Consumers create jobs.

[Oldstyle]

The idea that the interests of employers are aligned with the interests of employees is trickle-down. Its a term that's been criticized, but there's validity there.

With all due respect, Antagon...I don't think you're correct. By law employees receive pay in return for their providing labor to an employer. The employee will receive that pay whether or not the business realizes a profit from the investment that an employer makes. There is no "trickle down" taking place...it's ALWAYS "trickle up". As an employer I'm constantly controlling my costs trying to realize a profit. I don't have the luxury of telling my employees that they will only be paid if I make a profit. If I do I'm going to end up in court or worse in jail.

Supply-side economics from which trickle-down has been coined refers to the disposition of profits or retained earnings themselves. It proposes that apart from the obligations you are calling out, that your judgement with your profits will further benefit people like your staff to the same or greater extent than robin hood style government policy.

My point is that I still don't think that there IS any such thing as trickle-down. It's a straw man. It's always trickle up. The term trickle-down was coined by people that don't understand economics because the expression made it appear like employers had the money all along and decided who was going to get it after they'd taken their profit out. That isn't the way things work.

 

[antagon]

With all due respect, Antagon...I don't think you're correct. By law employees receive pay in return for their providing labor to an employer. The employee will receive that pay whether or not the business realizes a profit from the investment that an employer makes. There is no "trickle down" taking place...it's ALWAYS "trickle up". As an employer I'm constantly controlling my costs trying to realize a profit. I don't have the luxury of telling my employees that they will only be paid if I make a profit. If I do I'm going to end up in court or worse in jail.

Supply-side economics from which trickle-down has been coined refers to the disposition of profits or retained earnings themselves. It proposes that apart from the obligations you are calling out, that your judgement with your profits will further benefit people like your staff to the same or greater extent than robin hood style government policy.

My point is that I still don't think that there IS any such thing as trickle-down. It's a straw man. It's always trickle up.

Where trickle-down is associated with supply-side, and trickle-up with keynesian econ, do you still see a straw man or see there as being no way or no such thing as policy supporting the supply side of the equation?

The term trickle-down was coined by people that don't understand economics because the expression made it appear like employers had the money all along and decided who was going to get it after they'd taken their profit out. That isn't the way things work.

This is also not what is being referenced by the term, so I think you are confused about other people's positions, making them appear confused to you.

The term refers to net (pre-burdened) profit, rather than gross (pre-payroll) earnings... Remember that these are descriptors for government macroeconomic policy, and there's a huge 'insert government here' sign that comes up right after all your bills and employees are paid.

 

[Rshermr]

Or said another way, "Trickle-down economics" and "the trickle-down theory" are terms in United States politics to refer to the idea that tax breaks or other economic benefits provided by government to businesses and the wealthy will benefit poorer members of society by improving the economy as a whole"
"Today, "trickle-down economics" is most closely identified with the economic policies known as Reaganomics or laissez-faire. David Stockman, who as Reagan's budget director championed these cuts at first but then became skeptical of them, told journalist William Greider that the term "supply-side economics" was used to promote a trickle-down idea.[7]

"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."[8]
—David Stockman, Ronald Reagan's budget director

Quotes from:
Trickle-down economics - Wikipedia, the free encyclopedia
Or said another way, trickle down economics is the idea that we are all going to win as a result of the reduction of taxes to the wealthy. Has never worked, to my knowledge, in a BAD economy.

 

[Oldstyle]

Or said another way, "Trickle-down economics" and "the trickle-down theory" are terms in United States politics to refer to the idea that tax breaks or other economic benefits provided by government to businesses and the wealthy will benefit poorer members of society by improving the economy as a whole"
"Today, "trickle-down economics" is most closely identified with the economic policies known as Reaganomics or laissez-faire. David Stockman, who as Reagan's budget director championed these cuts at first but then became skeptical of them, told journalist William Greider that the term "supply-side economics" was used to promote a trickle-down idea.[7]

"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."[8]
—David Stockman, Ronald Reagan's budget director

Quotes from:
Trickle-down economics - Wikipedia, the free encyclopedia
Or said another way, trickle down economics is the idea that we are all going to win as a result of the reduction of taxes to the wealthy. Has never worked, to my knowledge, in a BAD economy.

