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tomandlu

Trickle Down

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Trickle down economics.

Is a lie.

It would only work if the people at the very top were so rich they could employ the average person to be bits of furniture dotted around their extensive range of property! :lol:

Actually, that is kind of working.....

But, isn't that just slavery?

Trickle down economics = slavery for 99.9%

It's a lie told to adults, like santa to kids.

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It would only work if the people at the very top were so rich they could employ the average person to be bits of furniture dotted around their extensive range of property! :lol:

My take on it would be that TD is an illusion/lie based on a fantasy about how rich people spend their money, as though they behaved like Tony Stark or a working-class lottery-winner. I've said before on another thread, rich people buying yachts isn't the problem - that's genuine TD. If all rich people did with their money was buy expensive toys, it would be fine(ish). The trouble is that they use their money to corner assets that the rest of us require, and then extract payment from us for access to those resources. That's not trickle-down, that's trickle-up...

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My take on it would be that TD is an illusion/lie based on a fantasy about how rich people spend their money, as though they behaved like Tony Stark or a working-class lottery-winner. I've said before on another thread, rich people buying yachts isn't the problem - that's genuine TD. If all rich people did with their money was buy expensive toys, it would be fine(ish). The trouble is that they use their money to corner assets that the rest of us require, and then extract payment from us for access to those resources. That's not trickle-down, that's trickle-up...

Yes.

Past a certain level, any extra cash people get ends up in assets (be that property, paintings, classic cars, etc). And since these are generally scarce, non-manufactured items, they just end up competing with each other to buy them.

It's not dissimilar to the problem India has, where most of their economic surplus is used to buy gold which is then hidden.

And these people are way past having enough to live in comfort for the rest of their lives on. Money is purely about keeping score.

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Past a certain level, any extra cash people get ends up in assets (be that property, paintings, classic cars, etc). And since these are generally scarce, non-manufactured items, they just end up competing with each other to buy them.

The thing is, that's what they don't do enough of IMHO (provided we're talking about rich people's property, rather than rent-seeking property). Okay, you don't get a huge TD from them buying stuff that already exists (expensive paintings and classic cars), but it's a reasonably harmless activity.

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The thing is, that's what they don't do enough of IMHO (provided we're talking about rich people's property, rather than rent-seeking property). Okay, you don't get a huge TD from them buying stuff that already exists (expensive paintings and classic cars), but it's a reasonably harmless activity.

Well..

The problem is that in order to give these people more money - which is the first step of trickle down, after all - we have to cut taxes and/or wages. Now, taxes generally go into wither wages for the relatively poor (bottom 90%), or transfer payments to the same; as do wages. If that extra income at the top went into new investment in productive capacity, then the theory might work; if that extra income was spent into the general economy on consumer goods, it would be OK. However, if it is effectively 'buried' in bidding up property/scarce items, it's actually taken out of the economy; that's an economic negative.

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Well..

The problem is that in order to give these people more money - which is the first step of trickle down, after all - we have to cut taxes and/or wages. Now, taxes generally go into wither wages for the relatively poor (bottom 90%), or transfer payments to the same; as do wages. If that extra income at the top went into new investment in productive capacity, then the theory might work; if that extra income was spent into the general economy on consumer goods, it would be OK. However, if it is effectively 'buried' in bidding up property/scarce items, it's actually taken out of the economy; that's an economic negative.

Well, the money goes somewhere. Either they're just buying and selling the same things over and over again (mildly deflationary), or the money they spend ends up with someone who does something else with it. My father loved surrealism and modern art in the 40s and 50s, and bought stuff by Magritte, Schwitters and Klee, as well as many others, for a few hundred pounds each. He sold them over the years (too early in most cases), and spent the money having a lot of fun. Now those pictures are either in public galleries or belong to private collectors who buy and sell, essentially between each other. I'd largely classify such spending as neutral in terms of TD/TU.

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Well, the money goes somewhere. Either they're just buying and selling the same things over and over again (mildly deflationary), or the money they spend ends up with someone who does something else with it. My father loved surrealism and modern art in the 40s and 50s, and bought stuff by Magritte, Schwitters and Klee, as well as many others, for a few hundred pounds each. He sold them over the years (too early in most cases), and spent the money having a lot of fun. Now those pictures are either in public galleries or belong to private collectors who buy and sell, essentially between each other. I'd largely classify such spending as neutral in terms of TD/TU.

Look at it like this:

I own a factory. To start with, taxation on profits or other money coming out of the factory is high; hence my incentive is to reinvest profits and grow the factory/expand.

Now, the supply siders come along. Suddenly, I have the option of taking money out of the business, which I can now spend on bidding up property prices/art prices/etc.

In theory this is meant to motivate people in business, because they can get more personal wealth out of it (this is probably true at some tax rates as well); the paradox is that it can encourage the opposite.

Other supply-side measures can include reducing wages; again this can have a counter-intuitive effect because it removes incentives to automate, and long term, automation is the reason for economic growth.

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Trickle down would be perfectly fine, IF, the thing that trickled up was CAPITAL.

