A summary of trickle down economic theory:

[Zero]

Trickle down economy doesnt make any sense.

If money keeps trickling downwards wouldnt the poorest be the richest?

[MichaeltheGreat]

And in the Kingdom of God, they are.

The "trickle down" (I don't subscribe to the idea entirely, but it's sure fun to troll in the midst of a bunch of would-be socialists) was only intended to imply that the benefits of the upper bracket tax cuts would trickle down to lower bracket taxpayers, through increased economic activity, not that all wealth would trickle down.

[Zero]

Originally posted by MichaeltheGreat
And in the Kingdom of God, they are.

The "trickle down" (I don't subscribe to the idea entirely, but it's sure fun to troll in the midst of a bunch of would-be socialists) was only intended to imply that the benefits of the upper bracket tax cuts would trickle down to lower bracket taxpayers, through increased economic activity, not that all wealth would trickle down.

i was just playing on words I have no idea what kind of policy it is. Didnt Adam Smith say something along that line? or was that rockerfeller?

Too long since econ.

[Solly]

Originally posted by Kidicious
Where are we going with this?

Quit sounding like a girl.

[Kropotkin]

Originally posted by DAVOUT
I consider the land as part of the organization job : choosing the appropriate place to undertake the project.

That seems like a missunderstanding to me. Land is of cource a very important input in in many forms of production. try to grow some crops in Sahara and you'll see.

Kidicious No, organizing labor is not producing something. Its' just what it is. Of course, we need organization, but it's not work.

This is in fact an interesting problem that's hard to solve with a orthodox view on things. I spent some time talking to my professor about this (one of his areas of expertice is service production), to be more precise; the contribution of white-collar workers in industrial goods production. With the logic that organizing isn't work then a hell of a lot of employed people are not working.

One could be very conventional about this and say that their contribution is reflected by their salaries relative share of the costs of inputs but that's quite lame. I'm more into considering the costs of organization and thus also white-collar workers, as the costs of transactions and/or coordination in the tradition of Ronald Coase.

[DAVOUT]

Originally posted by Kropotkin

That seems like a missunderstanding to me. Land is of cource a very important input in in many forms of production. try to grow some crops in Sahara and you'll see.


This is in fact an interesting problem that's hard to solve with a orthodox view on things. I spent some time talking to my professor about this (one of his areas of expertice is service production), to be more precise; the contribution of white-collar workers in industrial goods production. With the logic that organizing isn't work then a hell of a lot of employed people are not working.

One could be very conventional about this and say that their contribution is reflected by their salaries relative share of the costs of inputs but that's quite lame. I'm more into considering the costs of organization and thus also white-collar workers, as the costs of transactions and/or coordination in the tradition of Ronald Coase.

I suppose that a project of growing crop in the Sahara would not find a capitalist, so it is important yes, but easily solved.

Regarding the organization, again the value has not the same nature than the cost. They are many cost accounting method which have merit, but none of them pretend to tell the market value, hence the actual wealth created. What I find hard to swallow is that, in our extremely complex and sophisticated system of production, one can contend that the organization of the processus has no value and deserve no remuneration. This leads to the idea that efficiency (and progress) are adverse to the increase of the salaries, and that we should scrap all trucks and revert to the barrow.

[Agathon]

Originally posted by MichaeltheGreat
Trickle down = the most productive members of society get tired of subsidizing whiners and slackers via government forced wealth transfers, and finally a tiny shred of common sense is enabled to prevail in Congress, so that the most productive members of society are forced to subsidize the whiners and slackers a little less.

This assumes a moral interpretation of trickle down economics, which, unless you believe in the fiction of natural rights or some similar whacko theory, is unjustified. If you want to argue that it's somehow right to let people starve when you could help them at little or no cost to yourself then go ahead - the result won't be anything close to morality.

But if you don't believe in a moral interpretation of the market then there is nothing intrinsically wrong with forced redistribution of wealth (it isn't a property crime, since the criteria of entitlement are different).

Or, if you believe that there is something immoral about not being productive then presumably you have a problem with the "people who do nothing" and live off investments or trusts.

The resulting increase in available capital for the productive members of society allows them to do things which are actually useful, so that the whiners and slackers have resulting opportunities to better themselves by being more useful and productive, but they'd rather whine and slack off.

