“Trickle-Down” Economics….
Posted: Sun Dec 03, 2017 1:53 pm
Is there one person alive who really deep down believes that even more wealth directed to already wealthy people and institutions will “trickle down” in some fashion to those on lower economic rungs? Even if only as “jobs jobs jobs”?
That’s how “tax reform” is being sold. That by cutting corporate taxes, corporations will use their additional wealth to (1) create more jobs and (2) increase wages. And that such new wealth will not simply be channeled into dividends and stock buybacks.
Even given almost universal economic illiteracy, it’s astounding to me that they expect people to believe all that. Because (1) new jobs result only from increased demand for goods/services. Increased demand for goods/services results from increased wealth in the hands of everyday people. New jobs are not simply doled out because the money is there, at least not outside of government and government proxy institutions. And (2) even in the face of increased demand, increased wages requires a tight labor market, which for a variety of reasons (off-shoring, automation, etc.) we haven’t seen in the U.S. in decades. To believe in trickle-down economics is to believe the cart can pull the horse.
(As an aside, that said, the proper income tax rate for corporations is 0%. Either corporations are people, or they are not. I say they are not. And yes, the Citizens United decision was an abomination. Dems of course are their usual hypocritical selves on the issue, maintaining that corporations are people when it comes to paying taxes but not people when it comes to political influence. Like Matt Lauer on womens’ issues. At least the Republicans are outwardly in our faces about stuff.)
But somehow the trickle-down narrative must have gained at least a modicum of credibility over the last 2-3 decades. That’s why they’ve rolled out the trickle-down Big Kahuna: “Quantitative Easing.” That’s where the Federal Reserve, a private corporation owned by the big banks and controlled by the uber-wealthy via the Princeton eggheads, prints trillions of dollars for the expressed purpose of raising asset prices, primarily the stock market, but with real estate riding in the back seat. Assets which, without Fed help, would be languishing right now. And damn well should be. Is it any coincidence that the Fed has, over the last several years, created several trillion dollars’ worth of new “money” (credit, really, at almost 0% interest) and that the overall market cap of equities (stocks) has risen by (drum roll….) several trillion dollars? I think not.
We’re being told that a rising stock market is somehow good for us even though we don’t have very much money in the market. Trump even takes credit for it, like he has anything at all to do with it (not), and even though it was a “big fat bubble” during the campaign. But now they call it the “wealth effect,” because “trickle-down” must not pass focus group muster anymore. But beyond some dribs and drabs some of us have in our 401k’s, 98% of the remaining equities are held by the already-wealthy. (They did throw us a bone by restoring our home values to where they were before the bottom fell out some years ago.)
And if you’re young, you’re getting uber-schlonged. That’s because by doubling and tripling the price of stocks, they’ve doubled and tripled what you need to set aside to retire. The best thing that could happen for young millennials is a stock market crash. But they don’t know that. And of course, that will never be allowed to happen. Not anymore, not since the Fed discovered that the shiny new “wealth effect” narrative and the relative smidgen that QE bestows on everyday people gives them cover for endless QE. So they could pull it off without finding themselves at the wrong end of a pitchfork.
You wanna talk about being played? This is it. The Super Bowl of being played. Thanks for reading.
That’s how “tax reform” is being sold. That by cutting corporate taxes, corporations will use their additional wealth to (1) create more jobs and (2) increase wages. And that such new wealth will not simply be channeled into dividends and stock buybacks.
Even given almost universal economic illiteracy, it’s astounding to me that they expect people to believe all that. Because (1) new jobs result only from increased demand for goods/services. Increased demand for goods/services results from increased wealth in the hands of everyday people. New jobs are not simply doled out because the money is there, at least not outside of government and government proxy institutions. And (2) even in the face of increased demand, increased wages requires a tight labor market, which for a variety of reasons (off-shoring, automation, etc.) we haven’t seen in the U.S. in decades. To believe in trickle-down economics is to believe the cart can pull the horse.
(As an aside, that said, the proper income tax rate for corporations is 0%. Either corporations are people, or they are not. I say they are not. And yes, the Citizens United decision was an abomination. Dems of course are their usual hypocritical selves on the issue, maintaining that corporations are people when it comes to paying taxes but not people when it comes to political influence. Like Matt Lauer on womens’ issues. At least the Republicans are outwardly in our faces about stuff.)
But somehow the trickle-down narrative must have gained at least a modicum of credibility over the last 2-3 decades. That’s why they’ve rolled out the trickle-down Big Kahuna: “Quantitative Easing.” That’s where the Federal Reserve, a private corporation owned by the big banks and controlled by the uber-wealthy via the Princeton eggheads, prints trillions of dollars for the expressed purpose of raising asset prices, primarily the stock market, but with real estate riding in the back seat. Assets which, without Fed help, would be languishing right now. And damn well should be. Is it any coincidence that the Fed has, over the last several years, created several trillion dollars’ worth of new “money” (credit, really, at almost 0% interest) and that the overall market cap of equities (stocks) has risen by (drum roll….) several trillion dollars? I think not.
We’re being told that a rising stock market is somehow good for us even though we don’t have very much money in the market. Trump even takes credit for it, like he has anything at all to do with it (not), and even though it was a “big fat bubble” during the campaign. But now they call it the “wealth effect,” because “trickle-down” must not pass focus group muster anymore. But beyond some dribs and drabs some of us have in our 401k’s, 98% of the remaining equities are held by the already-wealthy. (They did throw us a bone by restoring our home values to where they were before the bottom fell out some years ago.)
And if you’re young, you’re getting uber-schlonged. That’s because by doubling and tripling the price of stocks, they’ve doubled and tripled what you need to set aside to retire. The best thing that could happen for young millennials is a stock market crash. But they don’t know that. And of course, that will never be allowed to happen. Not anymore, not since the Fed discovered that the shiny new “wealth effect” narrative and the relative smidgen that QE bestows on everyday people gives them cover for endless QE. So they could pull it off without finding themselves at the wrong end of a pitchfork.
You wanna talk about being played? This is it. The Super Bowl of being played. Thanks for reading.