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Saturday, November 17, 2018

BEEN THERE, DONE THAT, LOST THE TEE SHIRT. TRICKLE DOWN ECONOMICS WORKS FOR THE RICH, PERIOD.

What is "trickle down economics"?

One percent of people in a country have most of the money, maybe as much money,  as all the rest of the people in the country.  The big idea that won't go away, is to give the one percent people an extra $X million each, through tax breaks that the others in the country don't get.  The plan is, that the one percent people, will then take that money and through a combination of creating jobs, and purchasing products and services, distribute that money to the people who already had less money to start with.  The one percent people will "trickle" money down to the rest of the population, stimulating the economy.   It makes sense, right.  Let's look at a few things.


  1. How much of the $X million dollars a one percent person received, are they going to spend?  Not all of it.  You have to spend money to make money, but if you spend it all, you DON'T GET RICH. So it is for sure, they are not going to trickle down the whole $X million dollars.  Of the money they do spend, how much will be local and trickle down to the country we live in?
  2. Depending on how many, one percent people, get a tax cut, there could be a significant loss of income to our little country.  This, the trickle down salesman say, is going to be off set by the increase in tax revenue from the other people, now flush with cash from the ample money trickling down, from the one percent people.  Let's do some math, letting X=1.
Lost government revenue               $1,000,000.00
25% shifted elsewhere                       $250,000.00
Available for economic boost:           $750,000.00
Material/Goods purchased                 $250,000.00 **
Available for economic boost:           $500,000.00
Amount spend on new wages:           $500,000.00
Tax break exhausted:                                    $0.00

I don't have an accounting degree, and this is a very simplistic example, but ask some questions.  Who is going to take a sizeable tax cut and just roll it all over into wages for staff?  Who wouldn't squirrel at least some of it away, maybe even in a shelter that is a deduction for the next year's taxes?  **Add to that, any purchase of equipment and material for the business comes off of taxes next year as a qualified business expense.  Yes, there will be genuine economic activity around the goods and material purchase.**  I just can't see a scenario where the government can give away $X million in tax revenue and magically get it back. Who else can't find that scenario?  Reality and history. Right this minute the US deficit and debt is exploding, and there is no path to get that money back, except billing it to the future.

History Lesson, Do Big Tax Cuts Pay For Themselves?
https://www.washingtonpost.com/news/fact-checker/wp/2017/12/07/history-lesson-do-big-tax-cuts-pay-for-themselves/?noredirect=on&utm_term=.9c7d56e124c1

The answer some say, is cutting spending and making government smaller. This is the "smaller government" fantasy that conservatives often push.  We'll cut programs that "lazy, unproductive people" use to live well, off the government, as cost saving measure.  It never happens, because in the end it can't. Government is a complicated undertaking.  There are those who try to speak of it as a business and it should run like a for profit company.  This is the capitalist mantra, make government as small as possible, people should not be getting services from government, if they can't manage it, then they suffer the consequences of their inability. They want to take the civility out of civil society.  Survival of the fittest, what's mine is mine, no one needs help, only to get off their asses.... Taking away the programs that help people, means some people will end up having to do desperate acts to survive.  No faster way we can think of to increase crime, than to make it a plausible last ditch option for some one who is out of other options.  The other issue, in the end, these people also are potential voters, and in the next election year, it all rolls out to get the people back on side.



Government is far more like parenting than it is a business undertaking.  Your family will not get all of the things that it needs if you don't manage your money properly.  You don't, however, buy your kid a new set of shoes at the beginning of the school year based on the amount of money your are likely to make from the shoes over the school year. You buy new shoes because the kid needs shoes.  Governments build roads because we need roads, build water plants because we need clean water, hire police because we need security, hire teachers because education is vital to the future....  These things all cost money and without them we don't have a civil society.

 Military programs, the capitalists never want to cut.  Why?



In today's world an obviously capable military is vital to the sovereignty of an independent nation.  It's also MEGA HUGE BUSINESS.  Fair enough. Development of the weapons in today's military arsenals is extremely expensive, but the programs often protected with such vigour are massively expensive payouts to the big corporations.  A significant amount of military spending in the United States, we argue, is little more than corporate welfare.  Much equipment is built and delivered to storage compounds to sit unused and unneeded. This is not an argument against military spending. It is after all not 1918 anymore, and it not only takes much longer to produce new weapons systems, your enemy can be on top of you in days, or less.  You can't start getting weapons when the fight has already begun. Corporations love these government programs, because they PAY HUGE MONEY.  Even the most strict conservatives like them too, because they mean jobs, often pretty good paying jobs in districts they represent.

New Air Force Planes Go Directly To Bone Yard. 
https://www.military.com/daily-news/2013/10/07/new-air-force-planes-go-directly-to-boneyard.html

Pentagon Tells Congress To Stop Buying Equipment It Does Not Need.
https://www.military.com/daily-news/2015/01/28/pentagon-tells-congress-to-stop-buying-equipment-it-doesnt-need.html

Congress Funds Problematic Weapons Pentagon Does Not Want.
https://www.publicintegrity.org/2016/07/05/19869/congress-funds-problematic-weapons-pentagon-does-not-want
Government has a responsibility to all people in their country.  Capitalist and entrepreneurs need to be respected for their ingenuity, hard work and risk they are taking, often helping to bring other people along with them while trying to secure their own future and reap well deserved benefit from their work. What is often lost is the role, helping people in all circumstances plays in ensuring the environment is there that allows the capitalist to prosper. No sector of society lives in a bubble, no matter how high the walls around a condo complex may be.  The fewer people in desperate situations, the fewer people committing desperate acts.  Now you can worry less about how high to make your wall.

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