Posted by mooreds 13 hours ago
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.
It dates back to the late 1890s (and has been criticized since then):
> In 1896, United States Democratic presidential candidate William Jennings Bryan claimed in his Cross of Gold speech that his opposition based their policies on the idea that the success of the rich would "leak through" to the lower classes, stating: "There are those who believe that, if you will only legislate to make the well-to-do prosperous, their prosperity will leak through on those below."[8][9][10]
> In 1932, humorist and social commentator Will Rogers wrote a column criticizing Herbert Hoover's policies and approach to The Great Depression and stated: "The money was all appropriated for the top in the hopes that it would trickle down to the needy. Mr. Hoover was an engineer. He knew that water trickles down. Put it uphill and let it go and it will reach the driest little spot."[11] In 2007, political commentator William J. Bennett credited Rogers for coining the term "trickle down" and observed its persistent use throughout the decades since.[12]
* https://en.wikipedia.org/wiki/Trickle-down_economics
so I'm not hopeful it will ever go away.
You know what, you might just be right.
Except the folks that implement it:
> The cuts were based on model legislation published by the conservative American Legislative Exchange Council (ALEC),[8][9][10][11] supported by supply-side economist Arthur Laffer,[12] anti-tax leader Grover Norquist,[13] and the influential industrialists Charles and David Koch.[14][15]
* https://en.wikipedia.org/wiki/Kansas_experiment
The term was invented by its opponents, but it was a label that was put on actual policies, like Hoover's:
> In 1932, humorist and social commentator Will Rogers wrote a column criticizing Herbert Hoover's policies and approach to The Great Depression and stated: "The money was all appropriated for the top in the hopes that it would trickle down to the needy. Mr. Hoover was an engineer. He knew that water trickles down. Put it uphill and let it go and it will reach the driest little spot."[11] In 2007, political commentator William J. Bennett credited Rogers for coining the term "trickle down" and observed its persistent use throughout the decades since.[12]
And Reagan's:
> Ronald Reagan launched his 1980 campaign for the presidency on a platform advocating for supply-side economics. During the 1980 Republican Party presidential primaries, George H. W. Bush had derided Reagan's economic approach as "voodoo economics".[16] Following Reagan's election, the "trickle-down" reached wide circulation with the publication of "The Education of David Stockman", a December 1981 interview of Reagan's incoming Office of Management and Budget director David Stockman, in the magazine Atlantic Monthly. In the interview, Stockman expressed doubts about supply side economics, telling journalist William Greider that the Kemp–Roth Tax Cut was a way to rebrand a tax cut for the top income bracket to make it easier to pass into law.[17] Stockman said that "It's kind of hard to sell 'trickle down,' so the supply-side formula was the only way to get a tax policy that was really 'trickle down.' Supply-side is 'trickle-down' theory."[17][18][19] Reagan administration officials including Michael Deaver wanted Stockman to be fired in response to his comments, but he was ultimately kept on in exchange for a private apology.[20]
* https://en.wikipedia.org/wiki/Trickle-down_economics
It is pejorative, but it is not attacking a straw man, but actual policies that right-wing folks want implemented (and have).
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.
You've said you won't respond further, but seeing your passion, I think it would be great if we could have a civil conversation. I genuinely believe that trickle-down and supply-side economics are meaningfully different things, and I think there would be much to gain from hearing your perspective in more detail.
My thesis boils down to the fact that supply-side economics (say for example, something like small business tax credits) often gets conflated with trickle-down economics undeservedly. Trickle-down policy--take money from the poor and give it to the rich indiscriminately--is an objectively horrible idea, but I would say also that nobody is seriously arguing for that sort of thing.
(Also, I'm have no idea what "GP" stands for.)
But that's separate from the linked article, which was a discussion of an empirical paper that claims to find evidence that "tax cuts for the wealthy only benefit the rich"
A good faith way of addressing the argument would have been to look at examples where evidence appears to contradict this, or potential flaws in the academic paper, rather than dismiss the idea that supply siders believe that tax cuts for the wealthy benefit more than just the rich based on a label used in a blog headline...
