posted January 08, 2014 03:41 PM            

The 'Trickle-Down' Lie
By Thomas Sowell
January 7, 2014

New York's new mayor, Bill de Blasio, in his inaugural speech, denounced people "on the far right" who "continue to preach the virtue of trickle-down economics." According to Mayor de Blasio, "They believe that the way to move forward is to give more to the most fortunate, and that somehow the benefits will work their way down to everyone else."

If there is ever a contest for the biggest lie in politics, this one should be a top contender.

While there have been all too many lies told in politics, most have some little tiny fraction of truth in them, to make them seem plausible. But the "trickle-down" lie is 100 percent lie.

It should win the contest both because of its purity -- no contaminating speck of truth -- and because of how many people have repeated it over the years, without any evidence being asked for or given.

Years ago, this column challenged anybody to quote any economist outside of an insane asylum who had ever advocated this "trickle-down" theory. Some readers said that somebody said that somebody else had advocated a "trickle-down" policy. But they could never name that somebody else and quote them.

Mayor de Blasio is by no means the first politician to denounce this non-existent theory. Back in 2008, presidential candidate Barack Obama attacked what he called "an economic philosophy" which "says we should give more and more to those with the most and hope that prosperity trickles down to everyone else."

Let's do something completely unexpected: Let's stop and think. Why would anyone advocate that we "give" something to A in hopes that it would trickle down to B? Why in the world would any sane person not give it to B and cut out the middleman? But all this is moot, because there was no trickle-down theory about giving something to anybody in the first place.

The "trickle-down" theory cannot be found in even the most voluminous scholarly studies of economic theories -- including J.A. Schumpeter's monumental "History of Economic Analysis," more than a thousand pages long and printed in very small type.

It is not just in politics that the non-existent "trickle-down" theory is found. It has been attacked in the New York Times, in the Washington Post and by professors at prestigious American universities -- and even as far away as India. Yet none of those who denounce a "trickle-down" theory can quote anybody who actually advocated it.

The book "Winner-Take-All Politics" refers to "the 'trickle-down' scenario that advocates of helping the have-it-alls with tax cuts and other goodies constantly trot out." But no one who actually trotted out any such scenario was cited, much less quoted.

One of the things that provoke the left into bringing out the "trickle-down" bogeyman is any suggestion that there are limits to how high they can push tax rates on people with high incomes, without causing repercussions that hurt the economy as a whole.

But, contrary to Mayor de Blasio, this is not a view confined to people on the "far right." Such liberal icons as Presidents John F. Kennedy and Woodrow Wilson likewise argued that tax rates can be so high that they have an adverse effect on the economy.

In his 1919 address to Congress, Woodrow Wilson warned that, at some point, "high rates of income and profits taxes discourage energy, remove the incentive to new enterprise, encourage extravagant expenditures, and produce industrial stagnation with consequent unemployment and other attendant evils."

In a 1962 address to Congress, John F. Kennedy said, "it is a paradoxical truth that tax rates are too high today and tax revenues are too low and the soundest way to raise the revenues in the long run is to cut the rates now."

This was not a new idea. John Maynard Keynes said, back in 1933, that "taxation may be so high as to defeat its object," that in the long run, a reduction of the tax rate "will run a better chance, than an increase, of balancing the budget." And Keynes was not on "the far right" either.

posted January 08, 2014 03:55 PM            

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posted January 08, 2014 05:29 PM            

Today we find people having conniption fits over rates in the 30%s.

Apples and oranges, much?

posted January 08, 2014 05:30 PM            

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Originally posted by Catalina:
Those "non-right" men quoted were talking about tax rates of 77% and 90%...

Today we find people having conniption fits over rates in the 30%s.

Apples and oranges, much?

It may be true that no one on the right has ever used the phrase "trickle down economics" but this article says otherwise. Semanticd and hair splittin apples and oranges at that.
http://en.m.wikipedia.org/wiki/Trickle-down_economics

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Obfuscate the obvious

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posted January 09, 2014 01:49 PM            

This we should do despite hearing time and time again that the rationale for keeping the governments hands out of rich people's pockets is because the rich will invest and hire more if they don't lose that money to taxes, a myth that has been utterly defeated by simple observation.

posted January 09, 2014 01:52 PM            

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Originally posted by Catalina:
Yes, that is exactly what Jwhop and the article are trying to do...it's like when a robber says he didn't steal the money, the victim gave it to him. Lmao

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Whaaaa

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posted January 09, 2014 10:24 PM            

Yes, that's exactly what you should believe...unless you have proof to the contrary. So do you irrational one?

