Trickle Down Theory Is Demonstrably And Unarguably Wrong

[Guest The Relaxation Suite]

Trickle down theory has been proven as demonstrably and unarguably wrong. There is no argument that any person can make that will ever show trickle down theory works for the general population. The real question is did those who proposed and initiated it in the mid 20th Century, and accelerate it in the early 1980s, know it was nothing more a cynical attempt to extort the plebs' riches in the biggest looting of public wealth since the Enclosure Acts of the 18th and 19th Centuries, or did they genuinely believe it would make the plebeian classes richer?

From 1966 to 2011 the bottom 90% of Americans, i.e. almost the entire population, saw their income grow by $59 on average, adjusted for inflation. The top 10% of Americans in the same time period saw their incomes grow by an average of $116,071. The top 1% saw an income increase in the same period of $366,623. You don't have to be a socialist or liberal to be disgusted by what is happening, in fact it helps if you're not blinded by progressive theory.

I submit to the forum that these economics are deliberate, financially reckless, morally reprehensible, and will single-handedly destroy the West if not reversed as soon as possible, because they will lead us directly into war.

Edited August 9, 2014 by Lord of the Pies

[Guest The Relaxation Suite]

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Edited August 9, 2014 by Lord of the Pies

[Mikhail Liebenstein]

How about we test trickle up theory for the next 100 years.

Reduce tax on employment to 10%, keep corporation tax where it is, create wealth taxes at 10% of total assets, and fund all private individual borrowing with QE direct from the treasury at 0.5% interest, with banks being forced to borrow at 3%.

Let's see how the bankers do in that scenario.

[little fish]

The fat man scoffing his 22 course dinner, the more he eats the more crumbs we get. Is that how it's supposed to work?

[Maynardgravy]

Boris wants more jam.

[steve99]

Its been known about for most of the last 30 years when it became a popular mantra. The Murdoch press et al has been instrumental in promoting to the working classes (thats anyone who has to work and take out a mortgage or pay rent) that the more we pay the rich the more the working people will get, Hence many vote for such nonsense. We are almost at the point of maximum acheivement re this b&*(sh*&t whereby the money just revolves around at the top (like vultures) and does little for the benefit of the country or its vast majority citizens. ie A 3rd world structure to our economy where the owners of capital have it all, the rest run around like idiots just to survive.

[porca misèria]

It's easy to make spurious and idiotic claims like the headline of this thread.

Meanwhile, we all benefit from trickle-down. Messrs Hewlett and Packard got rich; the trickle-down is that the laptop from which I'm posting cost me just a few hours pay. You can multiply that by thousands of other mod-cons we can all afford today.

Mind you, maybe the non-trickle is the most important. The absence of raw sewage in our streets is, economically speaking, trickle-down from people like (most famously) Bazalgette getting ... erm ... stinking rich.

[Bland Unsight]

I've got to say that I am with Robert Skidelsky on this, (can't remember where he said it, might have been R4 Thinking out loud reviewing the book Never let a good crisis go to waste - BTW virtually unreadable IMPO so avoid), when he was asked if any change would follow from the present crisis and he argued that none would come, because it wasn't severe enough. These graphs and numbers are horrific, but the truth is that most of the people who have the intellect to understand them are on the 'right' side of the trade and are not agitating for change. For the people who don't understand them aren't interested and are on the wrong side of the trade, but you'd never know it; they've spent thirty years bidding up house prices and screwing their children out of a financial security, they've watched 2008 float past and they barely give a damn.

It seems to me that trickledown is not a theory, it is an after the fact rationalisation, storytelling if you will, to deflect awareness and criticism of the consequences of changes to the deeper structure of the economy - i.e. Reagan wasn't enthralled by a theory, he was agreeable to the machinations of various economic interests and willing to spout nonsense about why the interests he favoured should be favoured by everyone else and why favouring those interest would be in everyone's interest.

It was always moonshine. Contesting its veracity is redundant.

The locus of the problem is not why idiots could be tempted into believing it, but how it came to pass that the organs of the civil society (politicians, press, lobby groups, think tanks) became sufficiently consistent in promulgating it that it became part of that deep water of unquestioned beliefs that we absorb as we transition from being children, who know nothing, to adults who operate according to the things that we believe to be the case.

It's McLuhan 101 - It's the medium, not the message.

What changed so that the individual lost ground as an atom of legal significance and economic meaning and became closer again to the fungible serf - adequate to provide turnover on the bank P&L but not really the focus of policy...

Answers on a postcard.

I think that it was the allocation the power of uncontrolled money creation to private banks. For my money, everything follows from that.

