*SHOCKED* Study reveals that trickle-down economics doesn't work.

[ηєω ƒяσηтιєя]

https://twitter.com/kylegriffin1/status/1339578598970126336

[Frodo]

Well it's good to have confirmation even if it is self-evident.

[President Johnson]

They needed another a study to tell you that?

The only economic policy that works is supporting middle class people and small/medium sized businesses and leveling the playingfield for the poor to gain access to the middle class. Anything else is voodoo economics.

[MaxQue]

No doubt one of those far-right think tanks will conjure a phony study saying the reverse.

[Benjamin Frank]

They needed another a study to tell you that?

The only economic policy that works is supporting middle class people and small/medium sized businesses and leveling the playingfield for the poor to gain access to the middle class. Anything else is voodoo economics.

If you only have small/medium sized businesses, who is going to do the research and development for major advances?  To the degree that the lone inventor in the garage was ever true, it is pretty much a total myth/legend today.

There are startups that usual startup up in universities of course, but I think you want as many avenues as possible.

[Red Velvet]

Duh.

That making the rich richer is good for the economy because they supposedly create more opportunities is biggest lie invented that lots of people bought into. The profits go into their pockets for increased luxury more than anything.

Maybe it would be better to invest much more in the poor + the small businesses and much less on the rich + the big powerful companies? Just an idea.

[RI]

"Trickle-down economics" has always been an expressly political phenomenon (first as serious policy, then as a rhetorical bludgeon), not one borne of serious academic economics.

[Frozen Sky Ever Why]

It was never intended to actually work.

[Mr. Smith]

Oh, it works just fine, just like the SAT/ACT!

[Del Tachi]

A matching estimator that uses a binary dependent variable for major tax cuts to generate cross-country comparisons for a whole *five years after the policy intervention?  l o f{inks}ing l

If you fall for this, you're probably similarly *SHOCKED* that most working poors/LMC folx didn't have iPhones, televisions or access to post-secondary education fifty years ago (thanks neoliberalism!)

The fundamental problem with this type of #analysis is an improperly constructed counterfactual.  Cross-country comparisons don't really tell us whether "Reaganomics" has worked when there's been a steady, long-term global trend toward more liberal economies; the appropriate (and more difficult) question to answer is if we would've been better off sticking with the production/consumption economies of the 1930s-60s instead of transitioning to the investment economies of the 1980s-present?  If your outcomes of interest are the quality of consumer goods, national output (GDP) and just general quality-of-life, then the latter comes out as the obvious winner   

[Benjamin Frank]

A matching estimator that uses a binary dependent variable for major tax cuts to generate cross-country comparisons for a whole *five years after the policy intervention?  l o f{inks}ing l

If you fall for this, you're probably similarly *SHOCKED* that most working poors/LMC folx didn't have iPhones, televisions or access to post-secondary education fifty years ago (thanks neoliberalism!)

The fundamental problem with this type of #analysis is an improperly constructed counterfactual.  Cross-country comparisons don't really tell us whether "Reaganomics" has worked when there's been a steady, long-term global trend toward more liberal economies; the appropriate (and more difficult) question to answer is if we would've been better off sticking with the production/consumption economies of the 1930s-60s instead of transitioning to the investment economies of the 1980s-present?  If your outcomes of interest are the quality of consumer goods, national output (GDP) and just general quality-of-life, then the latter comes out as the obvious winner  

You're wrong based on GDP

Annualized U.S real GDP per capita
1946-1980: 2.12%
1981-2019: 1.74%

source: measuringworth.com calculator

I chose 1946 because it's post Great Depression and Post World War II.  The recovery from the Great Depression and the spending during World War II would obviously skew the numbers considerably.

Annualized U.S real GDP per capita
1930-1945 4.80%

After Roosevelt became President
1933-1945: 8.15%
This obviously includes the deep recession from 1937-1938.


If you feel that 1946 is too soon post war to be an accurate measurement, it actually lowers the percentage.  (There was a lot of inflation and slow growth for a time following World War II in the United States)

Annualized U.S real GDP per capita
1950-1980: 2.28%

I appreciate that you're wedded to your favorable feelings towards trickle down tax cuts, but as the saying goes: facts don't care about your feelings.