You, pretending to know something about economics is getting more and more amusing. Wikipedia? If you really WERE an economist...something that you've pretty much established without much question that you are NOT...then you would know that "trickle down" theory is a political term...not an economic term.

Trickle down does not exist in the Real World. It's a term that was invented by people opposed to supply side economics...people who were politically committed to the redistribution of income and used the term "trickle down" when they wanted to paint a dire picture of profits going to business owners first and then belatedly working their way down to workers. The problem with their scenario is that it's not something that happens...not ever! The very first thing that happens when an investment in business is made...no matter what it is that is being built...is that people are hired to do the work. Without that nothing happens. So if the workers are being paid FIRST and the investor is being paid LAST then how exactly does that constitute "trickle down"? Supply side economics is based on the principle that a reduction in capital gains taxes will produce an expectation of greater FUTURE net profits and thereby provide incentives to make CURRENT investments. I repeat...that is an expectation of FUTURE profits!!! Profits realized LONG after workers have been paid.

 

[Annie]

Is there even such a thing as a true "Trickle-down" effect? Quite frankly I don't see it. Money always goes out first before it returns as profit...if it ever does return. The whole theory of "trickle down" economics is something coined by people without a clue as to how economics really works.

The idea that the interests of employers are aligned with the interests of employees is trickle-down. Its a term that's been criticized, but there's validity there.

Indeed. Though I'm not sure what you are referring to is actually 'trickle down.'

Employees that seriously disagree with owner, to the degree that they are willing to forgo working, will find themselves either replaced or without jobs due to closure. No one wins in the later scenario.

 

[antagon]

Is there even such a thing as a true "Trickle-down" effect? Quite frankly I don't see it. Money always goes out first before it returns as profit...if it ever does return. The whole theory of "trickle down" economics is something coined by people without a clue as to how economics really works.

The idea that the interests of employers are aligned with the interests of employees is trickle-down. Its a term that's been criticized, but there's validity there.

Indeed. Though I'm not sure what you are referring to is actually 'trickle down.'

Employees that seriously disagree with owner, to the degree that they are willing to forgo working, will find themselves either replaced or without jobs due to closure. No one wins in the later scenario.

That builds off my very short and abstract take on supply-side economics. I'd say the organized labor scenario you point out is empowered by the opposite angle: that the interests of employees is aligned with the interest of employers.

Only certain types of employees actually align well with the interests of their employer. They'd never organize or strike... Though there could be a union of executives and salespeople of which I'm unaware.

Fundamentally, either extreme is invalid alone, but constitute the biggest game of economic tug-o-war in the last 50 yrs.

 

[antagon]

Oldstyle remains confused on the topic. The wiki quotes there make the case quite plainly, however, he's convinced that folks are probing how profits are derived from investments. The argument is actually about whether or not more cash after taxes will illicit investment in the first place.

 

[Oldstyle]

Actually Wiki backs up my contention quite plainly...as the following shows. As usual, Rshermr only took the parts from Wiki that backed up his argument and edited out what didn't.

