Lagboltz
Well-Known Member
Trickle down theory is a near universal falsehood. It is in disfavor by many noted economists. Here is one study from Alesina, Alberto and Dani Rodrick. “Distribution, Political Conflict and Economic Growth, in The Political Economy of Business Cycles and Growth, M.I.T. Press, Cambridge, MA, 1992.Trickle down economics is how economies work. It has nothing to do with deficits or federal spending. If you earn $25K/yr and spend $35K, you will be $10K in the hole. If you get a new job and the next year you earn $45K and spend $65K, you'll be $20K in the hole.
What's the point? You can't blame the new job for the massive deficit. What control does your pay rate have on your spending habits? Zero. What control does a taxation method have on government spending? Zero. This is basic logic 101.
Further... and this is where ignorance reigns... trickle down economics is not a method of taxation. As the name implies, it's an economic model. Specifically it's the model of economics that all economies follow.
The basic premise is this... nearly all jobs are created by the wealthy, and thus all economic activity trickles down from the top. My job was created by a very wealthy man. As were most jobs on the face of the earth. Even the self employed farmer... who built the equipment he uses? Wealthy people. Who made the fertilizer he uses? Wealthy people. Who made the pesticides he uses? Wealthy people. Who made the trucks and provided the transport of his crops to market? Wealthy people. Who made the stores his produce is sold in? Wealthy people.
This is how all economies work. Claiming trickle down doesn't work is like claiming oceans are not wet. Dave Thomas got backing by wealthy people to open his own resturant, and used that to hire people. When he had enough money from his investment, he opened up new burger stands that employed more people. Trickle down to Dave, to his employees, to new stores, to their employees and so on.
Trickle down is a near universal truth, unless your talking about a 3rd world country with some sort of quasi-feudal system, or if you are a leftist who values political points over truth.
The authors looked at a sample of 65 industrial nations and gleaned from data from the World Bank and the Organization for Economic Co-operation and Development.
They found lower growth rates in countries where higher shares of national income went to the top 5 percent and the top 20 percent of earners. In contrast, larger shares for poor and middle-income groups were associated with higher growth rates. Again and again, the observed pattern is the opposite of the one predicted by trickle-down theory.