Why doesn't "trickle down economics" work today?
By the idea, it sounds like it would work
but presently that's not the case,
- Charles MLv 51 decade agoBest Answer
Because the economic environment doesn't support it.
First, if you cut taxes, you have to reduce spending.
Second, you have to make it possible for people to work in the US in competition with other markets.
If you owned a business that made widgets, because of all the taxes and regulations in this country, it would cost you $1 to make a widget. Lets say that because of competition, you can't sell it for more than $1.20.
Now move the manufacturing offshore. In China, they can make the widget for $0.20. and then you can import it into the US and pay $0.30. now you have $.50 invested and still can sell it for $1.20. Any reasonable person would do that.
Well to change that, you have to make it cheaper in the US or make it more expensive from OffShore. Either you lower regulation and Taxes here or you Tariff it from there. Which do you choose?
- sandand_surfLv 61 decade ago
It's a case of once bitten, twice shy for people who lived through the 80s. Reagan gave massive tax cuts to the rich, moderate ones to working folks so Congress would buy it. Then he also decided to build up our military by leaps and bounds, ran up a pretty big deficit, then had to enact a major tax increase to balance the budget.
Folks who lived through aren't going to buy that it will work and the tax breaks will stay in place. They're thinking - "sounds great, but you'll just raise taxes even higher in the end to make up for lost revenues."
Even Bush Sr. referred to it as "voodoo economics".
- froghuggerLv 61 decade ago
It does work, how can it not. If the government (Obama's plan) raised taxes on businesses and companies they sure are not going to make less profit. They are going to raise prices to recoup the money they have to pay for taxes. So then we, the consumers, will pay more.
Same with min. wage. it not only causes prices to go up it also cause wages to go down. If you make 10$ on hour and min. wage is 5$ an hour you are making twice min. wage. Then when min wage goes up to 7$ on hour prices go up to cover the cost and you are now only make 3$ more then min. wage so you just took a pay cut. It drags middle class closer to poverty.
It all trickles down . . .
- 1 decade ago
It never did work. It made the rich richer and all the rest of us poorer.
The whole premise is stupid. The rich get all the cake but we get to scramble for the crumbs that fall to the ground - great!