There's a basic truth here. Sometimes allowing certain individuals to have more allows the overall standard of living of everyone else (especially the poorest folks) to improve. But that isn't saying very much and it certainly doesn't commit you to a trickle down theory. In fact experience shows that a welfare state with progressive taxation does a better job of it, which is why most civilised countries are organised this way (including the US).

There's also a basic falsehood: the so called existence of slackers. New Zealand when I was growing up (in the mid 70s) had an excessively generous welfare program, but there was almost no one collecting welfare checks. That's because there was virtually full employment - people preferred having jobs even though they could have done nothing and received a substantial sum for it. It just shows that people will work when there are proper jobs available - people enjoy working it brings other benefits besides a paycheck (like social interaction and a sense of achievement) I love it how the right consistently blame the unemployed for the lack of good jobs in the economy - as if its their fault.

Anyway, to show how silly the free marketeers are you only have to think about what the military would be like if it were funded on a volunteer basis. Or the police.

At a certain point, if wealthier people aren't investing, the extra money doesn't really improve their quality of life since most of this stuff is spent on competitive consumption. You know - where one person on the block works extra to buy the flash new car because having it when nobody else has it makes him feel better. The problem being that everyone does this and thus everyone works harder without being better off (generalize the point and you can see some of the problems that excessive wealth beyond the necessities of living brings with it).

How's that?

Not very good. Most people whining about tax cuts are hoping they'll get a personal cut and that the level of services will stay the same. Of course if everyone gets a cut this won't happen. Apart from the very rich, most people get quite a bit out of state provided services like unemployment benefits - they lower the crime rate for a start. In countries like mine they keep people off the street which is a benefit to anyone that walks around a major city (this just shows that the welfare state benefits everyone, not just the recipients of welfare checks). Of course taxation for these purposes has to be forced because otherwise they would be underfunded due to a collective action problem.

[MichaeltheGreat]

Originally posted by Agathon
This assumes a moral interpretation of trickle down economics, which, unless you believe in the fiction of natural rights or some similar whacko theory, is unjustified. If you want to argue that it's somehow right to let people starve when you could help them at little or no cost to yourself then go ahead - the result won't be anything close to morality.

Ah, so "rights" are whacko, but people have a "right" not to starve?

Don't you think it's just a bit of a strawman to argue about "letting people starve" and "little or no cost to yourself" in the context of tax distribution between different levels of earners? We're not talking a social darwinist laissez faire state vs. worker's paradise, we're talking on a much narrower scale.

But if you don't believe in a moral interpretation of the market then there is nothing intrinsically wrong with forced redistribution of wealth (it isn't a property crime, since the criteria of entitlement are different).

If there's nothing "intrinsically wrong" then let's just redistribute it the other way. Cut minimum wages, go strictly to VATs, increase hours of work, etc. Oh, that's wrong?

Or, if you believe that there is something immoral about not being productive then presumably you have a problem with the "people who do nothing" and live off investments or trusts.

(a) their money is productive. (b) they consume stuff, and thus increase demand and distribute some of their income that way. (c) I don't think it's moral or immoral. If people don't want to be productive, fine with me, but then they shouldn't worry much if they don't have anything. (again, to avoid strawmen, we're assuming people who are not disabled)

There's also a basic falsehood: the so called existence of slackers. New Zealand when I was growing up (in the mid 70s) had an excessively generous welfare program, but there was almost no one collecting welfare checks. That's because there was virtually full employment - people preferred having jobs even though they could have done nothing and received a substantial sum for it. It just shows that people will work when there are proper jobs available - people enjoy working it brings other benefits besides a paycheck (like social interaction and a sense of achievement) I love it how the right consistently blame the unemployed for the lack of good jobs in the economy - as if its their fault.

There are plenty of slackers. Not a majority of people, by any means, and not a majority of unemployed. The US seems to breed more of a sense of entitlement - that the kind of job you'd like to do, at the kind of pay you'd like to get, should be available to you without too much effort.

Anyway, to show how silly the free marketeers are you only have to think about what the military would be like if it were funded on a volunteer basis. Or the police.

