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Friday, January 10, 2014

There is no such thing as "Trickle-down Economics!"

The only plausible trickle-down theory

From Thomas Sowell:
New York's new mayor, Bill de Blasio, in his inaugural speech, denounced people "on the far right" who "continue to preach the virtue of trickle-down economics." According to Mayor de Blasio, "They believe that the way to move forward is to give more to the most fortunate, and that somehow the benefits will work their way down to everyone else." 
If there is ever a contest for the biggest lie in politics, this one should be a top contender. 
While there have been all too many lies told in politics, most have some little tiny fraction of truth in them, to make them seem plausible. But the "trickle-down" lie is 100 percent lie.
Years ago, this column challenged anybody to quote any economist outside of an insane asylum who had ever advocated this "trickle-down" theory. Some readers said that somebody said that somebody else had advocated a "trickle-down" policy. But they could never name that somebody else and quote them. 
Mayor de Blasio is by no means the first politician to denounce this non-existent theory. Back in 2008, presidential candidate Barack Obama attacked what he called "an economic philosophy" which "says we should give more and more to those with the most and hope that prosperity trickles down to everyone else." 
Let's do something completely unexpected: Let's stop and think. Why would anyone advocate that we "give" something to A in hopes that it would trickle down to B? Why in the world would any sane person not give it to B and cut out the middleman? But all this is moot, because there was no trickle-down theory about giving something to anybody in the first place.
We as conservatives have tried to defend the idea of trickle down economics but the truth is we've been manipulated into trying to defend something that doesn't really exist. Sowell's point is that the high taxes we push hurt the economy. By reducing the amount of money we take from people, particularly the high-income earners, the left has successfully misrepresented that as "giving more to the rich."

Giving something to someone involves a net gain to that person. I have 100 dollars. You give me 5 dollars, I now have 105 dollars. That's giving something to someone. When government taxes 20 dollars from my 100 dollars, I have 80 dollars. Let's say they decide to reduce the tax rate to 10 dollars so instead of 80 dollars, I have 90 dollars. Did they "give" me anything or just decide not to take as much? What we say is that since I have a bit more left after the government took theirs, I can spur more economic activity. The left has twisted this idea into something they call "trickle down economics" whereby I am given more by the government--in their definition-- because they didn't take as much as they would have.

And we fell for it. The idea is sound but the trickle-down theory is non-existent. A buzzword they defined and successfully got us to try to defend. We should be turning it back on them: Why do you insist on taking more from people, especially when all you do is waste it? It's always about not giving the govenment more, it's ALWAYS about the left losing money and losing power.

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