(GP, in this context, refers to the "grandparent" comment upthread)
But my problem is that "take from the poor and indiscriminately give to the rich" is a mischaracterization of supply-side economics.
You're missing the forest for the trees. I argue that the forest is a high level strategy that has been playing out for approaching 50 years:
1. Push money into the capital economy and cut taxes. If anyone complains, cite growth.
2. Push taxes into the labor economy and cut benefits. If anyone complains, cite fiscal responsibility.
This doesn't necessarily show up to an egregious degree in any individual policy. I can think of a few examples but that's beside the point. If (1) and (2) are aggressively promoted and happen frequently while the invisible (3) and (4) -- capital pays taxes, labor gets benefits -- aren't and don't, then the net effect is intentionally and predictably and observably upwards re-distributive.
Furthermore, I don't buy the excuse that policy wonks don't understand this. Back in comparative government class, they taught us that Iran was a theocracy rather than a democracy not because it didn't do the rituals of electing leaders, but because a Council of Religious Experts got to select the candidates. You can have any color you want, as long as it is black (or Shia Muslim). In any case, the filter is the policy.
Between campaign finance and private ownership of media, it's no real surprise that in the US we have the policy filtering mechanism that allows (1),(2) and blocks (3),(4). Again, the filter is the policy, the same logic that makes Iran a theocracy shoves the US towards plutocracy, and we need to push back by shifting aggregate legislative attention away from (1), (2) and towards (3), (4) rather than getting bogged down in debates over whether any particular fig-leaf appropriately covers any particular penis.
Now (1) and (2) as you mentioned, are broadly associated with the economic right in America. The usual narrative is that Republicans want to do (1) and (2) to concentrate more wealth among the rich, their reason for doing this being the trickle-down economics creed. There's two main problems with this narrative I see.
The first, is that (1) and (2) aren't strictly right or left. They can be bipartisan. The left--broadly associated with increased taxes on the rich, labor rights, and a bigger welfare state--despite its reputation, often engages with parts of (1) and (2). This is because (1) and (2) aren't strictly set. You can have parts of (1), or parts of (2), or mix-and-match, but presenting them as definitively joined is unfair.
Take the Inflation Reduction act from the Biden era, passed during a blue Congress. It invested heavily in renewable technologies--typically a left-wing endeavor--but wouldn't things like EV tax credits technically be considered corporate freebies, i.e. a bit of (1)? Or Trump's Working Families Tax Cut (the BBB), which although cut taxes for the rich, did genuinely expand the child tax credit and double the standard deduction--the opposite of (2). The point being that there's nuance in how you execute these policies.
The second problem I see with this narrative, is that policy goals are not the same thing as policy results. If legislation endeavors to solve a problem, but fails, it would be unfair to say that the legislation's purpose was to fail. While one could make the claim that (1) and (2) promote an upward redistributive, I don't think you can make the case that either the left or the right specifically aim for that.
This comes back to my central problem in this thread: trickle-down economics isn't a real policy. If you take purported aim of this caricature policy--taking money from the poor and indiscriminately giving it to the rich--nobody is seriously advocating for that. While you might think that that is what's broadly happening within the economy today, it's unfair to blame amalgamations of (1) and (2) policy and say that advocates of supply-side economics _want_ further inequality.
In the US, the economic left is a minority wing of the Democratic party. Neoliberals are the majority and have been for the entire Sixth Party System. The "New Democrats" of Bill Clinton -- 30% tax hike on top workers, 30% cut on capital gains tax, gutting of social programs that makes DOGE look like a dog toy, NAFTA, and hey, Epstein connection -- tend to vote with us more often than neoconservatives so we caucus with them but to our eyes they have more in common with Republican neocons than they do with the New Deal Democrats of the Fifth Party System, the FDR democrats who ended the Great Depression, ended elder poverty, electrified rural America, regulated the banks, taxed the rich, and won World War II.
