10 ms·

That's not "trickle down" economics, which is not actually a real thing at all. That's a nonsensical political term that the Democrats seized upon during Reagan

That's not "trickle down" economics, which is not actually a real thing at all. That's a nonsensical political term that the Democrats seized upon during Reagan's "supply side" economic policy; which has beginnings much earlier than Reagan, and likely older than Jean-Baptiste Say's formulation. There isn't an idea that alone "capital drives growth," that's an idea that Keynes came up with by misreading Jean-Baptiste Say. Paraphrasing him to say that "supply creates its own demand," which we all know is nonsensical, but that's not what Jean-Baptiste Say was saying. The idea is far more complicated than your simple explanation offers, though I sympathize with your view (though, at least the second paragraph is almost entirely wrong), it is narrow in its scope to the study of economics.

ricardobeat 11y ago
It doesn't really matter who said or misunderstood what, does it? I don't mean this as a personal attack but your comment is devoid of content.
Animats 11y ago
There is a school of economics, sometimes called the "freshwater school" (from the Chicago School and Milton Friedman) which claims you can't run out of demand. This is a classic position. But productivity is now so good that we can run out of demand. Classically, countries ran out of land, labor, capital, or management before they ran out of demand. There were occasional recessions, but that wasn't a permanent condition. That's over in the US. Plenty of land outside NY and SF, lots of workers (some might need retraining, but it's not like the real labor shortage of WWII), oceans of capital, and lots of experienced managers. But nothing to do with it, because the demand isn't there. This is an alien concept to many people and economic policy makers. See the parent article. They report on a capital glut, but are puzzled that it exists. The Fed keeps pumping capital into the economy in hopes it will fuel growth. But pumping capital into a capital glut doesn't do much. Look at Japan since 1989. Japan hit this about two decades before the US did. They never really figured out what to do about it. That's discouraging, because if Japan had a solution, we'd have a success to look at. So nobody really knows what to do about a capital glut and a demand shortage.
- duderific 11y ago
  > But pumping capital into a capital glut doesn't do much. I believe this is a phenomenon captured by the term "Pushing on a string."
- jmorrow977 11y ago
  Instead of injecting money top-down through the Federal Reserve and large banks, they could inject it bottom-up in selected industries. Invest $1 trillion in biotech. Some will succeed and produce amazing advances. Most will fail, but they'll still drive employment, education, services, etc. targeting that industry, driving down the cost of inputs to the biotech sector for decades. Of course, this can be done not completely blindly, by investing 10 to 1 with existing investors, or providing a guarantee to return 50% of lost capital, or having milestones companies need to hit, or have experts in the field provide "votes" toward getting higher levels of funding after examining their progress so far.
  - nradov 11y ago
    We don't want governments trying to pick winners, or generally even having an industrial policy at all. Their track record has been far worse than private investors. And politically it's impossible to justify when a large government investment fails. For example, look at Solyndra. At better approach to stimulating demand would be to offer a cash prize or a guaranteed purchase contract for specific innovations that meet defined criteria. For example, what if the US federal government offered to purchase 10 million doses of a 90%+ effective Zika virus vaccine at $100 per dose? I'll bet that would encourage private investors to take a gamble.
    - betenoire 11y ago
      You are suggesting what already exists, plus a guarantee. How does your guarantee change behavior? We already have the expectation of payoff for success, that's how we got to this point to begin with.
    - jmorrow977 11y ago
      Well, if the government is going to drop money from helicopters, I would at least prefer they ATTEMPT to do so in a way that might lead to some scientific advancement. They could also just send everyone a check for $1000, but although that would create some demand, it wouldn't likely lead to investments in long-term payoff high-risk science. I understand and somewhat sympathize with the idea that we don't want the government telling us to do with our money, and maybe we should let people spend that $1000 however they want, but I'm proposing trying to kill two birds with one stone here and also at least ATTEMPT to put the money initially in the hands of people trying to create something rather than just consume some basic goods.
mehwoot 11y ago
There isn't an idea that alone "capital drives growth," that's an idea How is it not an idea and an idea simultaneously
- twic 11y ago
  Economics.
ubernostrum 11y ago
The fundamental concept of "trickle down" -- legislate to further enrich the already-wealthy, and those less well-off will become more well-off as an indirect effect -- is way older than Reagan. William Jennings Bryan bashed on it in his "Cross of Gold" speech in 1896.

ricardobeat 11y ago

It doesn't really matter who said or misunderstood what, does it? I don't mean this as a personal attack but your comment is devoid of content.

