The end is nigh; Trying to look at all angles and always concluding that Obama needs to win One-Legged Pants and One Big Slipper
Oct 26

How trickle down economics is bogus, and why it matters in this election

Personal, Politics Add comments

I got a thoughtful response to my last post from a friend that always has some wise words (and has watched this stuff for a lot longer than myself). It was so clear, that I just have to post it:

I share the anxious, apprehensive mood. This country is dying for lack of everything Obama represents. He is hope. He is community and cooperation. He is logic and reasoning and compassion. I just hope the fix is not already in…

Some of what needs to be done is so obvious:

The current Republicans in power can’t stand a strong middle class because it leads to social demands (equalitly, human rights, consumer protection, etc.). But the economic reality is undeniable: if you own a business and somebody gives you money you are not going to use it to hire people, because there is no business case for it—what would those people do?

If, on the other hand, money in the hands of the middle class is increased, they will buy more, which drives up demand. As soon as your business has more sales than it can produce you WILL hire people, because it makes perfect business sense.

Bill Clinton knew this (because he was smart enough to listen to smart people) and he goosed the economy into vigorous growth. He also knew that low national debt leads to a strong dollar and a healthy environment for investing.

At the same time, the campaign people are folks in general are already bailing and starting to point fingers, highlighted in Palin’s ‘going rogue,’ McCain aide says.

This is happening already? Before the election? Most of it doesn’t seem to matter much though, as the election seems to have little to do with McCain and is basically a referendum on Obama.

The ballot may as well say:

Barack Obama? Yes, or No.

My favourite ads are the ones where Barack just talks to us. Like this one. It is all positive, not like the negative crap that I am watching on TV right now.

And then, the Wassup folks (remember those Bud ads? did an amazing video:

A few people have contacted me talking up Reagan and how trickle down worked great for him. Yet, Howard Zinn paints the picture in “A People’s History of the United States” (a book I think every American should read):

While he built up the military (allocations of over a trillion dollars in his first four years in office), Reagan tried to pay for this with cuts in benefits for the poor. There would be $140 billion of cuts in social programs through 1984 and an increase of $181 billion for “defense” in the same period. He also proposed tax cuts of $190 billion (most of this going to the wealthy).

Despite the tax cuts and the military appropriations, Reagan insisted he would still balance the budget because the tax cuts would so stimulate the economy as to generate new revenue. Nobel Prize-winning economist Wassily Leontied remarked dryly: “This is not likely to happen. In fact, I personally guarantee that it will not happen.”

Indeed, Department of Commerce figures showed that periods of lowered corporate taxes (1973-1975, 1979-1981) did not at all show higher capital investment, but a steep drop. The sharpest rise of capital investment (1975-1979) took place when corporate taxes were slightly higher than they had been the preceding five years.

He goes on to discuss the “human consequences” of Reagan’s budget cuts, and they are “deep.” Unemployment grew in his years. People lost health insurance. Oh, and he cut 90% of renewable energy funding. Can a President step up here?

5 Responses to “How trickle down economics is bogus, and why it matters in this election”

  1. Josh Says:

    “The current Republicans in power can’t stand a strong middle class because it leads to social demands (equalitly, human rights, consumer protection, etc.).”

    What? This doesn’t even make a scintilla of sense. Even put aside the incoherent the-other-side-isn’t-just-wrong-but-evil demagoguery, “social demands” are historically the product of middle class insecurity, not prosperity.

    It’s really not comforting to see the level of mindless hero worship around this election cycle.

  2. dion Says:

    I think it makes a ton of sense.

    But, even if you don’t agree with my friend there, I can’t reason why you wouldn’t think that Obama gives us a very different chance as a country. I’m sorry, I just can’t. Even if both McCain and Obama were to be average, just by winning we will see a seed change.

  3. duh Says:

    A better slogan: Why trickle up poverty is bogus and why every communist nation is dead or dying….

  4. Mike Licht Says:

    But what about Trickle-Down Economics and Beer?

    See http://notionscapital.wordpress.com/2008/10/28/mccain-economic-policy/

  5. Bobjuck Says:

    “My favourite ads are the ones where Barack just talks to us. Like this one. It is all positive, not like the negative crap that I am watching on TV right now.”

    The movie is not displayed, i do not see it, why ?

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