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The most amazing thing about "trickle down economics" is that it was never a real economic theory . It started as a Will Rogers joke. Opponents of Reagan adm

The most amazing thing about "trickle down economics" is that it was never a real economic theory . It started as a Will Rogers joke. Opponents of Reagan administration started to use it [1]. Then amazing thing happened. Somehow people in the right started to believe that it's actually a thing with solid facts behind it. Then politicians followed. Some economists have even tried to find the effect. It seems not to exist. [1]: Reagan administration believed in supply-side economics and free markets ad the cause of more economic growth.

sonnyblarney 8y ago
I don't think it was ever a theory, just an idea. If BigCorps, who employ a lot of people are healthy and stable, they will invest and grow. Related to supply side economics. It's not irrational. BigCos along with banks are at the center of the economy - their leaders have more direct and clear impact that others. Demand side things like government subsidies are generally a little more indirect, take time, and of course come a long with a bunch of side effects. 2008 was 'trickle down' economics, i.e. 'the banks must survive' and they got some cherry deals.
- Nokinside 8y ago
  Demand and supply must match. Too much supply creates just excess capacity and reduces the return of investment. That matching quantity is the size of the economy. Supply side argued that improving supply will increase demand and grow economy. In practice the demand side is more often correct, supply side wrong. Demand creates incentives to increase supply, not other way around. Supply side can be correct in some special circumstances for a short time, but not so much that it would be solid macroeconomic policy. Economy is like a rope. Demand is like pulling the rope. Supply is like pushing the rope.
  - sonnyblarney 8y ago
    "Demand and supply must match." They never match match. In an modern economy demand is created by innovation and marketing, i.e. by creating things like the iPhone, which change all previous consumer expectations, and other innovations change the dynamics of production for other things. " demand side is more often correct, supply side wrong. .Demand creates incentives to increase supply, not other way around" No. Printing money, or borrowing it to gin up demand is nothing but a temporary distortion and a waste of everyone's time unless you're trying to 'hold things over' while an economy recovers from some kind of shock (or fix a taxation situation that was whack), moreover, over any period this will just cause inflation and nothing will change in real-dollar terms, other than the temporary misreading of the economy by producers. To be clear: there can be no fundamental and secular shift in demand (and therefore growth) from demand side activities. There was no 'demand' for electricity until someone figured out electricity and the lightbulb, there was no 'demand' for toasters until someone figured it out. There was no 'demand' for the XMen and Avengers films, until someone created them. The majority of per-capita growth is predicated on some kind of fundamental innovation be it process, technology, organizational, geopolitical (i.e. trade deals). This is supply side. Now this doesn't mean we should just go ahead and wipe out corporate taxes yada yada, and that's not to say that strategic investment can't yield longer term action, but that strategic investment would have to be inherently value creating, not just some pure economic shift.
    - Nokinside 8y ago
      We can't have discussion without common vocabulary and common economic concepts that we both understand. Your are using words like demand and supply general concepts not a specific model of price determination and then arguing freely with them. This is why you don't understand what supply and demand must match means.
tim333 8y ago
Rogers proposed a counter hypothesis that money trickles upwards: >...The money was all appropriated for the top in the hopes that it would trickle down to the needy. Mr. Hoover was an engineer. He knew that water trickles down. Put it uphill and let it go and it will reach the driest little spot. But he didn’t know that money trickled up. Give it to the people at the bottom and the people at the top will have it before night, anyhow.

sonnyblarney 8y ago

I don't think it was ever a theory, just an idea. If BigCorps, who employ a lot of people are healthy and stable, they will invest and grow. Related to supply side economics. It's not irrational. BigCos along with banks are at the center of the economy - their leaders have more direct and clear impact that others. Demand side things like government subsidies are generally a little more indirect, take time, and of course come a long with a bunch of side effects. 2008 was 'trickle down' economics, i.e. 'the banks must survive' and they got some cherry deals.

Nokinside 8y ago
Demand and supply must match. Too much supply creates just excess capacity and reduces the return of investment. That matching quantity is the size of the economy. Supply side argued that improving supply will increase demand and grow economy. In practice the demand side is more often correct, supply side wrong. Demand creates incentives to increase supply, not other way around. Supply side can be correct in some special circumstances for a short time, but not so much that it would be solid macroeconomic policy. Economy is like a rope. Demand is like pulling the rope. Supply is like pushing the rope.
- sonnyblarney 8y ago
  "Demand and supply must match." They never match match. In an modern economy demand is created by innovation and marketing, i.e. by creating things like the iPhone, which change all previous consumer expectations, and other innovations change the dynamics of production for other things. " demand side is more often correct, supply side wrong. .Demand creates incentives to increase supply, not other way around" No. Printing money, or borrowing it to gin up demand is nothing but a temporary distortion and a waste of everyone's time unless you're trying to 'hold things over' while an economy recovers from some kind of shock (or fix a taxation situation that was whack), moreover, over any period this will just cause inflation and nothing will change in real-dollar terms, other than the temporary misreading of the economy by producers. To be clear: there can be no fundamental and secular shift in demand (and therefore growth) from demand side activities. There was no 'demand' for electricity until someone figured out electricity and the lightbulb, there was no 'demand' for toasters until someone figured it out. There was no 'demand' for the XMen and Avengers films, until someone created them. The majority of per-capita growth is predicated on some kind of fundamental innovation be it process, technology, organizational, geopolitical (i.e. trade deals). This is supply side. Now this doesn't mean we should just go ahead and wipe out corporate taxes yada yada, and that's not to say that strategic investment can't yield longer term action, but that strategic investment would have to be inherently value creating, not just some pure economic shift.
  - Nokinside 8y ago
    We can't have discussion without common vocabulary and common economic concepts that we both understand. Your are using words like demand and supply general concepts not a specific model of price determination and then arguing freely with them. This is why you don't understand what supply and demand must match means.

tim333 8y ago

Rogers proposed a counter hypothesis that money trickles upwards: >...The money was all appropriated for the top in the hopes that it would trickle down to the needy. Mr. Hoover was an engineer. He knew that water trickles down. Put it uphill and let it go and it will reach the driest little spot. But he didn’t know that money trickled up. Give it to the people at the bottom and the people at the top will have it before night, anyhow.