Edited August 10, 2014 by bland unsight

[Bland Unsight]

It's easy to make spurious and idiotic claims like the headline of this thread.

Meanwhile, we all benefit from trickle-down. Messrs Hewlett and Packard got rich; the trickle-down is that the laptop from which I'm posting cost me just a few hours pay. You can multiply that by thousands of other mod-cons we can all afford today.

Mind you, maybe the non-trickle is the most important. The absence of raw sewage in our streets is, economically speaking, trickle-down from people like (most famously) Bazalgette getting ... erm ... stinking rich.

And it is easy to spout boorish and simplistic counter-arguments, informed by a disposition to be contrarian and misplaced confidence in one's mastery of everything that could be thought and everything that could be known.

I suppose that this argument is made in earnest - but what is its structure? You've got a cheap laptop so the fact that someone twenty years behind you will not own a home till they are forty and will work to they are seventy retiring into penury is all gravy. Is it impossible that we could have cheap manufactured goods and greater, rather than diminishing income equality?

As to raw sewage...

I'd posit that the power elite outside Russian post-1914 give up a little sugar because a little bit less of a lot is better than being beaten to a bloody pulp by a mob.

As Mark Blyth puts it so eloquently: "Democracy is asset insurance for the rich"

Edited August 10, 2014 by bland unsight

[Guest The Relaxation Suite]

the trickle-down is that the laptop from which I'm posting cost me just a few hours pay.

Do you attribute the cost of your laptop to a discredited economic theory, or to the fact it was made by slave labour in a Chinese gulag?

[Guest The Relaxation Suite]

For the people who don't understand them aren't interested and are on the wrong side of the trade, but you'd never know it; they've spent thirty years bidding up house prices and screwing their children out of a financial security, they've watched 2008 float past and they barely give a damn

Creating the illusion of wealth among the general population via easy credit and cheap consumables thanks to exploitation of undeveloped/authoritarian countries has been integral to the success of trickle down theory, in my opinion. I'm no revolutionary by the way. I think the problems created by trickle-down could be reversed by the right or left of modern politics. Thanks for the Blyth link BTW.

I add in edit by the way that if you look at the NYT graph in my first post, you see they have drawn the line at 1979/1980. They have political reasons for this, but if you look closely the real disparity starts in 1972. And what happened in 1971, Mr Nixon?

Edited August 10, 2014 by Lord of the Pies

[Bill D'arblay]

I'm no revolutionary by the way. I think the problems created by trickle-down could be reversed by the right or left of modern politics.

However the Elites are afraid of revolution. Hence routinely arming Coppers and buying in watercannons.

It won't help them though. I, for one, will gladly help with the guillotines and nooses.

[porca misèria]

Do you attribute the cost of your laptop to a discredited economic theory, or to the fact it was made by slave labour in a Chinese gulag?

No. It's a product of a system of competitive pressures that drive innovation and efficiency, and benefit everyone involved.

Since you mention it, Chinese factory workers have got richer quicker than anyone, having gone from famine under Mao's enforced 'equality' to global middle-income today. Of course that doesn't mean that all's panglossian, merely that today's system appears to be serving them - as well as their trading partners - a lot better than its alternative experienced in recent times.

[Guest The Relaxation Suite]

No. It's a product of a system of competitive pressures that drive innovation and efficiency, and benefit everyone involved.

Since you mention it, Chinese factory workers have got richer quicker than anyone, having gone from famine under Mao's enforced 'equality' to global middle-income today. Of course that doesn't mean that all's panglossian, merely that today's system appears to be serving them - as well as their trading partners - a lot better than its alternative experienced in recent times.

A lot of the goods manufactured in China are made by criminals in repressive laogai, but even those who get paid get only $1.30 an hour in places like Shenzhen where a 100 sqm apartment costs $250,000. I'm not sure how they benefit from this arrangement. Subtract consumables from exploited economies like this and the West has nothing now. We can't afford land or property, we have stagnating economies, we manufacture nothing of significance except weapons. All of this in 40 years is an impressive achievement, especially as during the same time period the patrician classes of our societies have grown richer beyond even their dreams.

And from our perspective, what good, really, is a cheap laptop? You buy a laptop once every five years or something, so the saving made is tiny. What people really need is a solid growing economy where cash holds its value and savings aren't annihilated. But thanks to the financialisation of the economy this is impossible now. Only bubbles, fraud, smoke, mirrors and lies remain.

