"In the last 40 years, a "new" type of economic model arose.."<p>Did this model really arose ? Did anyone really create a document arguing for this "model" or was this just a theory, a lame excuse thrown on TV (and reverberated to heavens and back) to the masses by the politicians who got bribed to shower some special interests with easy money? How in the world can someone argue that we should make it much easier for some groups of people to become so rich that they'll get tired of money and the power it confers and they'll become benefactors and throw it more easily to the poor people who work for them ?
>As the reader can see, job cycles in the post-supply-side world (which began in the 80s) are significantly weaker than *job cycles in conditions in which the wealthy paid a higher percentage of their income in taxes [presumably in the 50s and 60s]*.<p>-<p>>This bottom-up model, Keynesian economics, provides public support for the neediest, which keeps "subsistence" funds in the general economy, for things like energy, food, shelter, and medicine. *But Keynesian economics is also concerned with expanding and raising up the broad middle class so that we can move beyond subsistence and into a gradually increasing standard of living*.<p>These two statements demonstrate that the author is not an economist; the high mid-century tax rates was targeted towards a small handful of billionaires and left most people untouched, and proper Keynesian economics is only valid during periods of sub-zero interest rates.
Business and tax loopholes used for corps and the ultrarich are not going to encourage them to pay employees [that much] more. It may, however, cause them to stay in your country, right?<p>Countries compete for businesses. Businesses try to optimize their costs and tax bills by pulling every trick the government allows.<p>The government's objective is to be among the most business-friendly countries, without losing money by being too much friendlier than the next one. If a government strays too far from that, while it won't happen overnight, businesses start leaving, UHNW individuals start leaving, employees follow, and the govt has a serious problem.<p>It's a tricky proposition to figure out how much govt can demand from corporations before they've had enough and move. Different companies with different infrastructure and employee requirements will make that decision at different levels of annoyance. Government policy probably errs on the too-friendly-toward-business side, but it's a game of imperfect information combined with non-linear effects and a disastrous endgame if govt chooses wrong.<p>To some extent companies already do this, by offshoring labor or by creative accounting, figuring out how to keep significant portions of their income legally untaxed by their home country, using shell companies and, in some cases, intellectual property licensing deals to funnel the money. Much has been outsourced to Asia or Mexico on the manufacturing side, and on the financial engineering side to Ireland. Stamping that out would be a choice govt could make, but the current negative side effects of those things pales in comparison to what happens if FAANG decides to move to Brazil or India and pays enough of their critical employees to move with them that it becomes viable.
That economic model has been dispelled numerous times often using basic personal accounting. One example I remember is the owner of a pillow making industrial business. This business owner lived pretty plain driving a regular car, wearing regular jeans, eating regular meals, and nothing unique about the quantity or size of his spending habits. This owner made around $30 million per year but spent money equivalently to somebody earning $60 thousand per year. He inherited his business from his father and thus didn’t need tax assistance to create job as the jobs were already there. The factory employees were mostly hourly labor. There was nothing special here aside from having a business that generates a profit and his personal earnings were the result of that profit. There was nothing for money to trickle down to.<p>Ultimately, none of that matters until you speak to tax policy.<p>As I have learned in a recent HN thread about tax policy people are generally internally conflicted about what they want taxed. The general nature I could gleam from the comments is that wealth should be taxed, but nobody could define wealth. Taxes should be fair unless you are wealthy or poor. Tax policy should be simple until your personally identified special interest group is impacted at which point there must be all kinds of exceptions. Land value should be disproportionately taxed at a higher rate, but only if owned by wealthy people. Some forms of taxing are superior because they are more efficient except for automation. Everything read like a self-contradictory nightmare where people really wanted to feel rational.
I do not think the economic effect is big enough to be proved, but I think there is a political virtue in reducing the opposition between the richest and the poorest. For me, it is not economy, but mind manipulation.
My take is that because money has become very easy to move about the wealthy move any saving on tax to the best return.
The best return is not local small business but rather countries that have slave labour.
We really need a new value system that is tied to our well-being as a community rather than allowing the very wealthy to abuse systems that are meant to help everyone.
One factor of this battle against trickle down economics is language. 'Trickle down economics' is term that is intuitive, explains itself well, and is easy to remember. It's a meme in Dawkin's original definition of the word.<p>The alternative term, 'bubble up economics', needs to the popularised more.
The more data and critical research comes in, the more we can see that the old conservative owned creed of trickle down has many problems and cracks. It’s certainly not an optimum model to work with any longer. It’s however a fickle beast because it’s owned as a belief system and sold as one during elections and beyond.
Fair share taxes and right redressing is most important, and how we put value into durable systems that work for everyone should be the debate and the challenge ahead.
Would you rather buy a high-quality item, and factor in its resale value as part of your decision-making process, or buy a cheap item that will be thrown away when you're done with it?<p>Do you think the purchasers of quality but second hand goods could afford to buy them new?
There is a pervasive inverse correlation between government spending, as a percentage of GDP, and the rate of economic growth:<p><a href="https://web.archive.org/web/20170821004405/http://ime.bg/uploads/335309_OptimalSizeOfGovernment.pdf" rel="nofollow">https://web.archive.org/web/20170821004405/http://ime.bg/upl...</a><p>A tax cut that isn't matched by a spending cut translates to more government borrowing, where the rich take that money they save on taxes, and lend it to the government.
TDE was a libertarian-flavored ideological myth Reagan bought into because it supported his warped and uneducated worldview (he, after all, was a know-nothing Hollywood celebrity who exploited politics because Nancy). "Just make the billionaires happy and everything will be fine." Yeah, except for one problem without regulations and taxes: greed. Billionaires don't just spread cash around willingly.<p>It's still trotted-out occasionally by out-of-touch Republicans and conservatives just to be debunked by folks like Thom Hartmann. If it ever makes a resurgence with the level of inequality at present, we're more than doomed.
If they don't have bread they can eat brioche, if they don't have housing they can stay in hotel, if the're sick they can go to doctor. That's the trickle down economics.
The larger problem is the verticality, the hierarchy, the dominance of the economic system.<p><a href="https://en.wikipedia.org/wiki/Social_dominance_orientation" rel="nofollow">https://en.wikipedia.org/wiki/Social_dominance_orientation</a><p><a href="https://en.wikipedia.org/wiki/Social_dominance_theory" rel="nofollow">https://en.wikipedia.org/wiki/Social_dominance_theory</a><p>Those are really primitive, irrational, traditional values and ideas that are difficult to get rid of, because so many humans just believe in the fatality of social darwinism. Evolutionism has no place in civilized society. Cynics who argue otherwise just want to benefit from their higher status.