AllentownJake and an economic lesson

[Karin]

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AllentownJake  (1000+ posts)        Mon Feb-22-10 04:16 AM
Original message
Why Trickle Down Economics failed
 Edited on Mon Feb-22-10 04:21 AM by AllentownJake
The trickle down economics theory of 30 years ago has been a failure. Simply put, wealthy people do not give money away for free, if they did they would not be wealthy. They will however invest money in the form of providing loans and buying capital.

So you have a situation, where wealthy people have more money to invest in loans and capital, they will inflate the value of assets. Generally in the land and commodity sector by buying more of it. Again, wealthy people, did not become wealthy by giving things away for free, so they will sell the land or rent and the same with the commodities for a premium on their investment.

This would be fine if the employees of the wealthy were being paid well, blah blah blah let me be clear I'm going to drone on and on for the next two hours blah blah blah

Golf applause from the echo chamber:

laughingliberal  (1000+ posts)      Mon Feb-22-10 05:00 AM
Response to Original message
1. That pretty well sums it up. 
 Any chance of having the wealthy pay their share in taxes? 

Hannah Bell (1000+ posts)        Mon Feb-22-10 05:10 AM
Response to Original message
3. K/R. You presented the trend of the last 30 years in an easily understood way.

  That's a concern for the smartest people on the internets. 

Union Yes  (1000+ posts)      Mon Feb-22-10 05:16 AM
Response to Original message
4. Testify ATJ!

And then,

ConstitutionalLib (6 posts)      Mon Feb-22-10 12:34 PM
Response to Original message
20. I am sorry that Imust beg to differ with you, but...
 You make some pretty fantastic assumptions that just aren't factual, and I feel I must call attention to them, and , Yes I know this will win me no friends here, but here goes;

I am a small(very small) business owner. I own a cleaning/carpet cleaning/ tile and grout cleaning company. I know I am an evil capitalist even though I, to, clean toilets, push brooms, and clean carpets. I sometimes work, as I did last week on a big job 22 hours in one day. No, I do not wish to pay my people MORe than their efforts are worth to me. No, I do not reap rewards at their expense. No, they do not work for my benefit.

If the tax code allows me to keep a little more of my money, that allows me more to invest in my company. That means I can purchase more productive equipment, or in last years case, I bought a tile and grout attachment that allowed me to branch out. It also allows me to hire people, which in turn expands the tax base, resulting in higher tax revenues. This is why when JFK cut taxes, and when Reagan cuts taxes, and even when the hated W. cut taxes actual money collected by the treasuries in ensuing years increased.

You are right wealthy(and I am not one) do not give money away for free, nor are they supposed to, BUT, it is a fact, that the top 1% of wage earners pay 40.42% of the Federal Income Taxes collected in 2007. The top 5%, paid 60.63%, the top 10% paid 71.22%, the top 25% paid 86.59%, and the top 50% paid 97.11% of ALL federal Income taxes collected. (data from the IRS)So it is fair to say that the Rich do pay their fair share of taxes.

But, if you are wealthy, AND a business owner, as most of the high wage earners are, the money you earn allows you to build your business either, bigger, or more diverse, or put it in a more successful position, which allows you to hire more workers, all of whom pay taxes of some kind, thereby helping the economy. Look at it this way; Bill Gates has a NET WORTH of somewhere around $60,000,000,000.00, That is not cash but shares of microsoft. If he were to liquidate everything, and give it out to everyone under the poverty line in America, each person would receive about $2,800.00, which they would most likely spend. The financial engine that is Microsoft would be gone. 30,000 workers would be out of work. those tax dollars lost. His wealth, and its resultant use, is more beneficial to the country than any populist distribution of it could achieve.

As to your assertion that the wealthy, by investing their money, simply inflate the cost of goods and commodities, to make a profit, that is absurd. The market effectively prices goods and commodities daily in reaction to an incredible variety of news and information from the world over. Example; there is a freeze in the mountains of colombia this week, coffee prices in NY are going up.

There is a new find of copper in the Andes, copper prices and all the resultant products prices are going down over time. If a wealthy person, to use your example buys a property to rent out, and make money. They have invested their money in a property that they can rent our for more than their mortgage payment, resulting in a positive cash flow(which generates tax revenue to the government) and presumably someone rents it because they feel it is a worthwile home for the price, everybody wins! The renter gets a space that they use for a price they are willing to pay, the owner gets rent money which he values mroe than the space, even the government makes their cut off the transaction.