"Trickle-down economics" and "the trickle-down theory" are terms in United States politics to refer to the idea that tax breaks or other economic benefits provided by government to businesses and the wealthy will benefit poorer members of society by improving the economy as a whole.[2] The term has been attributed to humorist Will Rogers, who said during the Great Depression that "money was all appropriated for the top in hopes that it would trickle down to the needy."[3] The term is mostly used ironically or as pejorative.[4] It has been referred to as a straw-man argument.[5]
Proponents of tax cuts often claim that savings and investment are essential to the economy, and thus less taxes for an income bracket need not harm any other income bracket. Economist George Reisman, a proponent of tax cuts, said the following: "Of course, many people will characterize the line of argument I have just given as the 'trickle-down' theory. There is nothing trickle-down about it. There is only the fact that capital accumulation and economic progress depend on saving and innovation and that these in turn depend on the freedom to make high profits and accumulate great wealth. The only alternative to improvement for all, through economic progress, achieved in this way, is the futile attempt of some men to gain at the expense of others by means of looting and plundering. This, the loot-and-plunder theory, is the alternative advocated by the critics of the misnamed trickle-down theory."[6]

Economist Thomas Sowell has written that the actual path of money in a private enterprise economy is quite the opposite of that claimed by people who refer to the trickle-down theory. He noted that money invested in new business ventures is first paid out to employees, suppliers, and contractors. Only some time later, if the business is profitable, does money return to the business owners—but in the absence of a profit motive, which is reduced in the aggregate by a raise in marginal tax rates in the upper tiers, this activity does not occur. Sowell further has made the case that no economist has ever advocated a "trickle-down" theory of economics, which is rather a misnomer attributed to certain economic ideas by political critics.[9]
Although the term "trickle down" is mainly political and does not denote a specific economic theory, some economic theories reflect the meaning of this pejorative."

I'm not "confused" on the topic, Antagon. Unlike some others here, I actually WENT to my Econ classes and paid attention to what was being discussed. I repeat...there is no such thing as "trickle down" theory in economics...it is a "misnomer"...a word or term which suggests a meaning that is known to be wrong.

 

[antagon]

I don't see the grave misnomer. Conservative rhetoric aimed at a broader less-informed voter base has indeed implied that a better economy with better outcomes for the 'working class' comes from less burden on profits as they are realized by the 'investment class'. Those effects are real, despite caveats and thresholds of diminishing returns. The benefit of lower tax rates come from a larger pool of untaxed profit. If you see the decision-makers in the investment class as 'up' and the working class or destitute folks as 'down', then indeed the flow from reinvestment flows downward. It doesn't gush in the sense of handouts which pay rent, but rather in opportunity to participate in capital investments. A trickle. I think it's an intuitive term, although pejorative. It's much like 'flooding the basement' refers to the the antithesis.

Sowell may be right that economists don't use the term, but clearly he, too, fails to understand the meaning of trickle-down, or what the term is referring to... based on the quote provided. If he also feels that the term contradicts the realization of profit from investment, he's also struggling with the scope of the term. I have only heard or seen the term used synonymously with supply-side macroeconomics, where he, like yourself, gets into some examination of how profits are realized at the micro level.

Supply-side economics is one thing. At the first insinuation that it could afford working classers or destitutes a favorable outcome, said proposal is implying trickle-down. As a pejorative, it goes further than 'supply-side' because it accounts for the problems with the theories at once with the dividends.

 

[Katzndogz]

Actually without Apple, there would be no consumers of Apple products. There was no consumer demand for a computer, or a cell phone, or an IPod before these things existed. The product created the demand.

 

[Katzndogz]

Or said another way, "Trickle-down economics" and "the trickle-down theory" are terms in United States politics to refer to the idea that tax breaks or other economic benefits provided by government to businesses and the wealthy will benefit poorer members of society by improving the economy as a whole"
"Today, "trickle-down economics" is most closely identified with the economic policies known as Reaganomics or laissez-faire. David Stockman, who as Reagan's budget director championed these cuts at first but then became skeptical of them, told journalist William Greider that the term "supply-side economics" was used to promote a trickle-down idea.[7]

"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."[8]
—David Stockman, Ronald Reagan's budget director

Quotes from:
Trickle-down economics - Wikipedia, the free encyclopedia
Or said another way, trickle down economics is the idea that we are all going to win as a result of the reduction of taxes to the wealthy. Has never worked, to my knowledge, in a BAD economy.

