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The policies of supply-side economics, however, are much more defensible, but it seems people would much rather pick on the strawman.
When half the country has believed something for close to a half a century, across multiple generations, you bet your ass it needs to be debunked. The fallacy of the "precious job creators" is as American as "pulling yourself up by your bootstraps"
The fact that you and I were not dumb enough to fall for it doesn't really help anyone in the grand scheme of things. There's still an insane amount of work left in educating the public, and we may even be regressing at this point.
You know what, you might just be right.
What they said is grossly dishonest, disingenuous, and incoherent. "pejorative straw man" is nonsensical. "trickle down economics" is, by your own accounting, a pejorative term for "supply side economics", but they refer to the exact same thing, and it's the thing that TFA argues only helps the rich. And since people do "believe in" supply side economics, they believe in trickle down economics since that is the exact same thing but given a name that is pejorative (and rightly so).
Neither of you has or can offer any defense of the policies that go by either name, or a rebuttal of TFA.
I have a thing about bad faith or such inept argumentation that it appears to be, so I won't respond further.
https://thehill.com/homenews/house/3522907-gop-lawmaker-byro...
Well here is one of those federal policy-makers you say doesn't exist, a Republican congressman, advocating four years ago for trickle down economics and advocating for "...letting the free market - and yes, trickle down economics, which does work - actually flourish in the United States"
r>g is close to a complete debunk of the trickle-down narrative, today and through history, and it's a remarkably sturdy result.
One is a policy and the other is basically the name of a common criticism for that policy.
For example, the Cartesian circle does not refer to any of the many mathematical advancements Rene Descartes discovered. Instead, it's the name of a common criticism for an argument he made. You can think of it like that.
So, does the criticism not hold value? Because a large part of "supply-side economics", a term coined in the 70s, is reduction of taxes and regulations. With the idea that that extra capital will then be used to create jobs.
And if that is not what's happening, then I don't care about the semantics of whether or not "trickle-down" is the appropriate term of art to be applied here. The core concept of "giving rich people more money spurs job growth" is apparently false.
You know enough about it to misidentify that obvious string replacement command as an example of it.
Your comments are incoherent and disingenuous. Saying that trickle down economics is "an entirely pejorative term created by detractors of supply-side economics" is very much saying that they refer to the same thing ... and it's the thing they refer to that TFA argues only helps the rich. You say that "the policies of supply-side economics, however, are much more defensible" but you offer no defense, and no rebuttal to TFA.
> For example, the Cartesian circle does not refer to any of the many mathematical advancements Rene Descartes discovered. Instead, it's the name of a common criticism for an argument he made.
This is the most inept attempt at an analogy that I can recall seeing.
I have a thing about people who act in bad faith, or argue so ineptly that it looks like it ... I won't be responding further.
Most of the nation (and world) never took any economics. This stuff is all magic or religion or whatever to them. Ronnie Raygun is as good as a saint to much of the US.
I also don’t like targeted new taxes, like taxing sports gambling and recreational drugs, because it unnecessarily entrenches those in our society. Even worse is when they earmark it, like using casino money to fund schools.
Supply-side economics is based on a flawed premise of looking at only the Laffer curve and saying if taxes are too high the economy suffers, therefore we must make the tax rate arbitrarily low. In reality though there are more nuances to making the tax rate arbitrarily low (e.g. high inflation and cost of living for starters).
Take corporate taxes for example. If one were to advocate to get rid of corporate taxes, you might think that person unabashedly biased. What kind of person would want to give breaks to the richest people (corporations) when everyday people are the most in need of those kind of cuts, right?
But the reality is that when you tax corporations, that is one of the most economically damaging taxes you can do. How about then, rather than taxing corporations, you tax the benefactors of those corporations directly? When you tax Walmart, sure you tax the C-suite, but you also make it so that Walmart can hire less people, and invest less in the economy. Rather than taxing the corporation, what if you just taxed the C-suite directly? Tax the Walton family, or the highest earning employees directly, and you get to have your cake and it too since you get similar amounts of tax revenue without damaging the economy nearly as much.
You'll see this often in the social democracies of Scandinavia, like Sweden or Denmark. These are countries with strong welfare states, and yet, the corporate tax rates are often lower than the U.S., even if you look at the most red states. This is supply side economics at work, and an example of how supply-side economics can be easily misrepresented.
Unlike many of our worst ideas, I'm actually surprised this one didn't become more popular around the world.