Edited August 10, 2014 by Lord of the Pies

[porca misèria]

A lot of the goods manufactured in China are made by criminals in repressive laogai, but even those who get paid get only $1.30 an hour in places like Shenzhen where a 100 sqm apartment costs $250,000. I'm not sure how they benefit from this arrangement. Subtract consumables from exploited economies like this and the West has nothing now. We can't afford land or property, we have stagnating economies, we manufacture nothing of significance except weapons. All of this in 40 years is an impressive achievement, especially as during the same time period the patrician classes of our societies have grown richer beyond even their dreams.

And from our perspective, what good, really, is a cheap laptop? You buy a laptop once every five years or something, so the saving made is tiny. What people really need is a solid growing economy where cash holds its value and savings aren't annihilated. But thanks to the financialisation of the economy this is impossible now. Only bubbles, fraud, smoke, mirrors and lies remain.

I can paraphrase that much more succinctly:

The system is unfair. Workers can't afford a luxury flat.

No argument with that, but I can't support the other half of it:

Therefore we should revert to a system where famine was prevalent amongst the poor, but was fairer because even the Royal Family couldn't heat their home in winter to a level that's considered a human right today.

[alexw]

It's easy to make spurious and idiotic claims like the headline of this thread.

Meanwhile, we all benefit from trickle-down. Messrs Hewlett and Packard got rich; the trickle-down is that the laptop from which I'm posting cost me just a few hours pay. You can multiply that by thousands of other mod-cons we can all afford today.

Mind you, maybe the non-trickle is the most important. The absence of raw sewage in our streets is, economically speaking, trickle-down from people like (most famously) Bazalgette getting ... erm ... stinking rich.

......and this is a load of nonsense.

You are equating trickle-down with technological advancement. They are not the same thing. Technological advancement happens irrespective of trickle-down - we had plenty of technological advancement in the 1950's, 60's, and 70's prior to trickle-down policies being implemented.

So please explain how trickle-down economic policies have benefited the masses, this time without equating trickle-down to technology. Above all show how we are better off than if trickle-down had not occurred. For example take the rate of income growth of the bottom 90% between say 1950-1975 and then compare it to 1975-2010.

[Guest The Relaxation Suite]

I can paraphrase that much more succinctly:

The system is unfair. Workers can't afford a luxury flat.

No argument with that, but I can't support the other half of it:

Therefore we should revert to a system where famine was prevalent amongst the poor, but was fairer because even the Royal Family couldn't heat their home in winter to a level that's considered a human right today.

We don't have to revert to anything. We just need to make our economies stronger in toto, not just for 1% at the top. It makes sense, even for the 1%, frankly. We have to compete with other states. We can't go on like this. China will overtake us.

[Venger]

It's easy to make spurious and idiotic claims like the headline of this thread.

Meanwhile, we all benefit from trickle-down. Messrs Hewlett and Packard got rich; the trickle-down is that the laptop from which I'm posting cost me just a few hours pay. You can multiply that by thousands of other mod-cons we can all afford today.

Mind you, maybe the non-trickle is the most important. The absence of raw sewage in our streets is, economically speaking, trickle-down from people like (most famously) Bazalgette getting ... erm ... stinking rich.

I lean with your position, but it's being tested recently. UK/global QE trillions/HTB etc, and the quest for recovery so central on making houses even more expensive for younger people. Too many speculators, markets supported. Sense that market have also been polluted by protect wealth policies.

You can cite Hewlett and Packard from a start up decades ago ... and Bazalgette from ages ago.... anything in the past 2 decades comes to mind not bubble-boom fed? Not bailed out banks/banker bonuses. A few companies perhaps, where loads of money shed out to executives, but I'm suspicious of their value (especially in social/bio tech), some of their share/value a result of taking others out of market, and question how much trickle down there has been, when looking at remuneration and conditions throughout the company or their overseas divisions.

It's less the 0.01% wealth that bothers me, but the 1%, who I think have had too much protection for their asset/investment valued wealth, denying younger people opportunities to break things up and buy at better value.

[Ah-so]

Using inflation to calculate relative wealth is utterly meaningless because the index basket changes annually. This fact seems to be overlooked by pretty much everyone, including economists.

For today's American, they could buy the contents of the 1996 basket cheaply. Accommodation is fairly cheap. A lower middle class house will be large. Food and petrol are not expensive.

Then there are the gadgets. White goods and tvs cost a fraction of what they did. Then there is international travel, now available for a lot of the 90%. Also phones, cheap music and other gadgets which you will probably dismiss as being the opium of the masses, distributed by The Man to divert our attention from What's Really Happening.

I don't care if you call it trickle down or not - the American 90% is vastly wealthier than the nonsense $59 dollars stated above.

[StainlessSteelCat]

I don't know that trickle down was particularly bought into by the working classes. Most working, and under, class people I knew if they were aware of it at all, greeted it with the dull cynicism that they reserve for most politicians' pronouncements.

