effective owner if he owns over 50%. Other types of ownership include partnerships and sole proprietorships in which the owners put their personal assets at risk. Given this type of arrangement of not being wiped out as a result of a failed business, this country has a huge number of corporations, most of them small. The corporation is the epitome of capitalism in action.

Buying shares in a corporation indeed helps build that organization. Attracting capital this way is excellent because it does not obligate the company to return anything to the investor. This is an excellent way to accumulate wealth and is the foundation of our economy.

Where you are confused is that the vast majority of corporations are small operations, and have little excess cash to hire lobbyists and lawyers. Some of the profits, if they have any, can be used to expand business or be given back to investors in the form of dividends. This is capitalism at work.

When I was 40 years old in 1975, I was flat broke. I learned about capitalism by taking an extension course in the stock market and working for a mutual funds company. My wife and I scraped enough money together to make a down payment on a $48,000 house in West Los Angeles. I sold the house in 2004 for $640,000. In the meantime I had bought shares in several mutual funds, contributed to them regularly, mapped out a retirement plan, managed my wife’s small inheritance, and opened up 401(k) accounts with my employers. For a while I worked as an independent and opened up a Keogh Retirement Plan where I put tax free money away for the future. Now that I have been retired for fourteen years, I can afford to pay for my wife’s care in an Alzheimer’s Nursing Home. I had nothing given to me. I worked my way through college. Should I feel apologetic toward poor people just because I have been successful? That is stupid.

Thank you for the explanation about corporations. I think so many people jump on the anti-corporation bandwagon without really knowing what they are in the first place and why they came into being. So easy to blame others for one’s situation. As such, corporations make an easy scapegoat. I am glad that you have been successful. Very sorry to hear about your wife’s Alzheimer’s.

Thanks again for the post.

Ishii

 

[ishii]

Such a theory may ease your conscience about your own prosperity, but it is a fiction. People who are economically successful are primarily that way because of unequal opportunity. Of course you need a certain amount of initiative to take advantage of opportunities that present themselves, but it is a mistake to think that everyone has the same amount of opportunities. Many people have health problems (physical and mental) that limit their opportunities. Many people have family obligations that limit them. Not everyone is born with a voice like Rush Limbaugh. Who knows how he would have turned out had his vocal cords been a little shorter and higher pitched? No, Rush is not a self-made man. God made him. And his success is due to an incredible amount of good luck (i.e. God’s graces).

Of course everyone has God given talents. Rush Limbaugh, if memory serves, never went to college, decided early on he wanted a future in radio and spent years in low-paying radio jobs - as a rock n roll DJ mostly. In the late 80’s I believe he was on a SF radio station and began the conservative talk radio that he is now famous for. Did he get lucky? Yes. Did his timing help him? Yes. But give him credit - he saw a niche and he filled it - which was unapologetic conservative views broadcast on the radio for everyone to hear and call in to contribute. Yes, all who are successful by using their talents do so by God’s grace. But that is to miss the point which is we all are blessed with talents and can be successful. Maybe not as successful as Rush, but since we’re so lucky to be born in a country like America which gives people so much opportunity we are able to pursue our happiness. Talent and luck helps, but hard work and perseverance help so much more. And we get that perseverance from God as well.

Ishii

 

[sallybutler]

A corporation is simply a company established so that the principal owner’s personal assets (home, car, bank account, etc.) cannot be used to satisfy company debts. Attracting capital for expansion is done by selling stock. The principal stock holder can be the effective owner if he owns over 50%. Other types of ownership include partnerships and sole proprietorships in which the owners put their personal assets at risk. Given this type of arrangement of not being wiped out as a result of a failed business, this country has a huge number of corporations, most of them small. The corporation is the epitome of capitalism in action.

Buying shares in a corporation indeed helps build that organization. Attracting capital this way is excellent because it does not obligate the company to return anything to the investor. This is an excellent way to accumulate wealth and is the foundation of our economy.

Where you are confused is that the vast majority of corporations are small operations, and have little excess cash to hire lobbyists and lawyers. Some of the profits, if they have any, can be used to expand business or be given back to investors in the form of dividends. This is capitalism at work.