I'm editorializing, of course, but don't come at us with "modern Democrats do a lot of things that look upward-redistributive." We know. They know too, that's why they called themselves "New" Democrats, they were explicitly sidelining the economic left. Obama was a little better, he even did a teeny tiny tax-the-rich with NIIT, but he didn't land the public-option, he didn't end Bush's wars, and he bailed out the banks. When Biden went in front of congress and proposed to tax capital gains like ordinary income, like the states do, it wasn't just Republicans laughing at him it was most Democrats (he probably promised Bernie to float the idea in exchange for support, and Bernie wanted those laughs on the record). The Democrats are a liberal party, not a lib-left or left party, and that penduluum is only beginning to slowly start its swing back. Which isn't to say that leftists are perfect (lord almighty we've got problems), but we've got substantially more focus on "the only war is the class war." Agree or disagree, that's what defines "left," and in the present day most Democrats aren't.
As for policy intent, I started where you are and after reading about the Roosevelts and Reagans of the world came fully around to the FDR perspective: if a policy predictably transfers enormous sums of money, don't accept incompetence as the explanation. But this is an adverse inference and needs examples, so let's list some.
Example 1: IP law. As a science-minded programmer I naturally have opinions on the problems of present day IP law, how the self-funding aspect of the USPTO gives them incentive to over-grant patents, that the bar for challenging trivial patents is too high so the optimal strategy is "lay minefields" not "do research," that bundling favors companies with strategic portfolios and lawyers on payroll, that all these little things add up to a system that helps the big guy at the expense of the little guy. I thought it was idiosyncratic, that the system just sort of evolved that way and a bunch of neutral-intent details turned out to have positive returns-to-capital. Nope. Ronald Reagan. The Reagan-Era IP law "reforms" were effectively identical to my check-list of everything wrong with the patent system. It turns out that every complaint of mine was well known last century and litigated last century -- the "Nine No-Nos" made me literally laugh out loud -- and the fact that Reagan's "reforms" all came in a single package and undid exactly that progress made it pretty clear to me that the crew which did this knew exactly what they were doing. Their checklist was as precise as mine, they were just punching in the opposite direction.
It's even more stark with anti-trust, I don't need to say "they" I can say "Robert Bork." Reagan and Bork brought back the Consumer Welfare standard, where mergers are allowed if a company can scribble a plan with crayons on butcher paper for how their monopoly will actually reduce prices, honest (crossed fingers behind back)! I saw many school acquaintances make many such scribbles and create lots of shareholder value at the expense of consumers. They absolutely knew what they were doing and joked about it in private. The idea that markets don't need competition because (incorrect claim about Standard Oil monopoly reducing prices by 70%) dates back to the Robber Baron era, it was litigated and defeated by Louis Brandeis in the Progressive era, and Reagan and Bork absolutely 100% understood what they were doing bringing it back. The wave of corporate consolidation it ushered in over the last 40 years was the entire point.
There are more examples. The ACA (Obamacare) is the one that bumped me out of the Republican party by convincing me that Republicans weren't legislating in good faith, back in the day. It's even more complicated than the above, though, and that's the problem: politics is adversarial, you must account for the possibility that a scoundrel is trying to force the draw, and it's soooo easy to force the draw by drowning with details. If someone takes 1000 steps to the right and 3 to the left, they can still give you 3 bullet points about how they're totally a leftist. The only defense is perspective.
That's hard to acquire because in general you need to know not just which levers were pulled but how much they mattered, what were the possible motives, what did people know, and which levers could have been pulled. Sometimes it's easy though. When we let Trump print $4T in an election year and he decides to spend $2T inflating the housing market, $1T inflating Wall St, $400B on checks (a 10-for-me-1-for-you ratio) and then, after much begging, graciously concedes to another $400B for a 5-for-me-1-for-you ratio, that breakdown tells you something. When the media spends 100% of its time talking about the 10%/20% that was actually checks, that tells you something. When Elon Musk whines about paying $500M/yr taxes while stacking $200B in wealth for a tax rate of 0.25%, that tells you something. When congress laughs at the idea of taxing capital gains like ordinary income (even Robber Baron lawyers weren't that "extreme"), that tells you something. On occasion, the priorities are laid very bare, and it is important to pay attention on those occasions.