I suspect that were I to learn about the industrial revolution I would find that the US Robber Barons didn't invent their talking points either and that they simply took British Industrialist talking points and, err, gave them 3 minutes on the stove.
I think it’s been decades by now.
As for tax hikes <90%, this hasn’t occurred in income; the opposite has occurred. You could make the case that it hasn’t been worth it for the poorest brackets though, given other coincident policy changes
Should business that actually do create jobs in practice get bigger tax breaks?
For example, if I by some miracle create a 1 man company that makes $100 million / year profit and somebody else creates a company that makes $100 million / year profit but has 2,000 employees...should the two companies be taxed differently?
Walmart employees 1.6 million people in the US. 68% are full time. Average salaries range from $18.25 / hr (field associate) to $27 / hr (supply chain). Median $30,520 across all US employees. 156,000 employees are estimated to be enrolled in Medicaid (9.4%).
Amazon employees 1.1 million. $23 / hour average for field / fulfillment. Median $53,211 across all US employees. 123,000 employees are estimated to be enrolled in Medicaid (11.7%).
Both offer pretty extensive career development, training and tuition assistance programs.
Profit per employee:
- Walmart $10,800 / employee (1.6 million employees)
- Amazon $50,000 / employee (1.1 million employees)
By comparison:
- AppLovin $3.7 million / employee (898 employees)
- NVIDIA $2.86 million / employee (42,000 employees)
So what if we actually had a tax strategy that literally was aimed at "job creators" rather than "capital gains"? What would that look like?
It’s a good thing farming needs an order of magnitude fewer farmers than a century ago.
That "high efficiency" is actually "less humans in the loop".
Compare something like money managing to car manufacturing. A team of money managers might clear $1B+ in revenue for a year with a team of 200. To clear $1B a yr selling cars, you need workers and supply chains that are tens of thousands of workers deep. It's the very inefficiency of manufacturing goods that makes it so attractive to workers.
This problem is inherent and intractable, but the natural order is to whither away the inefficient parts and only keep the most functional ones.
For those reading closely, this is also how you get a begrudged "coastal elite" and populist presidents like Trump (tariffs, anti-immigrants, state backed industry) elected. They want suffering for the offices of 200 people bringing in billions, and a return of the massive factories and supply chains with tens of thousands being the ones brining in billions.
Is that actually true? Maybe I'm being dense right now but that's not completely apparent to me.
More abundance per person does seem generally better (albeit there's eventually diminishing marginal utility), but that's not the same thing as society as a whole producing more with less labor.
Maybe "all else being equal" is the operative condition here, like assuming that the economy would be able to absorb newly freed labor into new economic activity?
You can also optimize some good things out of existence in this manner, and it's still not clear that robots are going to be able to swoop in and save that kind of newly uneconomical activity, at least within my lifetime.
And firms are already incentivised to increase productivity, including by offshoring jobs or replacing staff by robots, because that's their profit margin. And in this case we're not concerned with firms reducing costs in general, but firms substituting capital for labour. This was an improvement for agriculture, but it was an improvement because that labour found more productive things to do...
But if you're a government those decisions businesses make don't help unless the robots or Chinese factories are considerably more efficient at making stuff than domestic labour, because a business decision that at the margin spending a dollar less on domestic labour and 99 cents more on another production input is very slightly more efficient loses the government more in income tax receipts than it gains on anything else, and usually adds to their benefit bill. Also, people don't like their jobs being replaced. (And yet ironically, tax structures are often more favourable to companies increasing the capital input and decreasing the labour input...)
Obviously it's true that you can go too far and end up subsidising firms to keep on employees that aren't doing anything useful, but relatively minor tax breaks which mainly advantage low margin retail businesses don't do that, and they're not going to stop NVIDIA being NVIDIA either. But they might make the $45k outsourcing contract not look a substantially better deal than retaining the $50k employee.
So what incentive structure would you suggest? How do you prevent the concentration of wealth that results from a business raking in millions of dollars per employee?
I found at least found one analysis (by a left leaning think tank, so take it for what you will) https://www.americanprogress.org/article/the-failure-of-supp... that seems to show that supply-side economics hasn't panned out.
It seems obvious that there is an optimal tax rate, too much or too little is bad. But I'd definitely say right now we are far far on the too little side of things.
Much of Reagan’s trickle down stuff was based on the idea that we were on the wrong side of the peak.
As for whether supply-side economics actually works, to say it "hasn't panned out" I think, is really oversimplifying. Has capitalism (efficient markets but also environmental decay) worked? Has socialism (universal healthcare but also the military) worked? It depends on who your asking and in what regard. In some ways yes and in other ways no. The category is too broad.
