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

Clearly, however the worlds financial institutions have errectile disfunction and seem to believe that Viagra is a good long term fix for the problem.

 

Time to change their prescription and give 'em some of them red pills perhaps? I personally have a soft spot for them pink.

 

While I disagree with trickle down mostly, the problem hasn't been trickle down in relation to tax rates in general, it's been related to trickle down in the current monopolized environment that's killing our nations economic stability. I think trickle down in a small business driven economy would probably be okay. And an monopolized environment with uber high tax rates (similar to the 60's) would probably be okay as well. But having both environments working together has created the massive wealth gap, income gap and unsustainable economic environment that may well destroy the foundations of our nation.

In a small business environment, where there aren't mega-global-conglomerate companies in our small cities and suburban areas, but hoards of successful small businesses and healthy competition amongst them, trickle down is a truly effective part of healthy capitalism. When you benefit those owners with tax breaks, they DO help their communities because they live in those communities. They spend in those communities and they compete in those communities. I'd support tax rebates and lower income tax levels if they were the predominant benefactors. However, currently, the mega's get all the breaks, and that doesn't help the communities where their stores are, because such a small percantage of the profits spent in those stores actually stays and benefits the communities where they exist.

When you spend money at Wal-mart right now, the only money that stays in the town where you spend it is the money for wages, which are mostly lower (even for upper management) than they would be if you replaced one Walmart with 25 small businesses selling all the same stuff (with more employees). Every other penny spent by that town leaves the town to buy inventory in China, pad investor profit lines, and pay executive salaries. Profit doesn't exist in for those communities. Likewise, when you give tax breaks to those companies, none of it trickles down to the towns where those companies go. Once again, it goes to profit lines outside of the communities the tax breaks were intended to benefit.

I'd be more likely to support a trickle down environment in a much more highly regulated, anti-monopoly, pro small business environment, where profit centers stay in the communities they intend to benefit. Since we are no where near to that type of environment, I have know hope other than taxing those monopolized profit centers until the money actually does come back to teh communities they've pilfered them from. Of course, in the current environment, that MUST come through social programs and government handouts. It's so funny that the right wing that hates government handouts have created the very environment that has necessitated them so much. It's rather ironic, but also very sad.

 

Are you aware the Democrats believe in and often practice "trickle down" economics?

They believe if you tax people at much higher rates, some of the money they collect will actually "trickle down" and help the poor!

 

Taxes do not trickle down either...they are absorbed by that giant corporation called the government.


They have to establish a commitee to see where the money is to be spent.

They have to hire people to oversee how the money is spent.

They have to rent space in buildings all over the country to hand out the money.

They have to hire people to investigate whether someone is worthy to get the money.

They have to pay lifetime benefits to people that hand out the money.

By the time the money "trickles down" to the people that need it very little is left.....so they have to raise taxes...again.


It is a little more complicated than that but you get the picture.

 

No, that isn't how money works. If they did that, they would quickly become poor. They know that fact, which is how they become rich.

What they do is spend the money on things that increase in value, not things that rapidly decrease in value. Cash rapidly decreases in value, so they don't hold cash. They spend money on financial assets and durable goods, but they do spend nearly every dime they take in.

 

Restating it doesn't make me any less certain that you don't know about which you're speaking. Two people of equal wealth conduct business; they each gain equally.

Wealth just 'trickled' sideways.

 

Wealth has never trickled up. It is 'siphoned' up.

 

I think Leffe was more correct about this than you.
Where do the wealthy put their money? In "the markets". Is that spending? No, it is "investing". The top 1% of income earners hold over 80% of market shares.

What does the money do once it is "in the markets"? The vast majority of monies invested in the markets never leaves. Most just bounces around among different investors. Some is destroyed when the market fails, disappearing into thin air. A tiny fraction (less than 0.002%) goes to new share issues, which raises money for corporations. A slightly larger amount is withdrawn from the markets to pay for external goods and services like yachts and mansions and pool boys and stuff like that. Only this last can be considered spending, the trickle down from the investor class.