[The Right Honourable Martin Brian Mulroney PC CC GOQ]

"Trickle-down economics" is a silly term because that's not what supply-side economics even argues. The right needed a way to justify those tax cuts and used the argument that the wealth would be passed down to the poor, and the left mocked it by giving it that name.

Supply-side economics were meant to revitalize western economies after the stagflation of the 70s, when government spending was failing to stimulate the economy and only causing inflation, and the private sector was held back by government action. Supply-side economics were meant to revitalize the private sector, which it did, and it wasn't meant to reduce economic inequality, which it didn't. It does what it's meant to do, it doesn't do what it isn't meant to do.

This isn't me supporting or opposing these economics. Generally I lean more left and don't support ideas like this because it comes at the expense of social services, but in the context of stagflation, it was good policy. What isn't good policy is implementing the exact same things in every context because of an ideological predisposition. The Trump-Ryan tax cuts for example were really stupid--the American private sector was already doing very well, the tax cuts hardly led to any stimulus while skyrocketing the deficit. Frustratingly, good policy rarely makes for good politics. So here we are.

[Benjamin Frank]

"Trickle-down economics" is a silly term because that's not what supply-side economics even argues. The right needed a way to justify those tax cuts and used the argument that the wealth would be passed down to the poor, and the left mocked it by giving it that name.

Supply-side economics were meant to revitalize western economies after the stagflation of the 70s, when government spending was failing to stimulate the economy and only causing inflation, and the private sector was held back by government action. Supply-side economics were meant to revitalize the private sector, which it did, and it wasn't meant to reduce economic inequality, which it didn't. It does what it's meant to do, it doesn't do what it isn't meant to do.

This isn't me supporting or opposing these economics. Generally I lean more left and don't support ideas like this because it comes at the expense of social services, but in the context of stagflation, it was good policy. What isn't good policy is implementing the exact same things in every context because of an ideological predisposition. The Trump-Ryan tax cuts for example were really stupid--the American private sector was already doing very well, the tax cuts hardly led to any stimulus while skyrocketing the deficit. Frustratingly, good policy rarely makes for good politics. So here we are.

That's only referring to supply side theory in the monetary policy context.  There is also a broader macro economics definition.

[Lechasseur]

Ofc they don't work, trickle down economics are a farce.

As mentioned above, they may have made sense in the context of stagflation 40 years ago, but they have made absolutely zero sense in the context of the last 30 years.

They've just been an excuse for psychos to get rid of all government and to lower taxes on the rich.

[Intell]

Giving money for the rich to horde while the poors are subjected to poverty and have low consumption power doesn't work. *surprised pickachu face*

[dssg0915]

damn when did they ever

[Absentee Voting Ghost of Ruin]

Trickle-down economics works exactly as intended.

[Sumner 1868]

Trickle-down economics works exactly as intended.

https://www.nytimes.com/1985/07/19/opinion/in-the-nation-a-deliberate-deficit.html

[mileslunn]

It is a bit more complicated and depends on many factors.  For starters excessively high taxes on rich can stunt growth or encourage them to move elsewhere so if top rate is excessive and cut it can be beneficial.  Likewise many top rate cuts weren't actual cuts, but rather broadening of the base and then lowering rates.  Actual amount wealthy pay in taxes vs. topline marginal rates is more useful.  For example, Trump tax cuts mostly blew a hole due to corporate tax cuts and lower and middle income tax cuts.  For top earners, yes rates went down, but many itemized deductions like mortgage deduction and SALT were further limited.  In fact deductions and loopholes tend to distort growth and so simplifying it where each dollar earned no matter how it is earned is treated the same is better for growth.  Many who talk about sky high top rates in 60s compared to now forget you had way more deductions as well as base was much narrower.

Now yes it is true, if you cut top rates without raising elsewhere and they are already competitive, they don't tend to pay for themselves, see Bush tax cuts.  Like most policies, this is far more nuanced and its not as simple as trickle down economics works or doesn't work.  Rather devil is in details and also depends on circumstances.  If you look on topic on Laffer curve, that in many ways tells you a lot since if top rate is on wrong side of Laffer curve, tax cuts for rich do generally work, but if on right side of it, then they don't tend to work.

[Geoffrey Howe]

I am always amused that tax cuts (regardless of their merits) are “giving” money to the rich.

[Bootes Void]