What trickles up is the DEBT from the lower ranks, the CAPITAL/Wealth that goes up doesnt actually exist...if it did, then a collapse in the banking system would be more or less irrelevent to these monied classes.

The banking system, where these excess promises beyond wealth backed capital, is the source of the ruin...it trades on the money excesses, creates assets based on nothing at all other than promises and securitises the results in further piles of paper that all depend on the work of a few poor borrowers.

In other words, the future efforts of most are the very things that the Theory claims will trickle back down to the originators.indeed, the future efforts were theirs in the first place.

Edited by Bloo Loo

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In theory this is meant to motivate people in business, because they can get more personal wealth out of it (this is probably true at some tax rates as well); the paradox is that it can encourage the opposite.

You're almost conceding my point. It requires other dysfunctions in the system before it becomes a problem. In the end, what's the point of becoming rich if you don't get to buy stuff? Scrooge was not a happy man.

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Trickle down would be perfectly fine, IF, the thing that trickled up was CAPITAL.

What trickles up is the DEBT from the lower ranks

Very true (although a slightly separate issue).

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Very true (although a slightly separate issue).

There can be no separate issues in economics, the thing as a whole is a great monster of action and reaction.

The fact that what is supposed to trickle down is the very future labour of those supposed to benefit makes the idea a big lie...specially when 99% of it goes to create piles of paper in bank vaults reflected on the final peice of paper....the balance sheet....and if you want to maintain your balance sheet, then trickle down ( out of the bottom line) is clearly nonsense.

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You're almost conceding my point. It requires other dysfunctions in the system before it becomes a problem. In the end, what's the point of becoming rich if you don't get to buy stuff? Scrooge was not a happy man.

The problem is when you take it too far.

Indeed, Scrooge shows the problem: he is sitting on his moneybags, collecting rents and so effectively removing money from circulation.

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There can be no separate issues in economics, the thing as a whole is a great monster of action and reaction.

The fact that what is supposed to trickle down is the very future labour of those supposed to benefit makes the idea a big lie...specially when 99% of it goes to create piles of paper in bank vaults reflected on the final peice of paper....the balance sheet....and if you want to maintain your balance sheet, then trickle down ( out of the bottom line) is clearly nonsense.

Largely agree, but I'd phrase it differently as part of the notion that the rich are buying 'bad' things - in this case, our debt (with their leverage and access).

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One of our favorite graphs:

15.jpg

And the exponential rise of debt to cover Public and individual income shortfalls prove just how demented and flawed trickle down economics are.

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One of our favorite graphs:

15.jpg

And the exponential rise of debt to cover Public and individual income shortfalls prove just how demented and flawed trickle down economics are.

How anyone can look at that graph and not shiver is beyond me. Basically, they're paying us less and selling us more debt. Win win for them (until they lose).

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How anyone can look at that graph and not shiver is beyond me. Basically, they're paying us less and selling us more debt. Win win for them (until they lose).

It is the key to why "they" fight deflation....deflation sees the value of a persons work increase as the productivity gains means the things he buys with his wages become lower priced.

This is true trickle down, in that wealth generation becomes easier to do for the masses....of course, sucking up that wealth with financialisation of the big expenditures, cars, houses and other services, means the prices rise as the peeps are fed the line that rising prices are good.

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It is the key to why "they" fight deflation....deflation sees the value of a persons work increase as the productivity gains means the things he buys with his wages become lower priced.

This is true trickle down, in that wealth generation becomes easier to do for the masses....of course, sucking up that wealth with financialisation of the big expenditures, cars, houses and other services, means the prices rise as the peeps are fed the line that rising prices are good.

The average worker may not have reaped the rewards of this productivity miracle but the 'Friends of Boris Johnson' certainly have.

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....by failing to allow a fair trickle down keeping the best at the top for selfish own use only means they are 'shooting themselves in the foot' so to speak...less money to spend for the majority, less wages for more work means people will stop buying the stuff they want people to buy meaning profits will fall and resentments will rise. ;)

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....by failing to allow a fair trickle down keeping the best at the top for selfish own use only means they are 'shooting themselves in the foot' so to speak...less money to spend for the majority, less wages for more work means people will stop buying the stuff they want people to buy meaning profits will fall and resentments will rise. ;)

they keep all this cash where?

Ah yes, in the banking system....of course, the banks dont need this money, they have to pay for it...why do so when they can cash in valueless assets at the great cash machine in the London Street Scene?

Of course, any cash they do have in the banks will be trickled down to fresh borrowers....sadly, into property, producing nothing whatsoever. Trickle down causes HPI....which causes not a trickle but stream back up.

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they keep all this cash where?

Ah yes, in the banking system....of course, the banks dont need this money, they have to pay for it...why do so when they can cash in valueless assets at the great cash machine in the London Street Scene?

Of course, any cash they do have in the banks will be trickled down to fresh borrowers....sadly, into property, producing nothing whatsoever. Trickle down causes HPI....which causes not a trickle but stream back up.

Trickle down of debt is not the same as a trickle down of credit. ;)

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