But, the spending is more than offset by the middle class investing their savings in the markets through their 401K etc. This vastly increases demand for shares and increases share prices and overall market value. This general increase in share prices makes the wealthy even more wealthy. Interestingly, retail investing (i.e. middle class investors) was opposed by many in the investor class until it was explained to them that their wealth would increase enormously if the huge middle class savings were allowed into the markets. It was explained like this. It is low tide and your boat is in the mud. The rising tide of retail investing will raise your boat more since others will not launch their boats until the tide has already risen.

So, the wealthy end up with less of the pie but the pie is so much larger that their piece is far bigger. Then they just drill a few holes in the middle class's boats, or a storm like a mortgage bubble hits. And their mighty yachts continue to rise while the little boats flounder.

The wealthy have decided that they will not toss life preservers to the less fortunate since it would reduce their wealth.

 

I think Leffe was more correct about this than you.
Where do the wealthy put their money? In "the markets". Is that spending? No, it is "investing". The top 1% of income earners hold over 80% of market shares.

What does the money do once it is "in the markets"? The vast majority of monies invested in the markets never leaves. Most just bounces around among different investors. Some is destroyed when the market fails, disappearing into thin air. A tiny fraction (less than 0.002%) goes to new share issues, which raises money for corporations. A slightly larger amount is withdrawn from the markets to pay for external goods and services like yachts and mansions and pool boys and stuff like that. Only this last can be considered spending, the trickle down from the investor class.

But, the spending is more than offset by the middle class investing their savings in the markets through their 401K etc. This vastly increases demand for shares and increases share prices and overall market value. This general increase in share prices makes the wealthy even more wealthy. Interestingly, retail investing (i.e. middle class investors) was opposed by many in the investor class until it was explained to them that their wealth would increase enormously if the huge middle class savings were allowed into the markets. It was explained like this. It is low tide and your boat is in the mud. The rising tide of retail investing will raise your boat more since others will not launch their boats until the tide has already risen.

So, the wealthy end up with less of the pie but the pie is so much larger that their piece is far bigger. Then they just drill a few holes in the middle class's boats, or a storm like a mortgage bubble hits. And their mighty yachts continue to rise while the little boats flounder.

The wealthy have decided that they will not toss life preservers to the less fortunate since it would reduce their wealth, unfairly.

 

I just got to correct you on one tiny thing. Money never disappears. The stock market is a zero-sum game!

 

We shouldn't be looking at which policy helps the most people, but instead we should be looking at which policy is moral. What is wrong with someone spending the money they earned the way they see fit, as long as they don't directly harm others? What is wrong with someone saving his/her wealth if it truly is his or her wealth?

By the way, I am no republican, I'm a libertarian, so any argument pointing out contradictory republican policies doesn't prove your point, it only proves that republicans have contradictory ideas.

 

That position depends on your definition of harm, which I would like you to explain, and indirect harm is often more harmful than direct harm. Your morality seems somewhat limited.

 

When you commit fraud, steel, and attack others, you are directly harming them. Not helping someone isn't harming them, it's the absence of helping them. Do you see where I'm coming from?

I'm not saying that we shouldn't help others, I'm saying it shouldn't be mandatory. Our laws should defend people from aggressors only, and then people can decide what to do after that.

 

You've certainly got a goofy notion of the value of 'consumptive spending' versus 'investing'. You seem to value the 'consumptive spending' in some way more than investment - and that's flat nonsensical.

Investing creates - and sustains - cottage industries just as consumptive spending creates - and sustains - industries. There is a wealth multiplier effect from investment that isn't as powerful with consumptive expenditures. In addition, the number of people with the wealth necessary to create catalytic investment (ie venture capitalists) is not nearly as high as the consumers in the market.

There is no "drilling holes in the boats of the middle class" - such a notion is utterly ridiculous. The rich offer products and services to the rest of society, who choose whether or not to accept such offers. The individual wisdom of each person determines whether they consume without accruing, or accrue without consuming. Most people are a balance of both.

There is no "tossing of life preservers" - other than the fact that those who can preserve their own wealth by investing in things which circumvent market corrections and negative trends are the ones who then kick-start the economy by investing in ideas they believe will work to once again promulgate currency velocity throughout the economy.

