Analysis of media issues, politics and current events.
Trickle down economics. Reaganomics. The official economic title: supply side economics. The idea that if the big companies and wealthy are given the resources to proper, resulting economic success and wealth will register with the rest of society by trickling down. The wealthy will buy more boats, reinvest in business and inventory to spur production and create jobs and be more inclined to give in the form of donations. Essentially the idea that a rising tide from this trickling lifts all boats. But with the Dow showing lifetime high gains all week, corporations flush with profits, and job growth incredibly stubborn, charities struggling and banks really only lending to those who don’t need it, what’s exactly trickling? Or on the more optimistic side, when does the real trickling start?
In fact, despite the huge profits and market indicators of business growth and wealth accumulation at the top, the message of corporate America is the demand to now make things EVEN better for us, (tax cuts, loosen regulations) and, oh boy, then you you’ll see the results.
Possible. But even that argument concedes the fact that the prosperity expansion for the top earners has no set mathematical relationship to expansion or prosperity those at the bottom. It’s an argument delivered by corporate titans and supply side advocates in the same way you’d jiggle a wire in a stalled out car and yell at the person behind the wheel to, “Ok, try it now!” It’s a command given with fingers crossed more than complete confidence of results.
We’re not going to have an overthrow of capitalism. But I do think at a gut level, Americans have figured this disconnect between the top and their lives out. And by extension debunked a lot of trickle down economics. Part of this disillusionment is because Americans still feel burned by the economic free-fall of 2007. When the economy went south, Americans saw companies, who once ran ads about being here to help them and partnership, outrace them and metaphorically shoved them out of the way as they themselves ran to the economic lifeboats. And on top of that, some companies like the banks, asked for their lifeboats to be customized with nice unlimited executive salaries as they took government loans – all while proselytizing the “survival of the fittest” philosophy to be applied to the rest of us.
Bad enough. But a funny thing happened on the way back to property for corporate America. Many realized they didn’t need the middle class as much. Good or bad, but the economic collapse revealed that we’ve been country that could lose some employment weight and be more market and business efficient. For workers, technology and greater workloads placed on the job survivors means some companies can permanently defer or lose some labor costs (less people to trickle corporate revenue with). Banks realized they can make money in the bond markets and other high end markets than giving loans to startups and people who wanted to buy homes.
Trickle down doesn’t work and likely hasn’t work for some time now because many prosperity effects of supply side economics are now diverted from reaching the middle class. Companies refusing hiring. Lack of investment of business capital. Tax avoidance. Including many companies like Apple, GE who simply bank profits they make overseas rather than leaving it in the US to be taxes or reinvested to the benefit of Americans.
All this means is economic indicators like the Dow reflects one America. The investor class of Americans. Those who are invested in the stock market have made their money back for the financial collapse (thanks to the government trickling down bailout cash to save them). So Trickle down economics has worked for them. Not so much for everyone else.