I used to believe trickle-down had some merit ....

but that was all back in the day when investors had some incentive to invest in America. Foreign investment was either too risky or we didn't have enough aircraft carriers.

The incentive to invest in the country has left the premises. Don't give me anymore of that Romney bullcrap, trickle-down is obsolete.

 

Trickle-down isn't obsolete, but it is somewhat overrated.

Some wealth does reach the working class. However, a significant portion of the spending done by the wealthy is on luxury items with a limited worth for the overall economy.

Also, much of that wealth is hoarded during hard economic times. Understandably, the wealthy tend to be more uneasy about investment when the market is unstable. So, stimulating economic growth has to come from somewhere other than the wealthy during those periods.

 

"Trickle down" is more a political than economic term.

See Trickle-down economics - Context

Regardless of the merit of the above quote, I'd much rather see broad based tax policy reform than tax policies focused on encouraging or discouraging the economic activities of one particular sector of the income spectrum. In other words, I think we'd farther ahead if we quit trying to use tax policy to bludgeon or bate particularly targeted income groups in order to tinker with concocting various macroeconomic effects.

 

All economics is trickle-up economics. Don't be fooled.

 

I see no reason to believe that you're telling the truth in this post. None.

 

Trickle down is what created the economic problems of the past few years. The lowered capital gains rate did not, as promised, result in more investment in business growth and jobs but rather redirected even more investment monies into market speculation by reducing the cost of risky speculation.

As a result the markets became oversubscribed, asset bubbles ensued and market volatility increased by orders of magnitude as investors piled into ultra-high risk derivatives and oversubscribed sovereign debt offers. BY 2008 it only took one little push to collapse the entire house of cards.

Meanwhile, with all that money flooding into speculation and debt, far too little was invested in what really grows economies, infrastructure and private investment in capital goods. Except for Germany, the hollowed out economies of the developed world found themselves with no hard economy of goods and services to fall back on and no safe place for investors to put their money.

A tax policy that favours risky market speculation over direct business investment is not a good choice if one is looking for stable economic growth over the medium to long term. High taxes on the investment income makes investors less cavalier with their money and reduces economic risk for everyone.

 

Trickle-down economics never existed. Wealth has always trickled up.

 

Another disenchanted tricklee dehydrated in Dry Gulch Canyon.

 

So, you are now a believer in Bush/Obama's trickle-up economics, where they pick and choose who to toss billions of dollars to and that it is a good thing that some banks are allegedly "too big to fail." I seem to remember a time when democrats wanted to break up monopolies, not drop their losses on the taxpayers. What a shame.

Wealth is trickling nowhere at this point, as it is all pseudo-money based on debt that can never be repaid. Good thing we spread this model through the rest of the world and seemingly everyone is in trouble. Geez, I wonder who is actually owed all of this supposed debt?

I do believe most of American debt is now owed to the central bankers, who created the catastrophe in the first place.

 

exactly, after 10+ years of trickle down banks were failing, auto companies failing, jobs dwindling, trickle down was a massive republican fail

 

Globalization and central monopoly corporatism, shutting down the competition and moving their giants offshore. Selling us American products from China. If anything describes our presidents from Bush Sr to Obama, it is "international corporatist sellouts."

 

The Federal Reserve is even engaging in policies contrary to majority international commercial principles. While most economists are proponents of free trade, quantitative easing, which many have endorsed or are indifferent to, is a protectionist policy. The buying of mortgage backed-securities and the increase in the monetary base leads to a decrease in the interest rate, leading to increased exports as one's currency is devalued in relation to others. In the case of the United States, the devaluation was in relation to the Yuan, which is pegged to the dollar at a floating exchange rate rather than flexible exchange rate. Consequently, an increase in the monetary base in the United States has to be met with enough of an increase in China's monetary base to maintain the currency peg. That is what China did in reaction to QE and QE2, except unlike the Federal Reserve, they actually released their newly created reserves, thereby increasing the money supply. China, not the United States, experienced inflation afterwards.

 

Yep. --

 

Trickle down is well and ngood innChina wherte incentive and nCapital is allowing companies to compete with the West.

