Wednesday, August 27, 2014

More VERY EASY Trickle-Down Theory

On the heels of yesterday's post where the pope recognizes and calls out simple economic reality, I dug around in my archives for a post that I knew I did on this same topic, which at length I finally found here (I had labelled it poorly).

Here's what I wrote 3 years ago in a post called Debunking The Myth Of The Wealthy Job Creator: 

The conservatives keep reciting--to me, reminiscent of the mob of zombies chanting "Imhotep" in the first Mummy movie--that tax cuts for the wealthy are the best way to create jobs and stimulate the economy.  In fact, I think they actually believe it.

But it makes no sense.  The cart is not only before the horse, there seems to be no horse.  Let's try this for some logic:

The way jobs are created is through demand for goods and services.  I need my car worked on, so I take it to a garage.  If enough additional people like that particular garage, eventually the owner will need to hire another mechanic to meet the increased demand.  Merely giving more money to the owner via tax cuts--in the absence of increased demand--will not cause him suddenly to say "Aha!  Now I can hire that mechanic!" The new mechanic will be sitting on his hands because the cars are not lining up outside.  Why? People in a fiscal crunch are doing more of their own auto maintenance or deferring it.

Nope, it's D-E-M-A-N-D, in the form of spendable money in people's pockets, that will create jobs.  It's always been a bottom-driven process, never a top-down, trickle-down effect, despite all the lockstep chanting.


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