Leftist liars have made a living out of this non theory...trickle down economics. And yet, no republican or conservative has ever used the term.

posted January 09, 2014 10:42 PM            

But surely it can't surprise you that just because Republicans don't name it they don't push it. Democrats didn't coin the term Obamacare but it's still out there.

posted January 10, 2014 12:00 AM            

So said John F Kennedy.

And, it's true except for those too lazy, too unmovitated to work. You know, the freeloaders in society who won't lift their little finger to improve their lot.

Still, the trickle down theory of economics is an invention of leftist liars like other massive lies of the left.

posted January 10, 2014 12:26 AM            

This is what a conservative Republican economist says about the flow of money through the economy.

posted January 10, 2014 08:45 AM            

Life is difficult. Resources are scarce. Even as the pie grows, life is a zero sum Darwinian game for resources. Non-satiation is a fundamental assumption of capitalist economics. Marxist economics deals with a satiation assumption.

Liberals refuse to acknowledge competition and scarcity, and want to level the playing field in some utopian social construct. It never works.

posted January 10, 2014 08:57 AM            

Nonsense. What a perfect word to use for Cata. Maybe, you have a relative who is an economist

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posted January 12, 2014 12:19 AM            

No one is acting more irrational than you in re-posting this rationalization for why Republicans aren't advocates of trickle down economics. Why else would there be this massive emotional reaction to the reality that Republicans are, and have long been associated with trickle down economics? There is no denying the long held Republican idea that the rich need to be taxed less in order to do business in order to help the little guy. Sowell attempt at spinning really says exactly the same thing: that the rich need those lower rates in order to invest in the work that tax produces profit. By spinning it as capital used at the start of business, he attempts to negate the benefit given to those already running successful businesses who simply hang onto any extra money gained through favorable tax rates.

YTA, your spin doesn't work either. This is not some "Marxist" idea. Your account of how life works sounds like it's straight out of an Ayn Rand novel. You know where she went wrong, right? Human nature isn't like that in sum. Human nature is historically as charitable as it is "Darwinian".

Furthermore, liberals don't deny competition or Capitalism. You're getting on your soap box to try to sound strong whilst presenting an obviously flawed message. The diligent and innovative are often liberals who win with just as much frequency as non-liberals. And Republicans are often charitable Christians that do a lot to help the poor outside of the political realm (though they used to engage the political system to enact such charity as well).

posted January 12, 2014 02:54 PM            

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Trickle down always works. If the money isn't reinvested in wages and other expenses, then it is taxed. - Randall

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I agree with you and jwhop 100%. -Bears Archer

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With his massive spending and tax hikes -- rewarding big government and big unions, while punishing taxpayers and business owners -- Obama has killed jobs, he has killed motivation to create new jobs, he has killed the motivation to invest in new businesses, or expand old ones.

His one-trick pony -- raise taxes, raise taxes, raising taxes -- is chasing away the business owners he desperately needs to pay his bills. - Parts of an article posted by Jwhop http://www.linda-goodman.com/ubb/Forum26/HTML/000423.html

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The redistributionists sneer at the concept of "trickle down," as if they can't see the obvious fact that new jobs are created and new income is generated when someone invests his energy and risks his capital in creating a new enterprise or expanding an existing business.

What's also obvious is what trickled down from the "luxury tax" -- more unemployment, more poverty, more red ink, and more inequality. - From another article Jwhop posted http://www.linda-goodman.com/ubb/Forum26/HTML/001500.html

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If I'm elected President, I won't raise taxes on small businesses, as Senator Obama proposes, and force them to cut jobs. I will keep small business taxes where they are, help them keep their costs low, and let them spend their earnings to create more jobs. - Jwhop posting the trickle down claims of then Presidential candidate John McCain: http://www.linda-goodman.com/ubb/Forum16/HTML/004576.html

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posted January 12, 2014 03:43 PM            

quote:

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Originally posted by Catalina:
Ami I am sorry you have a rotten family but making fun of mine won'tchange that. Why do you insist on these childish interruptions?

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Just saw this piece of incredible humor

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posted January 13, 2014 08:48 AM            

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The redistributionists sneer at the concept of "trickle down," as if they can't see the obvious fact that new jobs are created and new income is generated when someone invests his energy and risks his capital in creating a new enterprise or expanding an existing business.

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I thought that was a generic basis for the trickle down theory.

posted January 13, 2014 08:59 AM            

If I have a business and the government gets off my back( including taxes, NOBamacare and other worthless over excessive regulation) I can build my business, make a profit and hire people. Those people will have jobs and not need welfare etc

If the government taxes me to death and makes me comply with NOBama care, I can't hire anyone and provide no jobs to anyone, as well as may lose my entire business.

Then, everyone is poor and need government which is what NOBama wants.

Then, people are dependent serfs.

End of lesson

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