Wednesday, December 06, 2017

Trickle Down Economics Doesn't Work

I know this because Really Smart People with Important Degrees like Paul Krugman and the entire Democratic Party tell me so.

Since I don't want to participate in something that doesn't work, I'm going to stop doing everything that is Trickle Down.

We do alright. We're not rich, but we can afford a maid service once a week and a gardener once a week. That's wealthy people hiring poor people, as far as I can tell from the political pundits. It's the very definition of Trickle Down. Our first step will be to fire these people and send that money to the government.

Government spending, as we all know, is not Trickle Down and there is no moral opprobrium or economic argument against more of it. Ergo, the right thing to do is to stop Trickling Down and use those resources to fund government programs.

Next, we're going to look at voluntary spending. When we buy ribeye steaks instead of, say, flank steak, all kinds of less-fortunate people get our money from the markup between the low-quality cuts of meat and the premium cuts. No more good meat or fish. All of those savings will be sent to the government.

We are pondering some home improvement projects where we might hire a contractor to work for us. Forget that! That would be Trickle Down, too - people with disposable income paying lower income people. Not good. Good spending is government spending. We're going to cancel our kitchen remodel plans and send that money to the government.

Finally, there are our charitable donations, of which we make a sizable amount, almost all to Catholic organizations who help the poor. No more of that for us! It's not only Trickle Down, it's misogynistic and homophobic, not to mention discriminatory against people of other faiths. No, we're going to stop all charitable donations and send that money to the government.

If we do that and you do it, too, we will finally be able to put an end to the scourge of Trickle Down Economics. Everyone will be better off.

Without Trickle Down Economics, the government will be able to provide good jobs at good wages.


tim eisele said...

I see your point, and I'm sure that when your taxes are reduced you'll use money that the government is no longer taking to employ more . . . wait, didn't you say a few days ago that under the new tax code, you'll be paying more taxes, not less?

Oh well, never mind. I'm sure that when your employer finds themselves able to keep more money instead of paying taxes, they'll be feeling so flush that they'll give you a nice raise just because they like you so much, right? Let us know when they do.

The thing is, the point is not that Trickle Down "doesn't work". Of course it works. The question is whether it is the most effective thing to do. Sure, money trickles down, but it also trickles *up*. Poor people buy stuff from businesses who are richer than them, and pay rents to landlords who are richer than them, and pay doctors and lawyers and the like who are all better-paid than them. So once they get some money, they spend it and it runs right back up the economic scale to the top again.

I've kind of wondering whether general prosperity is a bit analogous to the temperature of water in a pool. If you want to warm up the pool, you can just pump hot water onto the surface, and eventually the pool will warm up. But, since hot water is less dense than cold water, it doesn't mix very well with the lower layers. So the top stays hot and the bottom of the pool stays cold for a long time. But if you inject the hot water closer to the bottom, then the hot water rises up, convection is established, and the whole pool warms up.

Of course, the thing you have to watch out for is where you are getting the hot water from . . .

K T Cat said...

So this post started out as an intellectual exercise brought on by the paroxysms of rage from the left over tax reform. I started thinking about Trickle Down and if it was evil or didn't work, what would you do? It's really all about who gets to make the choices with the money. Which of the cases that I listed in the post should be taken out of my hands and handed to the government? That's the question to ask, not some vague assertion about capitalism in the form of name-calling.

Should we fire our maid and send that money to the government instead? If not, why not?