One last thing: the Double Insulation incentives (private funding of campaigns, private ownership of media, rich people systematically in charge of both) exist and are strong. The idea that policy only coincidentally produces outcomes consistent with these incentives beggars belief, first on account of the failure of those incentives to consistently affect the politicians, and subsequently on account of those politicians to consistently fumble legislative intent in the same direction. You need enormous and ongoing feats of mental gymnastics to sustain these explanations, whereas I just need to say "they went where the money was." Because of course they did. Why would they do anything else when they have an infinite supply of counterparty credulity to work with?
But I hope my pleading is evidence enough anyways. However much this means: I really am being sincere.
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.
We can accept that "supply-side economics" is a policy rebranding, but it is not a rebranding of "trickle-down economics". That is abundantly clear. There has never been a policy known as "trickle-down economics".
Reagan's people would disagree:
> Ronald Reagan launched his 1980 campaign for the presidency on a platform advocating for supply-side economics. During the 1980 Republican Party presidential primaries, George H. W. Bush had derided Reagan's economic approach as "voodoo economics".[16] Following Reagan's election, the "trickle-down" reached wide circulation with the publication of "The Education of David Stockman", a December 1981 interview of Reagan's incoming Office of Management and Budget director David Stockman, in the magazine Atlantic Monthly. In the interview, Stockman expressed doubts about supply side economics, telling journalist William Greider that the Kemp–Roth Tax Cut was a way to rebrand a tax cut for the top income bracket to make it easier to pass into law.[17] Stockman said that "It's kind of hard to sell 'trickle down,' so the supply-side formula was the only way to get a tax policy that was really 'trickle down.' Supply-side is 'trickle-down' theory."[17][18][19] Reagan administration officials including Michael Deaver wanted Stockman to be fired in response to his comments, but he was ultimately kept on in exchange for a private apology.[20]
"Trickle-up economics" has never been formally used to refer to a policy either, but at least if you called it that we would understand what you are trying to say. "Trickle-down economics" doesn't even make sense beyond a device used to setup a joke. It is bizarre that you keep going there.
No, cool tech does not make up for the ruinous cost of health care, housing, and education vs median wages. Maslow's Hierarchy still exists. A system that fails to deliver food and shelter for a reasonable number of worked hours at a reasonable and available job is still a failure no matter how cool the Big Screen TVs are.
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.
The mistake that Republicans made is thinking that the nobles are loyal to the kingdom instead of their own personal greed.
Foolish: policies that favor capital are good
Smart: let's check interest rates to see if policies that favor capital are good
I can name you differences, but it's like comparing apples and oranges.
If you are not going to tell us anything, why are you teasing us as if you will?
Holding back discussion points is not a way to advance a discussion
"""
I think supply-side economics deserves more nuance than simply thinking we need to make the tax rate arbitrarily low. The Laffer curve isn't the only thing you should look at, since where you tax can be just as important as how much you tax.
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 tax 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.
"""
How do you compare a criticism, with a policy? Trickle-down economics doesn't have any legislative appropriations. It's not taught in economics classes. Like saying "what's the difference between a boat and a car?" I can tell you that a boat is not a car, but I can't compare the wheels of a car with a boat, nor the keel of a boat with a car. They are different things is all I'm trying to say.
Now as for why I didn't expand with nuance earlier, in my defense I was expanding, but elsewhere in the thread. I foolishly thought this was enough.
This is only true if you look at the standard tax rate. The effective tax rate of a lot of US corporations is appreciably lower.
It works in places like Scandinavia because they don't give corporations ways to lower their tax burden
In other conversation though, am I curious to know where you got your data. As far as I'm aware the Scandinavian countries do in fact have a robust system of corporate tax incentives. This is part of the reason they boast such high productivity.
I very well might be wrong here though, and the topic is interesting. Would you care to share a source?
tl;dr: If you could name me differences you would name me differences
"""
I think supply-side economics deserves more nuance than simply thinking we need to make the tax rate arbitrarily low. The Laffer curve isn't the only thing you should look at, since where you tax can be just as important as how much you tax.
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.
"""
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.
I figured the syntax was like an either-or thing, but I wasn't sure.