That is basic economics. It is not one person or class of people taking advantage of another, it is transactions by mutual trade to mutual benefit. At least that is how my economics professor taught me.

Comments welcome. And yes, politically I am more of a Constitutional Libertarian, and that is why I predominantly believe that the government can only screw things up by controlling an economy.

To which Broccoli reponds much like Bobbolink would: 

ChoppinBroccoli (393 posts)      Mon Feb-22-10 01:58 PM
Response to Reply #20
22. Here's What You And All Supply-Siders Fail To Understand
 Edited on Mon Feb-22-10 02:03 PM by ChoppinBroccoli
And I find myself saying this more and more often these days. EVERYONE IS NOT LIKE YOU!!! Everybody that espouses Libertarianism has that fatal flaw. They can't imagine a scenario where someone isn't exactly like themselves. They can't imagine a person who has bad circumstances thrust upon him through no wrongdoing of his own. They can't imagine a person who flat-out isn't ABLE to obey their mantra, and "pull himself up by his bootstraps."

And then AllentownJake defends his lengthy screed with rapier wit and stunning repartee: 

AllentownJake  (1000+ posts)        Mon Feb-22-10 02:00 PM
Response to Reply #20
23. Lol
 So the Paultards came for a visit.

Congrats on your CPAC victory.

[djones520]

ChoppinBroccoli (393 posts)      Mon Feb-22-10 01:58 PM
Response to Reply #20
22. Here's What You And All Supply-Siders Fail To Understand
 Edited on Mon Feb-22-10 02:03 PM by ChoppinBroccoli
And I find myself saying this more and more often these days. EVERYONE IS NOT LIKE YOU!!! Everybody that espouses Libertarianism has that fatal flaw. They can't imagine a scenario where someone isn't exactly like themselves. They can't imagine a person who has bad circumstances thrust upon him through no wrongdoing of his own. They can't imagine a person who flat-out isn't ABLE to obey their mantra, and "pull himself up by his bootstraps."

And so the many must suffer for that few?  Mantra of the DUmmie.

[Peter3_1]

Where do the primitives get their ideas? Clearly not based in THIS Universe! Trickle down is a poor choice of wording, it is, instead, a MULTIPICATION of money! The same earned money can be passed from person to person to pay what each owes the other for labor performed! As we used to put on overdue bills "Please pay me, so I can pay them, and then they can pay you!".  There is NO other way that works, no, not one.

[The Village Idiot]

How many millionaires did Microsoft create again?

[Chris_]

And so the many must suffer for that few?  Mantra of the DUmmie.

Thus arises the case for "economic Darwinism"........

doc

[jukin]

The longest economic expansion in our history was a complete and absolute failure..oh and the USSR won the cold war.

Liberalism is a mental disease.

[BEG]

ChoppinBroccoli (393 posts)      Mon Feb-22-10 01:58 PM
Response to Reply #20
22. Here's What You And All Supply-Siders Fail To Understand
 Edited on Mon Feb-22-10 02:03 PM by ChoppinBroccoli
And I find myself saying this more and more often these days. EVERYONE IS NOT LIKE YOU!!! Everybody that espouses Libertarianism has that fatal flaw. They can't imagine a scenario where someone isn't exactly like themselves. They can't imagine a person who has bad circumstances thrust upon him through no wrongdoing of his own. They can't imagine a person who flat-out isn't ABLE to obey their mantra, and "pull himself up by his bootstraps."

They sell the human race short, a great majority of people can "pull themselves up by their bootstraps".  The ones who truly can't (and they are few compared to how many DU'ers would like to believe there are) deserve help.  What does that have to do with what ConstitutionalLib said anyway?   

[Texacon]

laughingliberal  (1000+ posts)     

Mon Feb-22-10 05:00 AM
Response to Original message

1. That pretty well sums it up. 
 Any chance of having the wealthy pay their share in taxes? 

I don't understand how liberals work.  When taxes are broken down by percentages (and this isn't even a good analogy because taxes go UP in percentage for the rich) anyway, when taxes are broken down by percentages the wealthy are not paying their 'Fair Share'.

When speeding tickets are issued in other countries and they charge the person driving a percentage of their income for the fine the liberals CHEER the 'fairness' of it ....

What am I missing?

