Andylusion
Platinum Member
This is literally as absurd as saying "gravity is a lie".
Trickle down is just an undeniable reality of life (like gravity). Wealthy people create jobs. A poor person never created even a single job in world history.
Wealthy people have money to spend on goods and services. That causes a portion of their wealth to "trickle down" to those people providing the goods and services.
It always amazes me how completely ignorant of even basic economics liberals are. I guess because they don't hold jobs and thus don't participate in the work force they are baffled by economics? I'm not sure what else it could be...![]()
So, if tickle down is a fact, then how come trickle down led the US from having a pumping economy to being in the worst recession since WW2?
If you give a person with $5 million in their bank another half a million, what will they do with it?
If you give 500,000 people living on the bread line $1 each, what will they do with it?
The problem we have here is that the economy is a massive thing, it takes a lot of brains to try and figure out one aspect of the economy and even then they don't necessarily get it.
The Tories in the UK are basking in the glory that their economic policy (cut taxes, cut spending, try and cut the debt level but increase it) has worked. However unemployment in the UK is HIGHER than in the US right now (or at least was when I last looked a few months back).
Why?
You are correct in one area. The economy is not the sum of a single policy. One policy alone does not solve everything.
In order to have a growing economy, there are three fundamentals you must have.
First, you must have a product that people want. If you come up with bricks made out of dog turds, chances are no matter how cheap they are, people are not going to buy them. People don't want a house that stinks year round, and falls apart after a rain storm.
Second, you must have the money to invest in creating the business. If you and I, decide we want to sell cars, and neither of us has the money to build the factory, buy the materials, or the equipment and tools, there will not be a factory no matter how profitable, or desirable to the public, our car would be.
Third, you must be able to produce the product profitably. Even if we have all the money to build the factory, and even if we have all the demand for the product by the public, if we can't build the products profitably, we'll eventually go broke and close... thus we wouldn't do the project to begin with.
So we need a product people want, the money to start production, and the ability to produce the product profitably.
If you have those 3 things, the economy will grow.
Now generally, the product demand is a given. In most cultures around the world, there is always things and stuff people want. I was reading about a specific middle east country, where their religious doctrine made material possession a negative, and as such it was very hard for them to develop a domestic economy. But for most of the world, that's not an issue.
That leaves the other two, having capital to invest in growing the economy, and being able to produce stuff profitably. Simply put...
Even if you have a trillion dollars, if you can't build the product profitably, nothing else matters.
Yet, even if you can build the product with even the largest of profits, if you don't have the money to build the factory to make the product, nothing else matters.
Both are absolute requirements.
So let's talk about the UK for a moment. The top marginal rate in the UK, dropped from 50% on wages over £150,000, to 45% on wages over £150,000 ($250,000).
I highly doubt a mere 5% cut on wages over £150,000, is going to make a big difference in anything. But, you are right, it is a cut, and thus the wealthy should have a few thousand pounds more to invest.
But you are ignoring the other key. Like I said, even if you had £1 Trillion pounds, would you invest into a manufacturing plant that was not profitable? If the cost to make the product was too high to make a profit, would invest into something that would lose money until you were broke? No. No one would.
What's the number 1, top cost in any business? Labor.
Rising U.K. Labor Costs Show Productivity Puzzle - WSJ.com
The Organization for Economic Cooperation and Development, a Paris-based think tank, said in a report this month that unit labor costs in the U.K. rose 2.4% in the second quarter compared with the first, outpacing the rate of growth in Germany, France, Italy and the U.S. The average rise in unit labor costs in the OECD's 34 members was just 0.3%.
U.K. labor costs rise despite weak wage growth - MarketWatch
The ONS said labor costs per hour rose 2% in the first quarter compared with the same period a year earlier. The bulk of the increase in labor costs came from non-wage inflation, such as higher taxes, sickness and maternity pay and employer contributions to pensions. Non-wage labor costs rose 4.3% on the year in the first quarter, the ONS said, while wage costs rose 1.6%.
There is the problem. You have a higher unemployment rate, which should cause wage costs to fall. Supply of labor high, demand for labor low, cost should go down.
Instead, because of government policies, taxes, labor laws, pension payments, sick pay.... instead of going down, labor costs in the UK are going UP, even while the economy is weak, and unemployment is high.
So even if we have the money to open a new car plant, and even if we have a car the people want to buy, if the cost of labor makes building the car unprofitable, then we don't build it, jobs are not created, and the economy doesn't grow.
That's your answer sir. That's why just cutting taxes alone, doesn't solve it. You have to also lower the cost of labor. And you people on the left, don't like that, but that's how the world works.