Animats 11y ago

There is a school of economics, sometimes called the "freshwater school" (from the Chicago School and Milton Friedman) which claims you can't run out of demand. This is a classic position. But productivity is now so good that we can run out of demand. Classically, countries ran out of land, labor, capital, or management before they ran out of demand. There were occasional recessions, but that wasn't a permanent condition. That's over in the US. Plenty of land outside NY and SF, lots of workers (some might need retraining, but it's not like the real labor shortage of WWII), oceans of capital, and lots of experienced managers. But nothing to do with it, because the demand isn't there. This is an alien concept to many people and economic policy makers. See the parent article. They report on a capital glut, but are puzzled that it exists. The Fed keeps pumping capital into the economy in hopes it will fuel growth. But pumping capital into a capital glut doesn't do much. Look at Japan since 1989. Japan hit this about two decades before the US did. They never really figured out what to do about it. That's discouraging, because if Japan had a solution, we'd have a success to look at. So nobody really knows what to do about a capital glut and a demand shortage.

duderific 11y ago
> But pumping capital into a capital glut doesn't do much. I believe this is a phenomenon captured by the term "Pushing on a string."
jmorrow977 11y ago
Instead of injecting money top-down through the Federal Reserve and large banks, they could inject it bottom-up in selected industries. Invest $1 trillion in biotech. Some will succeed and produce amazing advances. Most will fail, but they'll still drive employment, education, services, etc. targeting that industry, driving down the cost of inputs to the biotech sector for decades. Of course, this can be done not completely blindly, by investing 10 to 1 with existing investors, or providing a guarantee to return 50% of lost capital, or having milestones companies need to hit, or have experts in the field provide "votes" toward getting higher levels of funding after examining their progress so far.
- nradov 11y ago
  We don't want governments trying to pick winners, or generally even having an industrial policy at all. Their track record has been far worse than private investors. And politically it's impossible to justify when a large government investment fails. For example, look at Solyndra. At better approach to stimulating demand would be to offer a cash prize or a guaranteed purchase contract for specific innovations that meet defined criteria. For example, what if the US federal government offered to purchase 10 million doses of a 90%+ effective Zika virus vaccine at $100 per dose? I'll bet that would encourage private investors to take a gamble.
  - betenoire 11y ago
    You are suggesting what already exists, plus a guarantee. How does your guarantee change behavior? We already have the expectation of payoff for success, that's how we got to this point to begin with.
  - jmorrow977 11y ago
    Well, if the government is going to drop money from helicopters, I would at least prefer they ATTEMPT to do so in a way that might lead to some scientific advancement. They could also just send everyone a check for $1000, but although that would create some demand, it wouldn't likely lead to investments in long-term payoff high-risk science. I understand and somewhat sympathize with the idea that we don't want the government telling us to do with our money, and maybe we should let people spend that $1000 however they want, but I'm proposing trying to kill two birds with one stone here and also at least ATTEMPT to put the money initially in the hands of people trying to create something rather than just consume some basic goods.

mehwoot 11y ago

There isn't an idea that alone "capital drives growth," that's an idea How is it not an idea and an idea simultaneously

twic 11y ago
Economics.

ubernostrum 11y ago

The fundamental concept of "trickle down" -- legislate to further enrich the already-wealthy, and those less well-off will become more well-off as an indirect effect -- is way older than Reagan. William Jennings Bryan bashed on it in his "Cross of Gold" speech in 1896.