> 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...
I don't think it is. What I'm _not_ trying to say is that trickle-down economics is a nickname for supply-side economics. More, trickle-down economics is a strawman. Not the same thing or a different name, but an inaccurate version--a caricature which doesn't even resemble policy. Also I'm not sure what "TFA" stands for.
> This is the most inept attempt at an analogy that I can recall seeing.
It was kind of rough.
Regardless of the incompetence of my arguments though, I promise I am not being intentionally dense. I really do try to act in good faith here on HN, and I'd appreciate it if I could hear more of your perspective and continue this civilly.
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.
And in order to do that, it needs money.
Money it raises by taxation.
So it looks like this: Ancient Greece: state has to care for people English Enlightenment: govern French enlightenment: govern but you need to care for your people German enlightenment: govern based on ideas
Given the Americans rebelled against the English and aligned with the French, it’s a wonder modern Americans have adopted this brutalistic attitude. Btw the French Enlightenment is what led to the Romantic period.
TLDR: role of government depends on whose philosophy you adopt. But in terms of the greatest figures and looking at the healthiest countries, I’d say it is to look after its people.
They do get taxed same as everyone else, more even. What’s not taxed though is the stocks which never get materialized into cash and grow in value because of the low corporate tax rate that makes them more profitable.
> But the reality is that when you tax corporations, that is one of the most economically damaging taxes you can do
That’s a rhetorical jump you made. Corporations benefit from the government creating order and structure just like everyone else. They have a legal system they can use to settle disputes and protect themselves. They have solid roadway networks that help their employees get to work and to transport their goods. They get a military that protects their goods in transit to/from foreign lands. They get a police force that ensures that people don’t destroy their property. It’s only damaging if the value provided to all corporations is less than the tax rate is, but claiming any tax is damaging is laughable on its face. And that’s ignoring all the other kinds of non-monetary value the government grants corporations (eminent domain, water rights, suppression of various regulations, etc)
This says nothing about the wider economy nor about what the tax rate should be, and on its own it doesn’t seem too controversial to me.
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.
The hikes on labor come later, when the debt needs to be paid and Democrats are once again tricked into being fiscally responsible.
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.
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.
Yes, it is the same thing. There's no difference.
I'm not sure how to work with the "all else being equal" part. I suspect it's a way to get out of dealing with the truth of the situation, but feel free to expand on it.
But.. to the main point: "you want to produce more with less labor and other inputs" <- the owner of the business does, yes. But unemployment statistics and in general "labour" wants the opposite.
Let's take this to an extreme. Take all the business owners in the land and make them so efficient they only need employ themselves. "Productivity" remains the same, but now the bulk of the inhabitants of the land are unemployed, and can't buy the "products". So now the owners make no money and go bankrupt. And no-one has work. And there's no productivity.
I think what "you" really want (and by "you" I mean "we") is for business owners to make only the slightest margin of profit possible (after paying themselves) to keep their businesses running and to employ as many people as possible, who all get paid as close as possible to the owner; and for any left-over to be reinvested in new businesses with the same approach to paying staff. That way more people have a job, more people are "productive" and more people can buy the stuff made by the companies.
Sure, this is a ridiculous extreme, but it makes more sense to me than "you want to produce more with less labor and other inputs". I am curious though: is there an equally impractical and extreme story that works to bolster your argument, to help me see the pattern more clearly?
It compounds if the incentive is aimed at domestic labor.
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?
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.
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.
So if their employees are on government assistance, the cost to provide that assistance is inherently their burden. One way or another, every employee they employ will be earning a living wage from them.
I don't even care about overlap. If both Target and Walmart have to pay the difference between the full cost of government assistance for the same person, that's fine. Build a fucking library or something.
If Walmart employees somebody who's part time and is on Medicaid are they on Medicaid because of Walmart or because they couldn't commit to enough hours to go full time? 9% of 1.6 million employees on Medicaid means they are employing over 1.4 million people who are not on Medicaid, all of whom are taxed for income, payroll, property, sales, etc.
