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This is the main point that I feel is constantly left out of arguments against trickle down economics. Money needs to be invested or spent to be useful. Stockpi

This is the main point that I feel is constantly left out of arguments against trickle down economics. Money needs to be invested or spent to be useful. Stockpiling hordes of cash is not benefiting anyone. Wealthy individuals will invest that money into other companies and endeavors which drives more economic activity. If we tax them and give it to the government would we expect them to do the same?

austincheney 5y ago
Not exactly. The better counter-argument is more broad than that in that it isn't limited to investments but instead any kind of transaction and that quantity of transactions is more important that they size of transactions. This can be argued either way for the point of economics. For the point of something more practical, like taxation, it doesn't matter if the primary means of taxation isn't based upon transaction frequency. The primary means of tax revenue in the US is income tax, which has no bearing on any transactions.
throw0101a 5y ago
> Money needs to be invested or spent to be useful. Stockpiling hordes of cash is not benefiting anyone. Wealthy individuals will invest that money into other companies and endeavors which drives more economic activity. Most of the cash is used to further buy shares of existing companies. These shares are purchased on the open market so the money does not actually go to the companies in question, but rather to a shareholder that wishes to cash in. A company only makes money in the stock market during their IPO: the shares go from being "inside" the company to the "outside". No matter how many times shares are traded after that initial exchange, the company does not get a penny. (Unless they do another share offering.) So if a company distributes dividends, cash leaves the company to share holders, and then collects in accounts. And if you have a lot of shares (in one company, or in many companies), you probably can only spend only so much of it, so a large portion may simply sitting around. So the rich often decide to use that "spare" to buy more stocks—because why not? On the other hand, people that are less rich will tend not to have a bunch of "spare" cash sitting around. Most people use up all the cash that they get from (e.g.) dividends to (say) fund their life in retirement. Further, they may not have enough from just dividends to meet their expenses and so they also liquidate capital. And the buyers of the not-rich's shares would probably be the rich. So the rich use their large holdings to gain a lot of "spare" cash which they can't manage to completely spend, and so they use that spare cash to build even larger holdings. So what's the point of giving more money to those who probably already have 'too much' when all they're really doing with it is snowballing their holdings? If you give it to people who do not have a lot they will probably spend it (completely). At the grocery store, at the clothing store, perhaps at the car dealership to get a more reliable automobile, perhaps do some home improvement to fix a drafty house. This spending by one group will become income for another. Whereas the rich will simply re-consolidate things to themselves without much economic activity.

austincheney 5y ago

Not exactly. The better counter-argument is more broad than that in that it isn't limited to investments but instead any kind of transaction and that quantity of transactions is more important that they size of transactions. This can be argued either way for the point of economics. For the point of something more practical, like taxation, it doesn't matter if the primary means of taxation isn't based upon transaction frequency. The primary means of tax revenue in the US is income tax, which has no bearing on any transactions.

throw0101a 5y ago

> Money needs to be invested or spent to be useful. Stockpiling hordes of cash is not benefiting anyone. Wealthy individuals will invest that money into other companies and endeavors which drives more economic activity. Most of the cash is used to further buy shares of existing companies. These shares are purchased on the open market so the money does not actually go to the companies in question, but rather to a shareholder that wishes to cash in. A company only makes money in the stock market during their IPO: the shares go from being "inside" the company to the "outside". No matter how many times shares are traded after that initial exchange, the company does not get a penny. (Unless they do another share offering.) So if a company distributes dividends, cash leaves the company to share holders, and then collects in accounts. And if you have a lot of shares (in one company, or in many companies), you probably can only spend only so much of it, so a large portion may simply sitting around. So the rich often decide to use that "spare" to buy more stocks—because why not? On the other hand, people that are less rich will tend not to have a bunch of "spare" cash sitting around. Most people use up all the cash that they get from (e.g.) dividends to (say) fund their life in retirement. Further, they may not have enough from just dividends to meet their expenses and so they also liquidate capital. And the buyers of the not-rich's shares would probably be the rich. So the rich use their large holdings to gain a lot of "spare" cash which they can't manage to completely spend, and so they use that spare cash to build even larger holdings. So what's the point of giving more money to those who probably already have 'too much' when all they're really doing with it is snowballing their holdings? If you give it to people who do not have a lot they will probably spend it (completely). At the grocery store, at the clothing store, perhaps at the car dealership to get a more reliable automobile, perhaps do some home improvement to fix a drafty house. This spending by one group will become income for another. Whereas the rich will simply re-consolidate things to themselves without much economic activity.