When I was 40 years old in 1975, I was flat broke. I learned about capitalism by taking an extension course in the stock market and working for a mutual funds company. My wife and I scraped enough money together to make a down payment on a $48,000 house in West Los Angeles. I sold the house in 2004 for $640,000. In the meantime I had bought shares in several mutual funds, contributed to them regularly, mapped out a retirement plan, managed my wife’s small inheritance, and opened up 401(k) accounts with my employers. For a while I worked as an independent and opened up a Keogh Retirement Plan where I put tax free money away for the future. Now that I have been retired for fourteen years, I can afford to pay for my wife’s care in an Alzheimer’s Nursing Home. I had nothing given to me. I worked my way through college. Should I feel apologetic toward poor people just because I have been successful? That is stupid.

I am fully aware that numerically, most corporations are small businesses or LLC’s. And they are created to protect assets and to get preferential tax treatment. Which was my point that corporations get better treatment than humans.

Most of those small corporations do not have any investors other than the person who filed the papers and maybe a family member. I, too had a corporation. It was so I could work as an independent contractor and have tax deductions that I couldn’t have as a W2 employee. I could have a better retirement plan, I could deduct things like the car, medical expenses before the 10% threshold an individual has to meet, etc.

Investing in the stock market generally does not involve giving any money to the company. If you buy shares in an IPO or from the company directly, then you are putting money directly into the company and helping that company.

However, the fact that a corporation protects assets also limits the risk. If every shareholder in a corporation could be held liable for a bankruptcy, would we have to have the government bail them out? Would the boards of those corporations be held to higher standards by the shareholders if those shareholders could lose more than they initially invested, if they were actually responsible for what the company they ‘owned’ did?.

 

[LeafByNiggle]

Of course everyone has God given talents. Rush Limbaugh, if memory serves, never went to college, decided early on he wanted a future in radio and spent years in low-paying radio jobs - as a rock n roll DJ mostly. In the late 80’s I believe he was on a SF radio station and began the conservative talk radio that he is now famous for. Did he get lucky? Yes. Did his timing help him? Yes. But give him credit - he saw a niche and he filled it - which was unapologetic conservative views broadcast on the radio for everyone to hear and call in to contribute. Yes, all who are successful by using their talents do so by God’s grace. But that is to miss the point which is we all are blessed with talents and can be successful. Maybe not as successful as Rush, but since we’re so lucky to be born in a country like America which gives people so much opportunity we are able to pursue our happiness. Talent and luck helps, but hard work and perseverance help so much more. And we get that perseverance from God as well.

Ishii

We can give Rush credit for what he did. But it would be a mistake to therefore conclude that someone who is very poor is to blame for not taking advantage of the opportunities available. And that was the whole reason for bringing up how people get rich in the first place - to demonstrate that anyone can do it if they just try. Rush’s success does not demonstrate that the poor deserve to be poor, if that is what anyone was trying to show. Not even the anecdotes of people rising from abject poverty to do great things are sufficient to prove that. There are too many variables that we cannot possibly know before we can demonstrate equality of opportunity.

 

[ishii]

We can give Rush credit for what he did. But it would be a mistake to therefore conclude that someone who is very poor is to blame for not taking advantage of the opportunities available. And that was the whole reason for bringing up how people get rich in the first place - to demonstrate that anyone can do it if they just try. Rush’s success does not demonstrate that the poor deserve to be poor, if that is what anyone was trying to show. Not even the anecdotes of people rising from abject poverty to do great things are sufficient to prove that. There are too many variables that we cannot possibly know before we can demonstrate equality of opportunity.

We all have different situations and challenges that can hold us back from taking advantage of opportunity. In America we have had more people rise up to the middle class and beyond due to the opportunities available from our free-market system as well as the stable and secure political system which allows business to flourish. People get a free education for 12 years. There are opportunities to be had for anyone willing to work fairly hard and deny immediate gratification for a while. Some fall through the cracks, (which is why we have a safety net) but overall, the system we have has allowed millions to get ahead and be successful.

What do you think are the reasons why the “very poor” in America cannot be successful?

Ishii

 

[Robert_Sock]

We all have different situations and challenges that can hold us back from taking advantage of opportunity. In America we have had more people rise up to the middle class and beyond due to the opportunities available from our free-market system as well as the stable and secure political system which allows business to flourish. People get a free education for 12 years. There are opportunities to be had for anyone willing to work fairly hard and deny immediate gratification for a while. Some fall through the cracks, (which is why we have a safety net) but overall, the system we have has allowed millions to get ahead and be successful.