Even hardcore free marketeers don't argue much on the need to fund basic government services. The disagreement starts the more you tax and the more you try to include under the guise of government services.

At a certain point, if wealthier people aren't investing, the extra money doesn't really improve their quality of life since most of this stuff is spent on competitive consumption. You know - where one person on the block works extra to buy the flash new car because having it when nobody else has it makes him feel better. The problem being that everyone does this and thus everyone works harder without being better off (generalize the point and you can see some of the problems that excessive wealth beyond the necessities of living brings with it).

I suppose that having a net worth of ten billion won't give me a much better standard of living than having a net worth of five billion, no.

Your point is a bit fallacious, because it assumes everyone will act in the same way. If my neighbor decides to compensate by buying the newest Lamborghini toy, I could copy him, or I could buy a Humvee, or I could decide to make a big donation to an orphanage and outdo the bastard by getting good press for how wonderful I am. On a smaller scale, it works the same - people can choose to compete on consumerism, or while one guy is spending his money like a pimp, the other one can invest and grow his money, while a third can go fishing and drinkin' beer and a fourth can go volunteer for Habitat for Humanity for the weekend. People still make choices, so rationalizing that the government is doing them a favor by taking "unnecessary" wealth off their hands is just that - rationalizing.

Not very good.

For an admitted troll, it's reeled in plenty of people. I'd say that's pretty good.

[Ben Kenobi]

I love it how the right consistently blame the unemployed for the lack of good jobs in the economy - as if its their fault.

That's why we need to cut taxes for the rich so that they can start new businesses and raise employment.

You have an interesting take on New Zealand, since the government had to dismantle much of the cradle to grave welfare system since they owed so much foreign debt. I hear things are better now than 10 years ago, but not thanks to the welfare proponents.

I too agree with a flat tax, to encourage productivity and creativity with respect to new businesses.

UR:

Trickle down should benefit small as well as large businesses.

Still, even in a large business, the owners take a much larger risk than the workers, so why should they not be compensated for their efforts?

[Ben Kenobi]

The capitalist is simply not even needed, so why do you say that he is the most productive.

"Capitalist: and not "owner"

Gee I wonder what economic theory you subscribe to Kidicious. This statement is one of the major assumptions of communism, that capitalism cannot produce anything without labour.

However, you have taken this one step further. Labour needs capital to pay for the jobs and the infrastructure needed to start a business.

Or are you a proponent of all businesses being government owned?

[Agathon]

Originally posted by MichaeltheGreat

Ah, so "rights" are whacko, but people have a "right" not to starve?

Alright - I should have been more specific. Natural or God-given rights (to life, liberty, etc.) don't exist. However, saying it's bad to let people starve doesn't commit us to the existence of natural rights, just to the badness of letting people starve. Utilitarians can endorse a conception of rights, but it is posterior to the utilitarian calculus - in short it's different from the absolute rights of the natural rights theorist.

Don't you think it's just a bit of a strawman to argue about "letting people starve" and "little or no cost to yourself" in the context of tax distribution between different levels of earners? We're not talking a social darwinist laissez faire state vs. worker's paradise, we're talking on a much narrower scale.

Perhaps it is. But the debate tends to take on these extremist tones anyway (much more from the right these days, oddly enough). Part of my point is arguing for a mixed economy, one that is to the left of current economies - not a workers paradise (at least not now or in the foreseeable future).

If there's nothing "intrinsically wrong" then let's just redistribute it the other way. Cut minimum wages, go strictly to VATs, increase hours of work, etc. Oh, that's wrong?

It's not intrinsically wrong (like a violation of natural rights would be), but it has bad consequences. That's why I used "intrinsically", one of my favourite philosophy words.

(a) their money is productive.

Sometimes it is, sometimes it isn't. Externalities tend to increase under conditions of inequality because the cost of the externalities are outweighed for the wealthy by the monetary gains.

(b) they consume stuff, and thus increase demand and distribute some of their income that way.

If the money was redistributed to poorer people they would spend it and overall demand would remain roughly the same.

(c) I don't think it's moral or immoral. If people don't want to be productive, fine with me, but then they shouldn't worry much if they don't have anything. (again, to avoid strawmen, we're assuming people who are not disabled)

This assumes that unemployment is their fault. The kind of economy we have has unemployment as a result - read any economics textbook on why unemployment exists and you will find that the major cause is not laziness.

