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Isn't it curious how when America faced a real financial crisis that the very people who authored "trickle down economics" actually enacted a diametrically opposite approach? Instead of thinking that lavishing more riches on the already rich would somehow "trickle down" to the masses, when it really mattered, they created a "stimulus package" that put money into the hands of the American people knowing that it would, in fact, "trickle up".

It's funny how a true crisis betrayed conservatives' real understanding of economic policy. Of course, operating government almost exclusively in their personal interest has been the typically modus operandi of the conservative elite. Financial deregulation and the general "laissez faire" approach to business that engorged the rich but in so doing almost destroyed the American economy is a direct by-product of their approach. When that almost bankrupted our nation, however, they were forced to reject their traditional self-serving pandering and do what they knew would have a real effect.

Going forward, instead of the Supply Side measures for the wealthy that they cherish, this current episode, hopefully, taught them an important lesson. Economic policy with a more populist objective is both the most economically sound, and the correct, thing to do. It helps both the masses of the American people and the economy in far more fundamental ways than just focusing on the very few at the top - and then theorizing that the rest of America will somehow benefit from their "droppings". Even if your interest is only with the very rich, as the recent Bush stimulus program demonstrates, populist economic measures create the economic groundswell that ultimately, of course, 'trickles up' through the economy to business owners and shareholders.

The Bush stimulus package tells the story in a bold and clear way: trickle down economics is a sham (btw, beware of the "Fair Tax" - TDE's philosophical offspring). The fact that the administration is considering yet another round of stimulus checks underscores this point. Let's finally put the trickle down approach to rest and adopt a more honest and populist approach to both economics and politics in the future.

© MBM

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I was reflecting recently on how much of a sham supply-side economics really is. I thought about how, during that quintessentially "American" period of the 1950s -- the "Leave It To Beaver," wholesome apple-pie era of huge suburban growth, McCarthyism, and extended economic expansion -- the top marginal income tax rate was a staggering 91 PERCENT!!! And the government poured that money into infrastructure and social programs. The growth of the suburbs, and the access that working & middle class whites suddenly had to the suburbs, was the result of tremendous federal government spending. But somehow, the economy was surging anyway, and somehow, not even Senator McCarthy was calling it a "socialist" system. 19

Yet, imagine if Obama were to propose going back to that system today! 20

That leads me to what I see as the fundamental fallacy of supply side economics. Big business strives for profit. That is their sole purpose, and indeed, the whole point of trickle down economics is that the drive for profit should be encouraged and unrestrained, because the more profit they make, the more trickles down to the masses, in the form of jobs, higher salaries, and other benefits.

But what is profit? It's revenue minus expenses. So to maximize profit, you want to increase revenue while reducing expenses.

However, what is trickling down? The trickle IS AN EXPENSE. Whether it's higher salaries, better health benefits, or more employees, the trickle is an expense. So the very thing that trickle-down economics claims will result under their system -- the trickle -- is exactly what the wealthy want LESS of. Allowing them the freedom to do whatever they want without paying their share of taxes is allowing them to fight to prevent the very thing we're told that freedom will generate. It just doesn't follow.

So it's illogical to think you can use a hands-off approach, to encourage companies to profit more, while hoping that they will voluntarily increase their expenses. Nothing in supply side economics provides for the encouragement of an increase in expenses. The more they get to keep for themselves at the front end, the more they will endeavor to keep for themselves at the back end. This is why less regulation leads to more jobs being shipped overseas, more automation, and a much greater gap between rich and poor. Any system that honestly seeks growth that's beneficial to both business and the people -- and to society at large -- must recognize the need for balance and fairness.
You make great points. The disincentive for companies/shareholders to invest in their employees in various ways is why I fundamentally believe that in this hyper-capitalist/consumerist society that government should guarantee a minimum floor beneath which it allows no citizens to fall. This would act as some measure of protection to Americans against unmitigated greed.
You know though,

Regardless of how much the government doesn't do, it is the sum of the "sole" individuals that make true lasting economic change.

We can't wait for the government to do what needs to be done, but instead, we each have to make the "significant contributions" that will fix the financial mess this country is in.

We hit recession a long time ago...now we need to do whatever it takes to reach progression right now.

What would you suggest?

"WIAW!"
quote:
Originally posted by ShayaButHer:

What would you suggest?



Well, if we are to privatize profit, then privatize lost.

When financial inst./corporations are aware that there aren't much of a 'safety net' to fall on, if at all, many would at least think twice before partaking in risky endeavors.

If we are going to ask the individual to take personal responsibility and be held accountible for what they do, then we should ask nothing less of our govt. the corporations and banks/financial inst's.

Capitalism can not exist alone. It never has. If it had, we would've had our version of a french revolution (of 1848) a long time ago.

Are we all in this together, or is every woman and man for him/herselves?
Isn't it curious how when America faced a real financial crisis that the very people who authored "trickle down economics" actually enacted a diametrically opposite approach? Instead of thinking that lavishing more riches on the already rich would somehow "trickle down" to the masses, when it really mattered, they created a "stimulus package" that put money into the hands of the American people knowing that it would, in fact, "trickle up".---MBM

The initial response was in character, 'Give me 700MMM, and don't bother me.'

The 'bailout' was about giving money to those with money, and who caused the 'meltdown'.

Aid to the people didn't come until the people forced the members of congress to act on their behalf.

You may be aware that 'Bush I' had a term for Reagan's 'trickle-down' remedy.

'Bush I' called it, 'Voodoo Economics'.


PEACE

Jim Chester

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