Why is trickle down economics still supported ?

Question

The same model has been tried a few times now, Reagan, Bush,Bush. Each time it left our economy stressed and HUGE deficeits. If something does not work why keep supporting it. Is the indvidual more important than the Country?

Answer 1

It is not supported, it is just not voted out because the Christian Conservatives  vote on social issues not their economic interest and the money class  support them on social issues.

Note: growth in income  per capita of 70% over 25 years is 2% a year which is much less than the growth rate  form the end of WWII to 1980 so it is not particularly good and most people did not see even this increase because most of the growth in incomes  went to the top 20%. Median real wages  have seen almost no increase since 1980.

Answer 2

It is under too many assumption in order for it to succeed.  Tax cut for the rich is assumed that they would use the money to re-invigorate the economy but that is only an assumption.  It sounds good - more money for the pocket of individual (assuming for consumption / investment or savings). That however failed during the reagan era. What we have is a billion deficit that will eventually translate to cut down in much needed governement services like education and social services.  Huge deficit also would translate to higher interest rate because of the issuance of more bonds to finance government deficit.

It's an illusion, you'll have tax cut but you will end up being taxed indirectly through others means, such as higher oil price, expensive education, no free medical for the senior,  higher interest rate etc...

Answer 3

I hope it is not supported.  The "Steal from the poor and give to the rich" hasn't worked in the past.

Answer 4

The best way to think about the trickle down effect is by a pie chart. Imagine the size of the pie represents the size of the economy. Say originally the poorest 10% own 5% of the pie. Then by reducing taxes on the rich and business, more investment is poured into the economy stimulating growth ( Y = C + I + G + X - M). This means the pie grows larger, although at the same time the poorest 10% own a slightly smaller percentage of the pie. Is it more important that the poorest own the same portion of a smaller pie, or own a smaller part of a larger pie? There is some evidence that the trickle down effect does work in some cases. Look at Ireland's Celtic Tiger economy, where corporation taxes have been slashed and the economy has grown immensely along with living standards.

Bear in mind as well that it hasn't just been Republican presidents who have implemented this policy. Bill Clinton reduced taxes for the wealthiest by 2.6%. Which deficit are you talking about? If your on about the trade deficit. I would argue the reason for Americas huge deficit is due to Chinas growth in manufacturing exports to America rather than tax cuts. If your on about Americas federal gross debt, it is high compared to say the UK, but as long as GDP growth exceeds growth of gross federal debt, the US economy should not falter.

Hope that helps.  

Answer 5

BEcause the ones supporting it are the ones at the top of the food chain.  They want to remain rich and make it look like a good philosophy.  Tell them for us to be rich and them to get wages they can barely live on is good.  Get rid of Unions that help workers and give tax breaks to big business and rich people.  Which they are.

Basically what they have in Mexico, where the poor  are now working for a few dollars a day, while they have rich business owners as the richest men in the world.  But they have trickle down economics.

It is just that the rich don't trickle down much to the poor.

Answer 6

I'm not sure exactly what you mean by "trickle down economics" , but real (inflation adjusted) US disposable income per capita has increased 70 percent since 1980. That doesn't sound much like something I'd label "does not work".

Answer 7

I don't think the trickle down economics is supported by any reputable economist. It is supported by rich folks and the politicians they fund to work on thier behalf.

Answer 8

I often wonder this same thing. Is it: The wealthy class controls the media, or our educational system? There are several books that try to answer this question. There are several. Like "Dude, Where's My Country" or "The Shock Doctrine"