And there is nothing more chilling to that desire than to introduce unreasonable risk factors into the equation - among which are the threats to increase taxes and regulation, and policies such as ObamaCare.

You wish to know why our recovery has been so tepid and fragile? You now know.

 

Personally I think one can't really talk in absolute terms about what makes for good tax policy without considering where you are. Even Laffer curve adherants admit that for much of the curve lowering taxes doesn't raise revenue, even if for some cases that is true.

If your issue, as with the OP, is where money is being invested, look to taxes aimed at corporations and businesses, not individual capital gains taxes. Right now we have (relative to other similarish countries) a high corporate tax rate so money will tend to flow elsewhere.

 

The wealth multiplier of investment is tiny compared to consumption and a big reason why the economic recovery is so slow is that such a large portion of the national savings is chasing gains through speculation in the markets instead of through lending to businesses so they can expand, which is how businesses, and economies grow. Cottage industries are not financed by wall street investment bankers. They are financed by friends and family from hard won savings.

There is certainly a need for investment, and a community of investors but there needs to be a balance between types of investment for an economy to achieve long term sustainable growth. If too much investment is geared towards short term speculation there will be a shortage of long term investment that is critical for economic success over the longer term. There is currently a severe shortage of the medium and long term capital lending that fuels long term growth. The biggest impediments to business growth these days are lack of access to capital and health care costs.

The uncertainty over the direction of government policy has a lot to do with the republican agenda which long on inflammatory rhetoric, hallucinatory legislative proposals and intransigence but very short on anything resembling a practical idea on how to get the budget under control, fund the crumbling infrastructure, fix the health care mess, and other critical problems the nation faces, problems critical for the long term viability of the economy. Instead they spend all their time and energy proposing inflammatory legislation they know will not pass and turning on a dime to attack anything that the other side even thinks about, even if it was originally their idea. This against it because someone else thought it up thing is just nuts, completely insane. There is no telling what these lunatics will do if they gain power, which is a real possibility, and that is a big reason why investors are so uneasy and the economy is just muddling along.

Uncertainty comes from the rights cognitive dissonance. If the right actually had a position on anything and stuck to it the situation would be different but they do not. That alone increases the risk factor by orders of magnitude. Everyone knows what the dems wants and what they will do, no one can be sure about anything concerning the republicans.

 

Your post is complete nonsense. I want you to support the assertion that I bolded.

 

No, it does not work that way. It is still your turn. It is easy enough to debate with personal attacks, insults and a demand for facts when one has nothing cogent to contribute. That doing so will lead to greater exploration and understanding of the matter at hand is less than likely.

Until you refute my position with argument or logic you have failed to defend or advance your position or impinge on mine. You are free to try again.

 

You've given up on the idea anyone might invest in the U.S.? Hope you're wrong (for all our sake).​

 

Do you really believe that you didn't offer anything more than a base assertion in your post? You didn't substantiate anything! I'm asking you to do so. If you cannot - and I wouldn't at all be surprised that you can't - then your response to me was baseless.

 

Hmmmm...the "just give the rich everything and hope some of the piddlins will splash back out of the bowl of liquidity onto us too" mindset huh? I think we tried that one already...it failed miserably and died with the republican actor. Right wingers would like us all to believe that though....makes for easy pickins.

 

trickle down economics use to work before America went Corporate. We use to be a nation of shop keepers where most owned their own businesses or knew the owner. Now Wall Street OWNS EVERYTHING and good luck trying to meet the real boss. Also, due to technology the rich no longer vacation in Myrtle Beach but, instead go to Monaco Beach over in Europe. They no longer buy Cadillac's but, instead buy Porsche's... items like this & Gucci only benefit the rich in Europe and not America...

 

Marginal Propensity to Consume

Are you familiar with this term?
You should be because it has a lot to do with the multiplier effect and goes a long way in explaining why a $Trillion bailout to banks and another $Trillion in "economic stimulus", most of which went to support the investor community, did so little to spur economic growth.

 

That always cracks me up. The only reason you gave him your money in the first place was because you wanted something he had. After the deals done, don't sit there and hope the change will bounce back to you -- get up and make something he'll want from you. ... and no, asking big brother to go tax your money back from him so you can buy again is a sad way to play the game.​