In the West, the envious people who have actually opted for a communism in the intercity ghettoes and the sick idle small towns in Appalachia.

They all get the same benefits and they all raise the next fatherless generation of citizens who really get schooled among peers who hang with them in street gangs.

The realoney,ike Walmart, has crossed ver and started to operate in China and Brazil.

 

Trickle down never happened and I somewhat resent the way taxes are represented....for example::::;;;

10% of the population pay 85% of the taxes...it is not about the number of people but the number of dollars.

If 10% of the population makes 95% of the dollars....the should pay 95% of the taxes....not taxed at a lower rate because they make more money.

And as far as capital gains is concerned....it is still income...is capital gains income worth less than labor income?

Maybe people should start thinking about what is right and fair...and what is wrong and unfair....and no....I do not support socialism.

If the government quit throwing money away on stupid stuff we might all be able to pay less.

 

This is just a mischaracterization of an important dynamic. Wealth 'trickles' to those who harness ingenuity and create efficient production of goods or services in demand.

In that sense, it isn't as important that lots of people each have a little money, and their common expenditures results in a group of fewer people who each have more money - it's far more important to nurture and celebrate those who can innovate and lead and produce.

Because they are the engine of prosperity. Simply wishing something is meaningless. I demand an anti-gravity suit - yet there is no mechanism through which I can produce one: someone with the knowledge and ingenuity must do it first.

What is meant, therefore, by the traditional phrase 'trickle down' is that the most important cog in the economic wheel are those who create.

Not those who consume. They're as plentiful as grains of sand.

 

I consider trickle-down economics to be the culmination of the work of supply-siders, whose economic theories have been proven completely wrong. Case and point, the Tax Reform Act of 1986. The Laffer Curve argues that there is an optimal tax rate that renders a high yet optimal level of federal revenue. What this model does not take into account is the complexities of tax policy, including changes in loopholes, taxing methods, and multiple changes in tax rates.

The Tax Reform Act of 1986 lowered the top income bracket from 50% to 28%. However, the lowest income bracket saw their rates raised from 11% to 15%. At the same time, a tremendous amount of loopholes were eliminated. Capital gains were also incorporated into the income tax as ordinary income. These three latter policies completely counteracted the negative effects the large tax cut for the top income bracket would have on federal revenue. After all, during an expansion, the typical remedy to controlling exorbitant economic growth is tax increases or other tax policies that take a greater amount of money out of the private economy.

Nothing in the Tax Reform Act of 1986 points to the applicability of the Laffer Curve. The oversimplification of the model was simply a theory designed to promote pro-business fiscal policy when not necessary. Luckily, it was never implemented.

Your logical definition of the term make much more sense, yet like most descriptions of the economy, it is oversimplified. It is true that wealth trickles up, not down. Outside of wealth, the dynamics in which the economy progresses is heterogeneous, and therefore can/cannot trickle up and/or/cannot down depending on the situation and perspective.

 

As opposed to your claim that "wealth has always trickled up". This isn't a place for a thesis, but for core concepts.

'Wealth' trickles every direction. What matters is where it concentrates - and wealth concentration can take place anywhere - or do you wish to argue with me about the financial status of Mark Zuckerman before he had an idea that he put into action and created the very dynamic about which I am writing?

I don't think that even you knew what you said here.

 

In response to the bolded statement, what I was talking about is complexity economics. The economy progresses in a heterogeneous manner, in a complex manner, and is a complex system. Complex systems are ever-adapting. Consequently, wealth can trickle up or down depending on the situation.

In regards to how wealth moves throughout the economy, wealth cannot "trickle" in any other direction but up or down. That defies economic reason. Perspective comes into play when analyzing economic phenomena.

 

Obama's stimulus spending was just trickle down economics. A pile of money was handed to a rich contractor of some kind and very little trickled down into real jobs and wages. So were you against the Stimulus too?

 

Additionally, the wealthy spend a tiny tiny amount of their actual wealth. Most of it is locked up and not spent.

 

I would liken it more to a vaccum cleaner.

 

The only things that trickle down are toxic assets and any other crap.

 

That level of truth I find just too painful to contemplate...

 

Should we manage to have a growth we could ease pain with pleasure