Also, just as important as how much we tax is where we tax. Carbon tax (very good) vs stamp duty tax (very bad). Competent policy often allows you to have your cake (supporting government services) and eat it too (not sacrificing growth).
Supply side economics owners claimed that benefits would "flow" down from the capital owners. The pejorative name "trickle-down economics" accurately reflects that the quantity of benefits that "flows" down to everyone else from those benefiting from massive tax cuts is a mere trickle of the money that the supply side saved from the tax cuts.
Maybe not the name, but the literal idea that the money given to them will flow down. There were even graphics gping with it. Again, in all seriousness.
So yes, it needs to be debunked.
My quick take is that during the 2008-ish great financial crisis, those in power were children of the 1970s supply-side shocks (demand>supply resulting in shortages and inflation), and used precisely the wrong tool to handle the demand-side shock of the GFC: interest rates were zero-to-negative, indicating a surplus of investable cash and no place to put it to work, and policymakers responded by...cutting everything on their side to the bone as well (austerity). At a high level: the economy was literally trying to pay the government to spend money on productive investment, but this once-in-a-lifetime opportunity was largely squandered
I'm mostly interested in economic growth, so looked at what the paper claimed about that.
It found that major, sudden reductions in taxes on the rich did not have any statistically significant effect on the trajectory of economic growth over the following five years.
But:
- Their sample is small. They only looked at relatively large, discrete declines in their home-grown measure of taxes on the rich. They did not look at all tax-rate changes.
- They did not look at effects beyond the five-year horizon, which means it would probably exclude the impact on people starting startups, as the successful ones usually take more than 5 years to start making serious money. (or did during the period the paper considered, even if timelines have subsequently accelerated.)
- Big sudden tax cuts don't happen in a vacuum, and I don't see a way to control for confounding.
1, billion, 2 billion, 100 billion individuals makes no difference to the average person
In fact there's a misguided sense that they earnt that money through work and not rent seeking
But the sad truth of the matter is - the rich are on the other end of your mortgage or indirectly your rent - the other end of that business loan to your favourite coffee shop controls the price of your coffee - you pay them interest directly or indirectly through everything you pay for and they use that money to buy more of the assets you use - they are a massively increasing rent seeking class
Their wealth growth is exponential it compounds on itself some particularly rich people are seeing 40% annual returns and the overall economies wealth growth is 1 or 2%
It's analogous to a black hole things like capital gains tax and income tax mean nothing to these people because they don't sell and they don't have a "working" income because that's not how the ultra rich accumulate wealth
The sad thing is for people on benefits the government look automatically into your personal bank account and track anything coming in - they have built a massively invasive infrastructure to track the poor so they can remove their benefits if they try to earn £5 selling music or selling IT services - but if you're rich the government don't even know how wealthy you are - the government doesn't know how many billionaires there are - let alone any talk of having to tax them - so they get to pay very close to - if not nothing - whilst software engineers (as an example relative to this forum) in the UK get to be the high rate tax payers where 50% or more is taken
Everyone else has to fund their free ride and its absurd - they're the group that need the least support financially
There's an observation.
Similarly incentives to buy EVs naturally only apply to the folks who are better off. Most working class buy cars that are +10 years old. (The average car age is among the oldest in Europe btw)
Although I'm sure government and corporate greed was able to exploit those policies as much as it could.
In UK though the salaries are fixed at 25k GBP annually until forever, they simply like this number.
Source: https://www.destatis.de/DE/Themen/Gesellschaft-Umwelt/Einkom...
EDIT: Seems like the article is suggesting that giving more disposable income to the rich, results in them using that extra income to buy capital rent seeking assets. So it is a double fuck you to the poor. Because not only do the rich end up paying proportionally less in taxes, but they also use the extra money to compete with you for your home, buy the home and rent it back to you, putting you in an even worse financial situation.
France is concerned that the IMF main jump in and take things under control because the government's public deficit is out of control. With a GDP of about $3.6 trillion (american trillion, not french) and public spending representing, officially, 57.2% of those $3.6 trillion, that's a cool $2 trillion spent, yearly, by the state. This is where wealth goes to die.
If you were to seize, just fully seize (and consider it's liquid, which it is not), the wealth of all the billionaires in France (there aren't even 50 of them) you'd end up with $500 billion.
So if you were to just take all the wealth from all the french billionaires, you'd only pay a quarter (!) of the budget of the french state. For one year.
And that's it. 25% for a year.
