Trickle Down Economics: The Biggest Con In Politics
Now, I know Republicans would strongly disagree with the title of this blog. Then again, Republicans and “think” don’t often go hand in hand.
Here is a quick explanation to what Trickle Down Economics actually is for someone who may not know:
Trickle Down Economics is the belief that as the wealthy or big corporations increase profits or are taxed less, they will then “trickle” those excess profits down to the rest of us in the way of more jobs, increased pay, and better benefits.
Sounds great right? In theory, yes it does.
However, it doesn’t take into account the one flaw we’ve faced since the dawn of humanity- basic human nature. Human nature is often very greedy, and those who seem have the most tend to be the greediest.
The saying “absolute power corrupts absolutely” in reality means power of any kind often corrupts. With our society placing so much emphasis on money it has made having money power. Trickle Down Economics takes the health of a nation into the hands of the rich and powerful.
Who stands to gain by building an entire party around a philosophy such as this? It doesn’t take rocket science to figure that out- the rich and powerful. Who has continued to have a bigger role in politics such as the Citizens United ruling that allows big corporations the freedom to give whatever money they desire towards a political purpose? You guessed it, big business and the wealthy.
Almost all information you can find on the web over the last 30+ years shows that middle class pay has been fairly stagnant. The 1%’s income in this country has skyrocketed and never more so than in the last decade. Yet even with that information, you have millions of Americans in this country blindly accepting this theory of economics next to the Bible as far as “must have” faith and ideology.
A magnificent con.
The rich and powerful have convinced millions to vote against their own interest. Right now instead of raising taxes slightly on people who make millions, an entire political party has focused on cutting programs that mostly help lower and middle class Americans. They’ve screamed class warfare, yet have not allowed a single deficit reduction solution that includes a single sacrifice from the Top 1%, not even eliminating a tax break for people who buy corporate jets.
It seems insane to think a middle class American would fight to protect the tax rate of someone who makes 100x what they make, all while advocating the slashing of programs they themselves benefit from.
And the worst things get, the more tax breaks and tax cuts they want because they have a perfect talking point that makes absolute sense:
“Well, how will raising our taxes create jobs? We need lower taxes so we can create jobs and boost the economy!”
They’re right, raising taxes won’t help create jobs, but lowering them didn’t help either. At least with increased tax revenue we wouldn’t need such drastic cuts to public jobs like Republicans have done for the last year, cutting around 300,000-600,000 in 2011.
Imagine hypothetically if our deficit was zero but our tax increase was at the level Obama has suggested. By Boehner’s own words this would generate $1 trillion dollars in tax revenue. How many public jobs could we create with $1 trillion dollars? How many programs could we fund that would help Americans? How many roads could we repair? National Parks kept up? Public transportation projects built? You get the idea.
They ignore the fact that we had historic economic growth and all-time low unemployment rates under President Clinton with higher taxes. They’ve also ignored the fact that we faced the worst economic crash in 80 years and shed millions of jobs while we had the lowest tax rates in our countries history. These are two simple realities that easily prove the falsity of the Republican rhetoric that “tax cuts are vital for job creation”.
Ask yourself these questions: Over the last 30 years are most jobs gaining or losing benefits? Are people gaining or losing their pensions? Working less or more? Health care plans getting better or worse? Keep in mind when you answer these that over the last 30 years executive pay and benefits have hit historic highs and corporate profits have skyrocketed.
It’s a great scam because the terminology in both its application and rebuttal to opposition it makes great talking points:
“The more profits we get to keep the more jobs we can create.”
“How will raising our taxes help us create jobs?”
Both are right, however reality has proven that neither actually produces jobs either. So the argument is really about more tax revenue with no job creation, or less tax revenue with the same lack of job creation. Logic says a country should take the tax revenue if the tax breaks didn’t actually create jobs, and they haven’t.
What Republicans have done though is taken this ideology of greed, manipulated the American people by masking it in a cloak of Christian values and then successfully deceived a large portion of the American population to vote against their own best interest. The astonishing part is that it has actually worked!
It’s one of the greatest cons in human history. They’ve co-opted the Christian faith and twisted it into a hateful, judgmental, ignorant group of cult like followers to support an agenda of greed. They’ve built their economic base upon the idea that our best interest and economic salvation are found by giving those with the most wealth and power even more of both.
Just sit and think about that for a second…
What a great con.
Posted on January 22, 2012, in Uncategorized. Bookmark the permalink. 17 Comments.
Nice job! Yep, have not seen much of a change since the wave of change that was suppose to take place a little over a year ago. The only job creation they talk about, is when it is about lowering taxes and regulations, and building a pipeline (insert joke here). Trickle down looks nice on paper, but they forgot one thing, greed. Expecting the unscrupulous to actually do whats right by the others that reside in his or her own country is pretty much insanity. Serfs up!