You, pretending to know something about economics is getting more and more amusing. Wikipedia? If you really WERE an economist...something that you've pretty much established without much question that you are NOT...then you would know that "trickle down" theory is a political term...not an economic term.

Trickle down does not exist in the Real World. It's a term that was invented by people opposed to supply side economics...people who were politically committed to the redistribution of income and used the term "trickle down" when they wanted to paint a dire picture of profits going to business owners first and then belatedly working their way down to workers. The problem with their scenario is that it's not something that happens...not ever! The very first thing that happens when an investment in business is made...no matter what it is that is being built...is that people are hired to do the work. Without that nothing happens. So if the workers are being paid FIRST and the investor is being paid LAST then how exactly does that constitute "trickle down"? Supply side economics is based on the principle that a reduction in capital gains taxes will produce an expectation of greater FUTURE net profits and thereby provide incentives to make CURRENT investments. I repeat...that is an expectation of FUTURE profits!!! Profits realized LONG after workers have been paid.

Why do you contradict yourself? The first thing that happens is an investment in the business. In fact, if there was no investment, there would be no business to hire anyone. If investors understood that they would never realize a profit on that investment, they simply wouldn't not invest anything ever. Now the economy stalls. It stalls because even if the workers are willing, there is no investment that would give them something to do. That's what obama did. He stopped the investment.

The reality is, the initial investment in a business isn't made by a financial investor, it's by the person who started the business. They invest their time, their energy and their own capital. Sometimes for years before they start making enough money to trickle down to hiring an employee. Liquid Paper was started by an unemployed secretary in her own kitchen. It was her, making, bottling, selling and distributing her own little kitchen product. Her efforts have trickled down into a multimillion dollar corporate enterprise.

 

[antagon]

Actually without Apple, there would be no consumers of Apple products. There was no consumer demand for a computer, or a cell phone, or an IPod before these things existed. The product created the demand.

Says law... roughly.

Apple approached an electronics market knowing that there was demand and directed said demand onto their bottom line through the intro of their goods. How did they know? There were consumers with wants and money.

 

[EdwardBaiamonte]

Or said another way, "Trickle-down economics" and "the trickle-down theory" are terms in United States politics to refer to the idea that tax breaks or other economic benefits provided by government to businesses and the wealthy will benefit poorer members of society by improving the economy as a whole"
"Today, "trickle-down economics" is most closely identified with the economic policies known as Reaganomics or laissez-faire. David Stockman, who as Reagan's budget director championed these cuts at first but then became skeptical of them, told journalist William Greider that the term "supply-side economics" was used to promote a trickle-down idea.[7]

"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."[8]
—David Stockman, Ronald Reagan's budget director

Quotes from:
Trickle-down economics - Wikipedia, the free encyclopedia
Or said another way, trickle down economics is the idea that we are all going to win as a result of the reduction of taxes to the wealthy. Has never worked, to my knowledge, in a BAD economy.

You, pretending to know something about economics is getting more and more amusing. Wikipedia? If you really WERE an economist...something that you've pretty much established without much question that you are NOT...then you would know that "trickle down" theory is a political term...not an economic term.

Trickle down does not exist in the Real World. It's a term that was invented by people opposed to supply side economics...people who were politically committed to the redistribution of income and used the term "trickle down" when they wanted to paint a dire picture of profits going to business owners first and then belatedly working their way down to workers. The problem with their scenario is that it's not something that happens...not ever! The very first thing that happens when an investment in business is made...no matter what it is that is being built...is that people are hired to do the work. Without that nothing happens. So if the workers are being paid FIRST and the investor is being paid LAST then how exactly does that constitute "trickle down"? Supply side economics is based on the principle that a reduction in capital gains taxes will produce an expectation of greater FUTURE net profits and thereby provide incentives to make CURRENT investments. I repeat...that is an expectation of FUTURE profits!!! Profits realized LONG after workers have been paid.