The US wages/productivity divergence graphs since the 1970s show that the average person has been personally benefitting less and less from massive increases in productivity, which coupled with increased availability of personal debt, the demolition of the value of labour by globalisation/technology and systemic tax avoidance by the very rich and multinational corporations has created something of a perfect storm in terms of the real share of the wealth enjoyed by the average bloke/women. In most households, it now takes two salaries to enjoy the basics that one person was able to provide for their family in the 1970s.

One can, of course, as the Randians often do - point to individuals in rags to riches stories but they are really no more relevant than fairy tales like Dick Whittington and his cat or lottery winners. They are massively publicised because it's a way of keeping the population in check and striving for something 99.9% of them will never achieve no matter how many motivational tapes they listen to, how hard they work or how much they save or otherwise apply themselves to the opportunities available.

It's not the say that some things haven't improved enormously since the 1970s - but an awful lot of them look like distractions rather than a genuine share of the wealth. Sure, I may be able to buy a tablet for under a day's pay (often bought on credit), where once a television would have cost a month's pay - but are we any happier for it, and are the basics like energy, water, food and housing - in short, the lower elements of Maslow's hierachy of needs - cheaper in real terms? The raison d'être of this forum suggests at least one of them is not. Do most people here feel they are moving towards the self actualisation top of the pyramid? I'm not sure they do.

Edited August 10, 2014 by StainlessSteelCat

[winkie]

First it trickles down to all levels, enough crumbs fall to the bottom that only end up trickling up higher anyway...when the tap is tightened so that the bottom are not getting watered and the next layer up are finding they are now only getting the crumbs there will be greater numbers of people affected, disillusioned,resentful, angry and dissatisfied.....you can't please all people all of the time but you have to see that most people are pleased most of the time.

[porca misèria]

I lean with your position, but it's being tested recently. UK/global QE trillions/HTB etc, and the quest for recovery so central on making houses even more expensive for younger people. Too many speculators, markets supported. Sense that market have also been polluted by protect wealth policies.

You can cite Hewlett and Packard from a start up decades ago ... and Bazalgette from ages ago.... anything in the past 2 decades comes to mind not bubble-boom fed? Not bailed out banks/banker bonuses. A few companies perhaps, where loads of money shed out to executives, but I'm suspicious of their value (especially in social/bio tech), some of their share/value a result of taking others out of market, and question how much trickle down there has been, when looking at remuneration and conditions throughout the company or their overseas divisions.

Your first paragraph is fair, but the culprit isn't the market, it's government meddling and preventing the market functioning. Brown's bailouts were the very antithesis to a market that benefits us all.

And froth on the markets - you suggest social/bio tech valuations - is just white noise in the longer-term picture. Noone compels you to invest in them.

You want an example from our times, take Google. Some people get very rich, the world at large benefits. The one-stop-shop for information that was until recently an epic quest to find.

I could guess at yet-more-recent examples. But I doubt it would be credible to cite here something that's a startup or near-startup, and which may or may not "make it". Maybe something from Elon Musk would serve?

Edited August 10, 2014 by porca misèria

[Mrs Bear]

Maybe I'm not reading the right things, but I haven't heard anyone banging on about trickle down for quite a while - all that guff about how great it was that so many fabulously rich people were choosing to live in London, how wonderful for the rest of us...

I think it is pretty generally accepted now that many incredibly rich people spend very little time, if any, in the properties they have bought, and the only noticeable effect on the rest of us is that their willingness to pay ludicrous prices for places they don't even live in has caused HPI to ripple out, further and further from 'prime', until so many ordinary Londoners can't even afford a one bed ex council flat a half hour train ride away from the centre.

Of course BTLers and property VIs in general probably do still think how great it was and is.

[200p]

Hey, next time you're in Tescos, check out the chiller full of the Ben and Jerries and Hagan Das Ice creams. They are all frozen up! People aren't buying them as they are £4 a pot, and they are forming ice around all the containers. I've not seen that before. Check it out.

Edited August 10, 2014 by 200p

[acer]

It's easy to make spurious and idiotic claims [...]

Mind you, maybe the non-trickle is the most important. The absence of raw sewage in our streets is, economically speaking, trickle-down from people like (most famously) Bazalgette getting ... erm ... stinking rich.

How does this support trickle down? Joseph Bazelguette was employed as Chief Engineer by the Metropolitan Board of Works, and these works were funded by rates raised from property owners. In other words, he was a public sector employee working for the Local Authority.

I agree with your first statement.

Edited August 10, 2014 by acer