Not to mention if we give tax breaks then We llose the vote on where the money is spent. We voted people in office to decide where our tax dollars go. With these breaks we see where our tax dollars went. You let them donate money to whatever causes they want instead of paying their fair share then you have taken the power out of the people.
Actually, the mantra of “tax cuts help create jobs” is actually plain WRONG, at least when it comes to the corporation. The *LEGAL FIDUCIARY DUTY* of a corporation is to MAXIMIZE SHAREHOLDER VALUE. That means if you have 10 people, each doing a single person’s job, and you can get the same output, if you were to say, fire 3 of them and work the other 7 harder, for less total pay than the original 10 earned, that is your LEGAL OBLIGATION.
So when a company’s stock price goes up after they announce layoffs to become “leaner and more efficient”, that’s no coincidence. They’re rewarded for that because they allegedly produce the same profits while needing to pay fewer people.
To say that corporate profits allow them to hire more people is ass-backwards. Corporations hire people because those people will generate a greater positive on the bottom line than it costs to pay them. Furthermore, the cost of labor is deducted from gross revenue BEFORE taxes are factored in. This is where the acronym EBITDA comes from–Earnings Before Interest, TAXES, Depreciation, and Amortization.
All of this talk of “more profits for us means we hire more people” is actually a flat-out, bald-faced LIE–namely because taxes don’t impact your ability to hire people one way or the other. Yes, it means less money in your coffers after all is said and done, but all of that remaining profit is simply shareholder equity, which, while you *can* use to pay employees on a rainy day, is actually *not* for that purpose. It is shareholder equity–aka the $ that goes to people who own the company’s stock, NOT to the employees.
Oh, and as for all the lobbying…see that first paragraph? Yep, it means that if corporations can save on their taxes by bribing a congressman, they are LEGALLY BOUND to do just that as part of their efforts to maximize shareholder value.
Fucked up, ain’t it?
One often overlooked point about the whole trickle down voodoo economics thing is, no economy on the PLANET is driven by supply. It’s DEMAND that drives an economy. If I’m stinking rich but the demand for my product is drying up, there’s no way in hell I’ll create a job just because I got a tax break. Typical Republican regressive thinking. Good post.
So very true.
Ah, the lovely warm feeling of the trickle down effect…http://www.bbc.co.uk/news/business-17033039
Brilliant, the best overview I have seen in years. The difference between rush an Goebels is Rush doesn’t wear a uniform.
The final insult in this whole thing is that those of us who are retired are practically required to put our money in the stock market in one way or another in order to have it earn any profit at all. Interest is so low from banks that money markets and other traditional places do not produce income. Add to that the fact that if you want to move your money to anytihing unapproved, you are creating a “taxable incident” which will hit you like a ton of bricks. We are hog tied to the 1 percent’s ways of doing business although we can’t take the ups and downs they can endure.
Heads full of Progressive MUSH….
I prefer trickle down economics over trickle up POVERTY!
Beautifully done … gets right to the hard, cold core of the situation. This con only works for the same reasons any con works … because, all evidence to the contrary, ignorant people want to believe that they will benefit out of all proportion. Their ignorance and desire are used to convince them that this rigged game is going to provide them with something they want. It’s like the bumper-sticker says, “Vote Republican … it’s easier than thinking…”. Wrap that up in the sweet, candy-coated heroin of religion and they’ll swallow it so fast your hand will barely have time to let go, and then they’ll come back for more time after time after time because that yawning, gnawing need just keeps growing. Rainbow Pie sounds delicious, but you’ll starve to death eating it …
*¬◊
Trickle-down economics does not work. What will work is simultaneously broadening private, individual ownership of new productive capital investment as the American economy grows, turning labor workers and others into new capitalists who wi…ll benefit from expanded earnings through the full-dividend payout of the earnings the investments generate, which in turn will strengthen consumer demand and create even greater economic growth and growing asset portfolios for ALL Americans, thus reducing dependence on government redistribution “make-work employment” and “welfare” programs.
Modern technology and rapidly developing intelligent systems technology means that modern industry, the employer of middle class prosperity, simply does not need millions of new workers, while the population of available workers is multiplying. Truly intelligent “machines” (productive capital) will have the potential to eliminate poverty and usher in a new age of prosperity, opportunity and economic justice while closing the gap between rich and poor through broadened access to capital credit for investment in new productive capital assets so that everyone can become a capitalist with income from ownership of the economy’s future productive capital assets.
Free market capitalism can be a good thing because it involves the principle of private ownership. Private ownership creates incentive for individuals and business corporations to acquire productive capital, because the profits accrue to the owners. The problem is that there presently exists no means by which the majority of American citizens can fully benefit from the unprecedented productive potential of technological innovation in which the non-human factor of production is displacing the human factor of production. As most customers for the products and services that can be produced are labor workers, market demand will exponentially decline unless society’s customer base can gain access to capital credit to acquire long term viable ownership portfolios in future productive capital assets. Up to this point in our history, wages and salaries have been paid to labor workers to provide income that generates consumer demand in the market. Without jobs, labor workers cannot buy the products and services that are produced, and without customers, business enterprises cannot expand production. The principle operative of capitalism is to maximize income to the owners of the business corporation, not to create jobs or provide income for labor workers.