Why do you contradict yourself? The first thing that happens is an investment in the business. In fact, if there was no investment, there would be no business to hire anyone. If investors understood that they would never realize a profit on that investment, they simply wouldn't not invest anything ever. Now the economy stalls. It stalls because even if the workers are willing, there is no investment that would give them something to do. That's what obama did. He stopped the investment.

The reality is, the initial investment in a business isn't made by a financial investor, it's by the person who started the business. They invest their time, their energy and their own capital. Sometimes for years before they start making enough money to trickle down to hiring an employee. Liquid Paper was started by an unemployed secretary in her own kitchen. It was her, making, bottling, selling and distributing her own little kitchen product. Her efforts have trickled down into a multimillion dollar corporate enterprise.

liberals would rather have a ton a welfare entitlements trickle down!! Is that better?????

 

[EdwardBaiamonte]

The argument is actually about whether or not more cash after taxes will illicit investment in the first place.

What argument?? A liberal lacks the IQ to make what can fairly be called an argument.

In venture capital we use the phrase "shots on goal."
The more "shots on goal" we take the more likely we are to fund another Apple or Google or Intel. The more the liberals raise the capital gains tax the fewer "shots on goal" we can take.

The simplest concept will simply be beyond the liberal IQ.

 

[Katzndogz]

Actually without Apple, there would be no consumers of Apple products. There was no consumer demand for a computer, or a cell phone, or an IPod before these things existed. The product created the demand.

Says law... roughly.

Apple approached an electronics market knowing that there was demand and directed said demand onto their bottom line through the intro of their goods. How did they know? There were consumers with wants and money.

Sorry but there was no demand. Consumers didn't want cell phones before there were cell phones. Consumers didn't want pet rocks before someone came up with the idea of pet rocks. The product creates the demand. Before you know it, everyone wants a Cabbage Patch Doll!

True innovators know this. They can create a demand out of thin air. Steve Jobs, who always was a certified genius has hundreds of products he envisioned. What are they? What demand will these products fill? We don't know because they haven't been invented yet. How will these products improve your life? You don't know! As soon as they get on the market, you won't be able to live without it.

 

[Oldstyle]

I don't see the grave misnomer. Conservative rhetoric aimed at a broader less-informed voter base has indeed implied that a better economy with better outcomes for the 'working class' comes from less burden on profits as they are realized by the 'investment class'. Those effects are real, despite caveats and thresholds of diminishing returns. The benefit of lower tax rates come from a larger pool of untaxed profit. If you see the decision-makers in the investment class as 'up' and the working class or destitute folks as 'down', then indeed the flow from reinvestment flows downward. It doesn't gush in the sense of handouts which pay rent, but rather in opportunity to participate in capital investments. A trickle. I think it's an intuitive term, although pejorative. It's much like 'flooding the basement' refers to the the antithesis.

Sowell may be right that economists don't use the term, but clearly he, too, fails to understand the meaning of trickle-down, or what the term is referring to... based on the quote provided. If he also feels that the term contradicts the realization of profit from investment, he's also struggling with the scope of the term. I have only heard or seen the term used synonymously with supply-side macroeconomics, where he, like yourself, gets into some examination of how profits are realized at the micro level.

Supply-side economics is one thing. At the first insinuation that it could afford working classers or destitutes a favorable outcome, said proposal is implying trickle-down. As a pejorative, it goes further than 'supply-side' because it accounts for the problems with the theories at once with the dividends.

What economists like Sowell are saying, Antagon is since profit is what is left over AFTER paying workers that it's impossible for profits to "trickle down" to those workers because they got paid long before profits were generated. This is pretty common sense stuff here and Sowell hasn't failed to understand it. He's pointed out the inherent fallacy of trickle down theory and why it is simply political rhetoric...a misnomer in fact...that is not backed up by economic reality.

