Showing posts with label jobs. Show all posts
Showing posts with label jobs. Show all posts

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.


Saturday, October 8, 2011

Debunking The Myth Of The Wealthy Job Creator

Back in July, I think, Avedon Carol pointed me to Thom Hartmann and a great discussion of 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.

Duh!

 

Wednesday, April 13, 2011

Ths Wisdom of Matt Damon (seriously)

From Mike the Mad Biologist, a good one:

What Rich People (or Matt Damon Anyway) Do with Their Tax Cuts

What I've never understood about the idea of tax cuts for the rich to stimulate the economy is that, as one wealthy person told me, "I spend what I'm going to spend, and the rest goes in the bank." Tax cuts don't stimulate growth, unmet demand stimulates growth. Sure, there are some rich people with insatiable appetites who will spend all of the additional money. But most will just stick their money in the bank (or invest and drive up asset prices simply because they have to invest in something). In an environment where banks aren't lending, that is the worst way to create jobs--the money just sits in the bank.

In an interview with The Guardian, actor Matt Damon thinks the same thing:

Damon appears so disillusioned that, playing devil's advocate, I ask whether he is considering voting Republican. "Good God, no! I just got a 3 per cent tax cut. Do you think I'm going to start a small business with that money? You're out of your mind if you think so. I'm going to put it in the bank. So is every other guy that makes the kind of money I make. I don't think that's what's best for the country. I think a stronger middle class makes for a stronger country."

Really. That's how most, though not all, rich people will behave. They might spend some of that money and create some jobs, but the government will spend all of it and create many more jobs.

To me, seems that a tax break for the lower classes would put more money in their pockets...which they would then use to procure goods and services...that in turn would drive demand to produce those goods and services.

As above, I think the conservatives have it all backwards. To give them massive tax breaks and hope they will generate jobs will not stimulate the economy in a trickle-down manner simply because the consumers are not consuming.  No rich joker would invest in a business that has no market.