This is a fundamental structural problem plaguing the capitalist system. It explains why the middle class is in decline and poverty persists despite capitalism’s obvious capability to produce and meet demand for products and services needed and wanted by our citizenry. With declining labor worker incomes and the prospects of more people living with insufficient or no income, demand in the market likewise declines. Without a job there is no money. And as technological innovation gains exponential momentum there will be fewer and fewer jobs for labor workers to produce the products and services that they cannot buy because they don’t have jobs. Thus, this vicious circle is the current embodiment of capitalism.
Capitalism is not designed to benefit the working class and poor. Capitalism is designed to benefit the owners of productive capital. Few people can save enough to become wealthy by investing their savings. Yet the financial system is based on “savings” and as a result the percentage of people that derives most of their income from returns on productive capital investments is small. But it does not have to be.
What if we could reverse this trend and turn the vast pool of Americans into productive capital owners and thus consumers? If that were done, more labor workers would be required (at least in the short term) to produce products and services that would be demanded by these new consumers, who are as well the new capitalist owners of the productive capital assets created to expand productive capacity to meet demand. This would effectively recover the economy from the present recession to the point where business enterprises again can profitably sell their products and services. And as companies expand to meet demand with investment in new productive capital, new owners would participate and through their income dividend payout create more demand.
Such a system can be created that rewards labor workers with skills that are in demand, while at the same time provide capital dividend income to them and to those not needed for the production of products and services. Such a creation would embrace productive capital as a replacement for labor as the principal factor in the production with continued productivity growth. Thus, the future economy would generate material wealth for ALL Americans created by technological invention embodied in superautomation, automate factories, intelligent machines, and sophisticated computerization.
See http://foreconomicjustice.com/11/economic-justice/
Thank you. You’ve said so eloquently what I could not put into words before!!! I’ve always said it is “trickle out of the country economics” because human nature is GREED. Maybe it worked a few years back in the Reagan era, but businesses eventually will find a cheaper way to do it and then the jobs trickled right out of the country. Getting that same job to trickle back into the United States will never happen at the cheap price of labor they are now paying in the other country. What I liked best about your article is how the rich have co-opted with the Christian faith. You said, “What Republicans have done though is taken this ideology of greed, manipulated the American people by masking it in a cloak of Christian values and then successfully deceived a large portion of the American population to vote against their own best interest. The astonishing part is that it has actually worked!” Yes, it is astonishing and I want to add the reason I think this has happened is because Republican leaders have tapped into a major theme of the Christian faith where the words “trust” and “obey” are the cornerstones of the religion. Because of these words that are so ingrained in the Christian faith, anyone who is a leader and proclaims to be a Christian could never possibly lead them astray! And for what other reason would the GOP falsely try to convince people that Obama’s faith is Muslim despite the fact that Obama, Michelle and the kids are Baptist! What further makes this brainwashing so hard to reverse is because of the poor economy, Americans are in a rut where there’s no time to pick up a newspaper and read to see that they are being brainwashed. These poor middle class Christians are so busy trying to hold down their now $10 per hour job in order to pay their rent, cook and clean, feed their families that they are working 80+ hours a week and have no time to pick up a newspaper to figure out they are being conned.
Corporate profits are at record highs and corporations have record amounts of cash on hand. The stock has risen nearly 6000 points since 2008 and it is near its all-time high.
Are you better off?… If not, YOU are the proof that “trickle down” does not work!
Trickle down never did. Not only that, Romney/Ryan are not job creators, but jobs losers. Do people know what Bain Capital is? It’s a private equity firm that deals in leveraged buyouts–the buying and selling of smaller, more “vulnerable” companies for quick-gain profits at both the buyout and sellout ends. First, they bleed the company of it’s capital and assets (including workers) by making it pay for its own buyout (profit #1), then dump the company on the market without any reinvestments in it, and/or to bankruptcy (profit #2). This is just like what realtors used to be able to do, buy and sell and re-sell properties without reinvestments, to artificially jack up prices for a quick killing. It’s also what led, in part, to the 2008 Global Recession, since it’s not based on putting money back into assets, but denuding entities of assets to profit at both buyout and sellout stages. Not only are there often massive job losses or massive outsourcing of companies and jobs, but whole communities are often devastated. Just last week, Bain-owned Sensata sent a whole factory and its 170 jobs to China, forcing the newly about-to-be-unemployed American workers to train the Chinese before they lost their own jobs. A great article on the LBO (leveraged buyout) process and how it affects workers and companies is in the February 6, 2012 issue of the New Yorker, on Stella D’Oro, American Factories, and Private Equity. It’s very detailed and shows how one company went through several LBOs. The example is relatively benign compared to what often happens, but still chronicles the jobs losses and community devastation that occurs in these practices.
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