Friday, December 17, 2010

Why Trickle Down Economics Never Works.

Everybody is ostensibly searching, looking in every possible nook and cranny, for the cause of the hard financial times that has befallen our country America. Hundreds of reasons have been proffered as the cause by thousands of politicians, economists, specialists and experts; you name them, and they probably have put forward some reason(s) and solution to this conundrum.

As can be expected from a situation like this, these reasons and solutions have been as varied as many have been wild. Some have been sincere but many have been self serving, either for individual or group financial gains, or for political gains. In all, few have been willing to say the truth about it and that is the major reason why we have remained in the mess more than two years later.

The Republican Party's solution has always been to give more and more to the wealthy and hope that they will create jobs and employ the rest of us. This policy is known as trickle down economics and was in practise throughout the eight years of the Bush administration contributing in no small measure to the present recession. The way to do this, they claim, is to have the rich keep all the money they make without having to pay any taxes thereby leaving them with enough money to create jobs.

The problem with their claim is that over the ten years that that system has been in trial, what has happened is that the rich have kept almost all the money for themselves making them stupendously richer and the rest of us infinitely poorer. A country cannot be self sufficient when much of its money and wealth is going into the hands of people who do not put it back into the economy but save it. Now, with these lowest ever tax rates for the rich, government cannot even get some of the wealth back and put back into the economy like it used to.

So what you get is government having to keep borrowing more and more money in order to keep the economy and society going. But, because of the system that has been set up, all the money that's borrowed quickly end up in the hands of the same super rich who dump it in banks setting up a vicious cycle that needs to be broken if this country will survive.

Everywhere you look, you see signs indicating that America is unravelling, and fast, but we are not heeding any of these warnings. Our life expectancy has gone down, we are living longer in our parents' houses (those of us whose parents still have houses) and our kids have started begging for clothing. This year, more American children than ever asked for clothing in their letters to Santa.

A new report says that 1 in 4 American children go hungry. Do you notice the trend? Americans have begun to lack the three basic necessities of life which are, food, clothing and shelter. Yet our government still finds it expedient to borrow more money - hundreds of billions of dollars - on our behalf, and hand over to the richest among us who are just about 2% of us. How is that sane?

Now the latest story is that the Republican controlled congress is going to target the safety nets instituted by our forebears as a fall back cushion for the poorest amongst us when they can no longer help themselves. They say safety nets like social security and medicare are the cause of the country's economic problems and are planning to make cuts to them.

That they can make arguments like that with a straight face is what baffles me given that all they do, beside looking for new ways to stiff the middle class and poor, is carve out tax cuts and favors for their rich benefactors. How does one reconcile the fact that they just reached a deal to give $700 billion in additional tax cuts to their rich sponsors while readying their chopping block for cuts to social security and medicare?

They claim that they are trying to cut down the country's deficits and reduce debt as a reason for wanting to cut social security and medicare. When anyone asks about the propriety of borrowing, and therefore, adding hundreds of billions of dollars to the debt and deficit in order to give additional tax cuts to people who are already obscenely rich, there is no reasonable answer.

The best answer they can muster, and which they keep repeating, is the tired line of the rich creating jobs with the extra money they make from the tax cuts. Unfortunately, the tax cuts have been in place for ten years already and the only jobs they created were in China. The only thing they created here is the biggest economic downturn since the great depression.

But, like they keep repeating to everyone who cares to listen, they won the election and therefore, they have the mandate to do everything they are doing right now, and everything they will do throughout their tenure. To be fair to them, they actually campaigned on many of the things they are doing and won which is a fact that does not reflect well on our sanity as Americans.

We are here and will remain here for the next two years before the next elections in 2012. My hope is that we learn enough in this coming two years to realize that the Republican road cannot lead us to where we will love to be as a country. I hope that we will learn enough to recognize that trickle down economics only benefit the very rich who get to keep a disproportionate portion of the wealth while trickling down too little for the rest of us to survive on.

I hope that we will learn enough to go back to what worked for us in the past and made our country the greatest in the world. I hope that we will learn enough to want to go back to the economics of empowering every single one of our citizens instead of just a few and hoping that that few will save the rest of us. I hope we will have learned for certain that they never do.


  1. Very well written on todays economic issues.

    I think many of us see this, but it's the other half that just don't get it. The conservatives all praise the voodoo economics / trickle down theory practices Reagan put in place, yet, are having the same problems we are.

    Many, if not most, are losing their homes, their jobs, their retirements; and instead of questioning the ones that put these policies in place, they just turn to the democrats and say it's your fault, your socialists. Even though the democrats have only controlled the presidency only 12 of the past 30 years, and two we cannot even count because we are barely recovering from the last 8 years of republican rule that decimated this county

  2. One last thing. What if we took the tax breaks for the rich and answer this one wish? Do you think the total dollar amount would cover more than enough to pay for it?

    "This year, more American children than ever asked for clothing in their letters to Santa. "

  3. Here in the UK, we do find it constantly amazing that your political system blatantly looks after the wealthy. The rich can, and always have, taken care of themselves because they have the resources to do just that. Higher taxes hurt their bank balance but not their comfort.

    We also think America's revulsion of socialism as something evil is laughable. But then, as a UK citizen I have a longer life expectancy than you do, access to healthcare whenever I need it, and if I was unfortunate enough to lose my job I wouldn't go hungry.

    I think it has a lot to do with America believing it is a world leader, which is true, but due to it's youth, perhaps it forgets that a lot of societies have been here already and it can still learn from others.

  4. Thanks a bunch TJCIII and Matt, for your very insightful comments on this article. TJC, like you very rightly point out, our major problem in America is the stupidity of many of us. What these people are doing is very clear and you don't need any special knowledge to see it but you do need some intelligence which, sadly is lacking. And the dollar amount for the extra tax break for just 1% of the rich would answer that wish a thousand times over.

    Matt, you hit the nail on the head when you said that America "forgets that a lot of societies have been here already" Another major problem of our country is that we fail to learn from history while foolishly believing that history doesn't repeat itself. Wise people know otherwise and I hope our country's leaders don't find that out the hard way.

    Once again, thanks friends for reading.