KC

[Texacon]

ChoppinBroccoli (393 posts)     

Mon Feb-22-10 01:58 PM
Response to Reply #20

22. Here's What You And All Supply-Siders Fail To Understand
 Edited on Mon Feb-22-10 02:03 PM by ChoppinBroccoli
And I find myself saying this more and more often these days. EVERYONE IS NOT LIKE YOU!!! Everybody that espouses Libertarianism has that fatal flaw. They can't imagine a scenario where someone isn't exactly like themselves. They can't imagine a person who has bad circumstances thrust upon him through no wrongdoing of his own. They can't imagine a person who flat-out isn't ABLE to obey their mantra, and "pull himself up by his bootstraps."

And using this as a response to the other post .... What the hell?  This makes no sense at all if it is a reply to the libertarian.

It doesn't matter if people are like you or not for the market to work so what the hell does this mean??

KC

[Texacon]

Where do the primitives get their ideas? Clearly not based in THIS Universe! Trickle down is a poor choice of wording, it is, instead, a MULTIPICATION of money! The same earned money can be passed from person to person to pay what each owes the other for labor performed! As we used to put on overdue bills "Please pay me, so I can pay them, and then they can pay you!".  There is NO other way that works, no, not one.

Here's how that works for DUmmies;

It is the month of August on the shores of the  Black Sea. It is raining, and the little town looks totally deserted.  It is tough times, everybody is in debt, and everybody lives on credit.

Suddenly, a rich tourist comes to town.

He enters the only hotel, lays a 100 Euro note on the reception counter, and goes to inspect the rooms upstairs to pick one.

The hotel proprietor takes the 100 Euro note and runs to pay his debt to the butcher.

The Butcher takes the 100 Euro note and runs to pay his debt to the pig farmer.

The pig farmer takes the 100 Euro note and runs to pay his debt to the supplier of his feed and fuel.

The supplier of feed and fuel takes the 100 Euro note and runs to pay his debt to the town's prostitute that in these hard times, gave her "services" on credit.

The hooker runs to the hotel, and pays off her debt with the 100 Euro note to the hotel proprietor to pay for the rooms that she rented when she brought her clients there.

The hotel proprietor then lays the 100 Euro note back on the counter so that the rich tourist will not suspect anything.

At that moment, the rich tourist comes down after inspecting the rooms, and takes his 100 Euro note, after saying that he did not like any of the rooms, and leaves town.

No one earned anything. However, the whole town is now without debt, and looks to the future with a lot of optimism .

And that, ladies and gentlemen, is how the US Government is doing business today.

There ya go.

KC

[USA4ME]

ConstitutionalLib

You make some pretty fantastic assumptions that just aren't factual...

That's the first thing I noticed as I was reading his nonsense.  He builds some strawman and then tears it down.  Not worth consideration.

.

[Mike220]

ConLib eats granite in 3...

[thundley4]

If the tax code allows me to keep a little more of my money, that allows me more to invest in my company. That means I can purchase more productive equipment, or in last years case, I bought a tile and grout attachment that allowed me to branch out. It also allows me to hire people, which in turn expands the tax base, resulting in higher tax revenues. This is why when JFK cut taxes, and when Reagan cuts taxes, and even when the hated W. cut taxes actual money collected by the treasuries in ensuing years increased.

You are right wealthy(and I am not one) do not give money away for free, nor are they supposed to, BUT, it is a fact, that the top 1% of wage earners pay 40.42% of the Federal Income Taxes collected in 2007. The top 5%, paid 60.63%, the top 10% paid 71.22%, the top 25% paid 86.59%, and the top 50% paid 97.11% of ALL federal Income taxes collected. (data from the IRS)So it is fair to say that the Rich do pay their fair share of taxes.

Not one of the DUmmies provided any argument against these salient points.

[SSG Snuggle Bunny]

ChoppinBroccoli (393 posts)      Mon Feb-22-10 01:58 PM
Response to Reply #20
22. Here's What You And All Supply-Siders Fail To Understand
 Edited on Mon Feb-22-10 02:03 PM by ChoppinBroccoli
And I find myself saying this more and more often these days. EVERYONE IS NOT LIKE YOU!!! Everybody that espouses Libertarianism has that fatal flaw. They can't imagine a scenario where someone isn't exactly like themselves. They can't imagine a person who has bad circumstances thrust upon him through no wrongdoing of his own. They can't imagine a person who flat-out isn't ABLE to obey their mantra, and "pull himself up by his bootstraps."

And people laugh when I say the 13th amendment should be repealed.