If Walmart decided tomorrow to terminate all employees who were collecting Medicaid so that they could avoid a tax increase for that stat would it be a good thing? Is it better for a company to avoid hiring at all, even part time, if they can't fully purge the employee from government assistance?
Significant enough that Walmart couldn't operate without them. Not to mention, Walmart manages to capture those government dollars through accepting EBT and such.
And the goal is to make WalMart pay regardless of how they try to weasel out. If you say "only full time", then they employ thrice as many people and give no one enough hours to make a living. Same if you prorate to hours worked.
Essentially you need to stop inventing rules and systems that can be gamed. Because Walmart is incentivized to game them. Push them in the direction of hiring people full time and paying them a fair wage for their time.
Lowering taxes is one of the policies of supply-side economics:
> Supply-side economics is a macroeconomic theory postulating that economic growth can be most effectively fostered by lowering taxes, decreasing regulation, and allowing free trade.[1][2]
* https://en.wikipedia.org/wiki/Supply-side_economics
Along with decreasing regulation and allowing free trade, so you've just knocked down one of the reasons to think about supply-side stuff seriously.
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.
In reality higher taxes implies higher spending, and different countries spend differently. It's entirely possible that the peak of the curve moves based on where you plan to spend the money. If you proposed a 5% tax increase to build the supports to take on Taiwan in semi, then you probably have a curve that looks different than a 5% tax increase to start a war.
"the term 'trickle-down economics' was popularized by Democrats in the US to derogate Reaganomics"
"not to be confused with trickle-down economics"
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).
Plus the Supply Side Economics wiki article, right below the "Not to be confused with trickle-down economics", contains a huge box pointing out the many issues with the article, including but not limited to "Needs more academic or scholarly research, rather than newspaper articles." and "contains weasel words: vague phrasing that often accompanies biased or unverifiable information."
I also was trying to google it and saw what the other commenter saw btw. The AI overview on Google says "Yes, they refer to the same core economic concept, but supply-side economics is the formal, academic term, while trickle-down economics is a popular and critical label for it. Both argue that cutting taxes and reducing rules for businesses and rich people will help the whole economy". And it references: https://mattbruenig.com/2013/01/07/on-trickle-down-economics... https://en.wikipedia.org/wiki/Trickle-down_economics https://study.com/learn/lesson/video/demand-side-vs-supply-s... https://www.annenbergclassroom.org/glossary_term/supply-side...
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
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.
Tax the rich means: Increase W2 tax and property tax which, takes money away from me to feed lower middle class
Tax cut means: Reduce the estate tax and cooperate tax, keep the W2 tax flat, and cut the benefits that most critical to the bottom: Food stamps while keep other unnecessary programs unchanged: Discounted Toll for low income when driving in HOV lanes.
Once you hit a certain wealth in most OECD countries, you just stop paying taxes. All that is required is to not take any income, which is easily done. So the top of the "income" distribution is a lie. When we say "top 1% pay X of all taxes", we're talking about the top 1% income earners, not the 1% who have the most wealth, or even the 1% who have increased their wealth the most over the last year.
Piketty is clearly correct with his minimum wealth tax proposal. It does seem the only way to tax people who never realize income.
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.
Obviously this is correlation, but it's somewhat damning to the conservative gospel (dogma?) that lowering taxes somehow automatically produces more growth.
Given that we have no clear indicator that raising taxes on wealthy people would reduce growth (really, we have the opposite signal from the historical record), there seems little reason not to pursue greater equality.
There's an observation.
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
They can avoid both through schemes such as taking low salaries and borrowing against assets they will never sell for a profit.
The tax system would need a complete overhaul to plug those holes, but it would always be a game of whack-a-mole.
Basically the idea is to just accept the fact that the super wealthy will find the loopholes, so instead remove the loopholes. Just flatly put a minimum tax all wealth over $XX million at 2%.
One nice aspect of the policy is that it's a tax minimum: so people with high incomes who are already paying that much, regardless of how wealthy they are, don't need to pay the tax.
Another nice aspect is it's relatively easy to implement. There aren't that many people with $XX millions in wealth.
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.
---ron white, upon experiencing a flash of enlightenment. quote from memory.