A Teaser for you . . . Trickle Down Economics
Ever since Reagan and Thatcher first tried them, trickle-down policies have exploded budget deficits and widened inequality. At best, they’ve temporarily increased consumer demand (the opposite of what’s needed during high inflation that Britain and much of the world are experiencing).
Reagan’s tax cuts and deregulation at the start of the 1980s were not responsible for America’s rapid growth through the late 1980s. His exorbitant spending (mostly on national defense) fueled a temporary boom that ended in a fierce recession. The Donald Trump White House’s tax cut never trickled down.
Yet the US never restored the highest marginal tax rates before Reagan, and deregulation – especially of financial markets – is a continuing legacy.
The result? From 1989 to 2019, typical working families in the United States saw negligible increases in their real (inflation-adjusted) incomes and wealth.
Over the same period, the wealthiest 1% of Americans became $29tn richer. The national debt exploded. And Wall Street’s takeover of the economy continued.
Meanwhile, and largely as a result, America has become more bitterly divided along the fissures of class and education. Trump didn’t cause this. He exploited it.
Why is trickle-down economics still with us? | Robert Reich | The Guardian
trump’s 2017 tax break left a $2,7 trillion bill on the table for us to pick up. One give back . . . If you eliminated the 2017 tax break for the fifth quintile, you could fund the other 80% taxes.
More for Them, Less for Us, Talking Taxes and Deficits – Angry Bear
Looking at the Trump 2017 Tax Breaks and Extension of them – Angry Bear
There’s “trickle down economics” and then there’s trickle down monetary policy, best acknowledged by Bernanke’s wealth effect. Under trickle down monetary policy the wealthy don’t get tax breaks, but they almost immediately realize higher asset values, driven by lower rates. Supposedly they take their manna from heaven and create jobs by investing to expand their businesses and employ more people. Alternatively, they might take some of their newfound wealth and spend it, which may eventually drive new investment. These are exactly the same rationales given for tax breaks that mostly benefit the wealthy.
Unfortunately the effect on employment can take many years to materialize, and the effect on real wages can take even longer, while the effect on wealth is almost immediate.
The main benefit to trickle down monetary policy, is that the increase in wealth is distributed more widely to include homeowners whose assets also increase in value. It may also benefit home buyers, if lower interest rates have not already been offset by higher purchase prices.
However, trickle down monetary policy is of marginal value to the large cohort of non-homeowners, since interest rates on student loans and credit card debt may not drop, but instead rise. And low interest rates hurts people on fixed incomes as well as those trying to save and needing to invest in relatively secure, interest bearing assets for retirement, an HSA, a 529 College Savings Plan, etc.
IMO, the Trickle Downs amount to a case of heads, the wealthy win; tails, they also win. What’s needed is a strengthening of automatic stabilizers–financed by increased windfall taxes on extraordinary capital gains–to get money to people hurt by recession, thereby preserving people’s purchasing power as well as aggregate demand.
Navigating Economic Crises | Institute for New Economic Thinking (ineteconomics.org)
I think they took their higher asset vaues and gave us 2008. you might want to read Bernackes book (21s century monetary policy). if he’s lying he is doing a pretty good job of it. but in general money and fiscal policy benefit the rich… that’s because that’s how they got rich and that’s how they got power.
i am not against the rich. i am against their stealing from the poor to get rich. and their destroying necessary government in order to make it easier to steal. i think we could deal with that if we weren’t alway running around with our heads up someone else’s propaganda.
The most aggravating part of the Trickle Downs is that both are heavily promoted, both in the media and by boatloads of economists, as benefiting workers. As in every propaganda campaign, there is some truth to it, albeit that most of the benefits accrue to the wealthy…and quickly.