There are plenty of slackers. Not a majority of people, by any means, and not a majority of unemployed. The US seems to breed more of a sense of entitlement - that the kind of job you'd like to do, at the kind of pay you'd like to get, should be available to you without too much effort.

That's strange - I thought that the increase of market policies was supposed to make people more self reliant and not less. This doesn't happen so much in countries with welfare states. Food for thought, eh.

Even hardcore free marketeers don't argue much on the need to fund basic government services. The disagreement starts the more you tax and the more you try to include under the guise of government services.

I take it you haven't ever met a hardcore free marketer.

I suppose that having a net worth of ten billion won't give me a much better standard of living than having a net worth of five billion, no.

Not according to the principle of diminishing marginal utility it won't.

Your point is a bit fallacious, because it assumes everyone will act in the same way. If my neighbor decides to compensate by buying the newest Lamborghini toy, I could copy him, or I could buy a Humvee, or I could decide to make a big donation to an orphanage and outdo the bastard by getting good press for how wonderful I am. On a smaller scale, it works the same - people can choose to compete on consumerism, or while one guy is spending his money like a pimp, the other one can invest and grow his money, while a third can go fishing and drinkin' beer and a fourth can go volunteer for Habitat for Humanity for the weekend. People still make choices, so rationalizing that the government is doing them a favor by taking "unnecessary" wealth off their hands is just that - rationalizing.

But the vast majority of people with the funds to do it do engage in competitive consumption. Only the very rich compete in donating to charity. People would be better off if they didn't - so even the wealthy have some interest in progressive taxation.

For an admitted troll, it's reeled in plenty of people. I'd say that's pretty good.

I'm not sure it's wholly a troll.

[Ben Kenobi]

Natural or God-given rights (to life, liberty, etc.) don't exist.

The beauty of logic. One false premise can lead you to plenty of interesting places, just like hiking on a trail.

Without natural rights, you cannot support the worker over the capitalist, as a society could simply say that all workers are shiftless bums, and treat them accordingly.

Generally, only the powerful benefit from a lack of restraint, in your case, the rich over the poor.

Care to defend your premise?

[Agathon]

Originally posted by obiwan18

That's why we need to cut taxes for the rich so that they can start new businesses and raise employment.

But then we'll lose public services that we need. The market is notoriously inefficient at providing useful things like health care and education. You live in Canada, so you know this.

You have an interesting take on New Zealand, since the government had to dismantle much of the cradle to grave welfare system since they owed so much foreign debt. I hear things are better now than 10 years ago, but not thanks to the welfare proponents.

You have heard what the trumpeters of the market have been telling everyone. I lived there - things were somewhat different. The truth is that New Zealand still has a much more generous welfare system that Canada and that the only crisis was a short currency crisis. While some of the reforms were useful (the dismantling of inefficient public services that were being used to provide jobs and their replacement with State owned Enterprises) others were really dumb. The health care and education systems are worse than they used to be simply because the cookie-cutter one size fits all policy of market reform was introduced.

I too agree with a flat tax, to encourage productivity and creativity with respect to new businesses.

Flat taxes impose more hardship on the poor since 20 dollars matters much more to a poor person than it does to a rich person. Again the principle of diminishing marginal utility applies.

Still, even in a large business, the owners take a much larger risk than the workers, so why should they not be compensated for their efforts?

Is this always true? If I have shares in a business that goes bang then I'll lose some money; but if I lose my job I may well lose everything.

[Agathon]

Originally posted by obiwan18

Care to defend your premise?

Easy. Where are they? Can they be measured? What reasons do we have for believing in them?

Compare with human welfare.

[Imran Siddiqui]

I take it you haven't ever met a hardcore free marketer.

Even Floyd believes in funding basic governmental services (of course, I guess, it depends on your definition of 'basic') and he's pretty hardcore, isn't he?

Not according to the principle of diminishing marginal utility it won't.

I think you misunderstand diminishing marginal utility. The extra $5 million (to get to $10 million) won't be as great in utility as the first $5 million, but that doesn't mean that it has NO utility at all. It still does, just less.