 

[EdwardBaiamonte]

Actually without Apple, there would be no consumers of Apple products. There was no consumer demand for a computer, or a cell phone, or an IPod before these things existed. The product created the demand.

Says law... roughly.

Apple approached an electronics market knowing that there was demand and directed said demand onto their bottom line through the intro of their goods. How did they know? There were consumers with wants and money.

Sorry but there was no demand. Consumers didn't want cell phones before there were cell phones. Consumers didn't want pet rocks before someone came up with the idea of pet rocks. The product creates the demand. Before you know it, everyone wants a Cabbage Patch Doll!

True innovators know this. They can create a demand out of thin air. Steve Jobs, who always was a certified genius has hundreds of products he envisioned. What are they? What demand will these products fill? We don't know because they haven't been invented yet. How will these products improve your life? You don't know! As soon as they get on the market, you won't be able to live without it.

all great points!! There is no demand until Republican supply side capitalist put something on the market consumers want and can afford!!

Consumers are passive and exist in the billions so don't need to be encourged one tiny bit. Folks like Steve Jobs are one in a billion. We cant afford to lose even one like him but it is certain we already have among todays young as they listen to all hateful anti capitalist liberal rhetoric.

 

[antagon]

I don't see the grave misnomer. Conservative rhetoric aimed at a broader less-informed voter base has indeed implied that a better economy with better outcomes for the 'working class' comes from less burden on profits as they are realized by the 'investment class'. Those effects are real, despite caveats and thresholds of diminishing returns. The benefit of lower tax rates come from a larger pool of untaxed profit. If you see the decision-makers in the investment class as 'up' and the working class or destitute folks as 'down', then indeed the flow from reinvestment flows downward. It doesn't gush in the sense of handouts which pay rent, but rather in opportunity to participate in capital investments. A trickle. I think it's an intuitive term, although pejorative. It's much like 'flooding the basement' refers to the the antithesis.

Sowell may be right that economists don't use the term, but clearly he, too, fails to understand the meaning of trickle-down, or what the term is referring to... based on the quote provided. If he also feels that the term contradicts the realization of profit from investment, he's also struggling with the scope of the term. I have only heard or seen the term used synonymously with supply-side macroeconomics, where he, like yourself, gets into some examination of how profits are realized at the micro level.

Supply-side economics is one thing. At the first insinuation that it could afford working classers or destitutes a favorable outcome, said proposal is implying trickle-down. As a pejorative, it goes further than 'supply-side' because it accounts for the problems with the theories at once with the dividends.

What economists like Sowell are saying, Antagon is since profit is what is left over AFTER paying workers that it's impossible for profits to "trickle down" to those workers because they got paid long before profits were generated. This is pretty common sense stuff here and Sowell hasn't failed to understand it. He's pointed out the inherent fallacy of trickle down theory and why it is simply political rhetoric...a misnomer in fact...that is not backed up by economic reality.

The term refers to the conversion of profit to investment, not investment into profit.

Read that again until you can wit a distinction.


Seriously, read that line one more time.

So, "long before profits were generated", "they got paid", and long before that, there was an investment. "Pretty common sense stuff here".

 

[Katzndogz]

This is the first Bartleby generation. They would simply prefer not to. At what age was a boy considered a man? At one time it was 13. Then 18. After that 21. Now children are children to nearly 30. They are "children" when they have children of their own!

 

[Moonglow]

The argument is actually about whether or not more cash after taxes will illicit investment in the first place.

What argument?? A liberal lacks the IQ to make what can fairly be called an argument.

In venture capital we use the phrase "shots on goal."
The more "shots on goal" we take the more likely we are to fund another Apple or Google or Intel. The more the liberals raise the capital gains tax the fewer "shots on goal" we can take.

The simplest concept will simply be beyond the liberal IQ.

Hmm, didn't bother you fellows when reagan raised capital gaines tax to 28%. or are you too stupid to remember that?