DUers who are versed in economics: educate me

[greenbird]

Is there an real-life example of trickle-down economics ever working?

[Junkdrawer]

1. Sure. People get pissed on all the time....

Key Question: Works for WHOM???

[greenbird]

5. Working for the people at the bottom

The way people who defend it claim it will. I know it works for the ones at the top. I'm just trying to educate myself and also respond to a talking point of a right-wing acquaintance. I'd like to challenge him to name one instance where trickle-down economics has benefitted everyone in a society.

[Junkdrawer]

6. Oh, in that case...nah....

It's just a thinly disguised way of saying "Let them eat cake!". VERY thinly disguised.

[izquierdista]

10. Ask him how much trickle he got

Maybe that $300 tax cut of Dubya's? You know, the one that paid for a month's worth of gas.

[AnneD]

2. The silence .....

is deafening. Try the Stock Watch Thread.SWT

[BlooInBloo]

3. Not to my knowledge. (assuming normal-ish meaning of "working".)

[Peacetrain]

4. ~crickets~

well if you like pyramid schemes it works..

[YOY]

7. The assumption is that it creates jobs by allowing more wealthy more money to invest.

It looks great on paper and even sounds logical. Often the truly wealthy will indeed take their money and use it to create more wealth. One would assume that this creates both jobs and allow them to spend more on luxuries and boost a "retail economy". It doesn't work that way though. Not in the way that they intended, but the wealthy do generally keep their wealth although they take a hit too when the bottom falls out...but if they are old money they are smart and never fall too far.

I find the true shortcoming is in the global free-trade economy that the world has settled into. Indeed they invest. Indeed jobs are created but they are created abroad (or moved) for the sake of higher short-term profit margins at the cost of shrinking the national working middle class into a retail working class and eventually shoveling them into obscurity and poverty as these jobs offer little by the way of anything more than bare survivability. As the middle class (and even the upper class) shrink so does the notion of a "retail economy". Eventually, all that is left is a surviving (and shrinking) upper class and elite group that still has the money invested in enough basics abroad.

Bottom line: It allows for a short term high margin of profitability followed by massive loss. Any investor will tell you that as profitability increases so does the Beta (the risk factor). It would seem that people would avoid the risk but the trend and culture of a "I want it now" culture regardless forces massive amounts of investment into the risky investment. We are a short termed people. Think of it as gradually selling pieces of your legs to fund fantastic plastic surgery.

The key here is sustainability. Trickle-down works in the short run but is NOT sustainable. Outsourcing when done to a small level and ethically is not a bad thing...but these two things were done to none of the aforementioned. Usually industrial outsourcing does not create any kind of financial development for the masses of workers. It does create some wealth for a select few in the countries outsources too, but these too take a hit when there is no middle class to consume the goods they produce.

I often wonder if it could be done in a single and protected national case where investments were almost exclusivly to be done locally and jobs created were local and protected by unions to make sure workers do not get forced to compete with low cost domestic labor that shrink their spending power as consumers and as supposedly "upwardly mobile investors" themselves. Totally pie in the sky at this point.

I dunno, I'm more of a Project Manager type MBA, but there is a reason why I always distrusted the "investment bank weasels" and the "marketing models" in business school.

[alsame]

8. Thank you, this is a great explanation. eom

[BlooInBloo]

12. Keep in mind that it only sounds logical if you don't think about it.

[YOY]

13. and/or are totally ignorant to globalization.

and most Amerians truly think the wealthy investors are investing in American jobs and there are actually a few rubes out there who think working retail is sustainable on personal economic levels.

Sometimes you have to spell it out for them on how to live on 2 jobs and 70 hours a week at 7$ an hour with little or no bennies and a kid or two to feed.

Then again, now even retail is drying up...of course "conservatives" blame everyone but themselves.

[BlooInBloo]

14. Moral: Anaphoric chains don't jump posts.

[greenbird]

15. Thank you YOY

That's what I'm looking for.

[Junkdrawer]

16. Add to that the Military costs of insuring that said foreign investments aren't "nationalized"...

and the opportunity costs of employing "The Best and the Brightest" designing weapons and not the next generation of sustainable technology.

[pampango]

9. Not sure how you could prove that it ever worked.

Switzerland is a prosperous country whose development has been dominated by the banking and finance industry and several aristocratic families. But I don't know how anyone could prove that their prosperity resulted from "trickle-down" economics rather some other force of economics.

If "trickle-down" ever worked anywhere, it would have to be in a country with an internationally respected banking sector. In most countries, certainly in the Third World, when rich folks get richer, they send most of the money to banks in other countries (Switzerland, England, the US, Japan), to either hide it from local authorities or because they don't trust the integrity of the local banking system. This removes the new wealth from their domestic economy, so that there is not even the fiction of any trickle-down effect.

Some small oil-rich countries might qualify, since their populace benefits from the oil wealth of the king or prince or whatever. More accurately that situation "buying off" the populace, in order to maintain political control, rather than "trickle-down" economics.

If trickle-down economics ever worked anywhere, it is pretty slim pickings.

[Captain Hilts]

11. JFK's "a rising tide lifts all boats" tax cuts. nt