Another way to see it: the french public deficit is more than $100 billion, yearly. If you were to seize the wealth of all french billionaires, you'd only have enough money to prevent the public debt from growing (which has to be at around 140% by now) for five years.
I'm not listening to talks about "taxing the rich" anymore until that caste called politicians stops spending money it doesn't have, enslaving future generations that shall be taxed to death to pay the insane public debt their governments are creating.
Wanna talk about what's happening to the city of Brussels (Belgium), my native city? 40% right at the poverty line. Immense deficit. Conditions of living going down the drain. First political party in the poll is now the PTB, a full on communist party (and communist in the EU have noticed that, at the moment, they could get the votes of islamists, so strangely enough in a "the enemy of my enemy of my friend" way, communists in countries like France and Belgium happen to be very welcoming to religious extremism [in France the communist party literally has been forced, when it created a coalition with others party at the left, to sign a paper saying it condemned islamism terrorism for they've been so cosy with the idea that it really wasn't clear at all that they actually were against islamist terrorism]).
And you want to get me started on that wonderful discovery the left made recently: that by importing millions of poor migrants and then giving them the right to vote, by a very surprising coincidence these poor imported migrants happened to not vote for the right?
How... Convenient?
Several countries are discovering that: "you eventually end up of the money of others" and "when the rich becomes poor, the poor dies".
The one thing that really irks me in this is the full-on hypocrites I know who believe that anyone richer than them should be taxed to death: to them "trickle down economics" do not work but that they live a middle-class lifestyle more preposterous than 99% of the planet doesn't bother them. They want lower taxes but not for those richer than they are.
I cannot understand that mindset.
I hate the Zuck: really, screw that guy and his faked 3D legless avatar demo for his dystopian VR world (how did that one turn out btw? As well as the Meta AI race?) and screw his PHP+JavaScript "punch the monkey" abusive ad world. Just fuck it. But I don't give a single crap in the world that he's got two $250 million Yacht or whatever they cost and however many he's got.
Good. For. Him.
I'd rather be poor and free than live under communism. And doubly so if we're talking about living in a society dictated both by religious intolerance and communism (which is where several countries are headed).
And if you want to "help the poor", go give all your money, open your house/appartment to pooor migrants and give me a fucking break.
We literally spend more government money per person on healthcare than France does while having less public healthcare, precisely because of the "help the rich" policies causing most of that public money to go to subsidizing insurance companies.
Also just because someone benefits, that doesn't mean that other people have to suffer.
If basic needs aren’t being sufficiently eased, there’s no money left to invest.
The only reason this isn't common sense is because the rich have fought it for millennia.
The only real way to tax the rich is to ensure that the rich have to compete for workers by paying competitive wages
there are all sorts of losses inherent to poverty that shouldn't be discounted, like the inability to save via bulk purchasing, transportation, high cost credit, preventative spending, time losses...
in theory eliminating the poor by literally giving them money could have an impact that makes society better for everyone... it's very reductive to assume there's just one big knob that the rich can turn to get it all back
It seems like all it does is lock people into poverty with unreasonably high effective marginal tax rates.
I mean I'm perfectly fine with people who work hard making a lot of money. But that changes once that money is used against me. From that moment on I want to be compensated for damages, and the best way to do it is through taxes.
I don't want to be personally compensated. I just want to live in a society where people's basic needs are easily met: clothes, food, medicine, housing. The current landscape is, by the day, increasingly dystopian.
PS And you wonder why Mississippi is richer than the UK.
PPS The Laffer curve is real, has a mountain of evidence and disproves this paper.
And in the late 70s, they launched Operation Berkshire as a bulwark against negative press and government regulation.
They have literally been found guilty of conspiring to suppress the health risks.
every single time its resulted in lower tax intake compensated with more deficit spending.
Because Mississippi didn't have Brexit /s
All jokes apart I don't see any real evidence that Mississippi is richer than the UK. Their median household disposable income is pretty damn close ($49k vs $54k). The UK has a better social and health safety net (where would you rather be unemployed or disabled?).
Mississippi has much lower life expectancy than the UK (69 vs 79 for men). Crudely speaking a Briton makes $5k less/year but lives 10 years longer - a trade almost anyone would make in a heartbeat.
I won't bother digging into other quality of life indicators vs economic indicators but I expect Mississippi will be mostly equal or worse.
On average Mississippi may have higher dollar numbers on a spreadsheet. That doesn't mean squat for the ordinary person on the street. If anything this is an argument against trickle-down economics/the Laffer curve.