What do you think are the reasons why the “very poor” in America cannot be successful?

Ishii

It’s the senseless competition that distresses me. Again, a lot of stress and frustration for the poor if they are to achieve modest prosperity.

LOVE!

 

[Zoltan_Cobalt]

Such a theory may ease your conscience about your own prosperity, but it is a fiction. People who are economically successful are primarily that way because of unequal opportunity. Of course you need a certain amount of initiative to take advantage of opportunities that present themselves, but it is a mistake to think that everyone has the same amount of opportunities. Many people have health problems (physical and mental) that limit their opportunities. Many people have family obligations that limit them. Not everyone is born with a voice like Rush Limbaugh. Who knows how he would have turned out had his vocal cords been a little shorter and higher pitched? No, Rush is not a self-made man. God made him. And his success is due to an incredible amount of good luck (i.e. God’s graces).

By your reasoning, as I understand it, a rich person is rich by “God’s graces”. Therefore a poor person is poor for the same reason.

Now since God wants the rich person to be rich and the poor person to be poor…why are we troubled with senseless equality thing?

 

[_thaddeus]

’
.
.
.
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.
.
.
.

Hello Sally. Pleased to meet you.

I’ve read this thread and other similar threads. Your phrase of “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.” identifies the crux of the matter. The thieves and the “bad guys” are winning. It is straightforward class warfare. Let’s invade. We don’t care who as long as we tell you who you can invade(vote for).

To be nationalistic: the Great White North is also becoming deranged with the same mindless kill the goose thievery.

Peace be with us.

 

[ishii]

It’s the senseless competition that distresses me. Again, a lot of stress and frustration for the poor if they are to achieve modest prosperity.

LOVE!

What kind of competition are you talking about? It seems some competition is part of the natural order of things. Have you ever had a job? If so, understand that you competed for that job - some others did NOT get that job because you got it. Therefore you competed. What is wrong with that?

Ishii

 

[nmgauss]

It’s the senseless competition that distresses me. Again, a lot of stress and frustration for the poor if they are to achieve modest prosperity.
LOVE!

To eliminate competition would eliminate excellence. Without competition there would be no sports, no contests, no elections, and we would all be so confused with the chaos we wouldn’t know which goals to strive for.

When I was a college professor, I graded on the curve and posted the scores of each student (without the name) to give every student in the class an idea of where they stood and how much more it was possible to achieve. Since these scores were the result of numerical performance on tests, no bias was present. Should I have kept these relative scores secret to take the pressure off?

When my father was a farm worker during the Great Depression, he had an opportunity to work in a foundry at union wages. Should he have stayed on the farm to be equal to all the other farm workers? After all, there must have been several of his fellow farm workers who would jump at the chance for a union job in a foundry.

 

[Zoltan_Cobalt]

What existed after we declared our independence from Britain was a war which we almost lost.

But, for the Grace of God we didn’t.

A war which saw Soldiers marching bare foot in the snow leaving their bloody tracks to mark their passage. Is this truly what you pine for?

ATB

I’m sure you and I both thank God for the suffering they endured and the lives they sacrificed for us.

I don’t pine for it. The two wars I was involved in were in hot humid jungles or hot dry deserts…if there has to be another…A little snow would be welcome.

 

[nmgauss]

We all have different situations and challenges that can hold us back from taking advantage of opportunity. In America we have had more people rise up to the middle class and beyond due to the opportunities available from our free-market system as well as the stable and secure political system which allows business to flourish. People get a free education for 12 years. There are opportunities to be had for anyone willing to work fairly hard and deny immediate gratification for a while. Some fall through the cracks, (which is why we have a safety net) but overall, the system we have has allowed millions to get ahead and be successful.

What do you think are the reasons why the “very poor” in America cannot be successful?

Ishii

I used to work in a Los Angeles office with a young Mexican-American from the farm belt in Central California who learned how to operate mainframe computers. He became a pariah among his pals back on the farm and they ostracized him when he visited. They accused him of being better than they.

Coal miners in Appalachia decide to become miners because of family tradition. They could seek out better opportunities in the cities but opt for remaining in the fold rather than being adventurous.