Bubba wrote: ↑Mon Sep 23, 2024 3:26 am
It always shocks me when people think that trickle down works. Even if you give a million examples of why it doesn't work, they'll still tell you otherwise. Just for funsies I did a bunch of searches for papers on it too
https://scholar.google.com/scholar?hl=e ... ickle+down. Crazy stuff.
I think the focus is on the wrong thing. Trickle down doesn't work because government sticks it's nose into the economic sphere in a way it shouldn't. Trickle down theory works if you let it, but if you mess with it then you mess with the underpinnings of the theory, and it fails.
Here's my take: Socialism in any form doesn't work. Neither does pure capitalism, which inevitably leads to corporatism / crony capitalism. The supporters of "real socialism" say that it's never been really implemented anywhere. Well, "real socialism" has never been tried the same way that "real capitalism" has never been tried. I disagree - each has been tried at various points - but let's say for the sake of argument that they're right. Well, history shows us that "almost socialism" resulted in the death and impoverishment of hundreds of millions of people, whereas "almost capitalism" has lifted billions from absolute poverty, extended lifespans, and saved lives due to the advances and inventions that the market made possible.
One is a system where the powerful supposedly steals from the powerless (capitalism), and the other is a system where the powerful actually steals from the powerless (socialism). So what's the solution?
My argument is that capitalism is the best option humanity has found, but it needs to be restrained a bit by a government that is itself severely restrained. The government portion of the balance needs to be more constrained than the capitalism, because government is more difficult to rein in when it gets out of control, while companies can be legally broken up, sold, or go bankrupt if everybody stops buying. The difficulty comes in deciding where those lines are drawn.
I'm an advocate of the Chicago School a-la Milton Friedman. Allow the market to run freely, let bad businesses fail, and government's job is not to direct the economy like a quarterback, rather, be more of a referee and blow the whistle when individual players make mistakes (become monopolies, intentionally mislead customers, break contracts, etc.) Government has no business telling people what they must and must not buy, nor telling a business what products they must or must not create, nor what features their products must contain regardless of the reason (seatbelts in cars, forcing energy efficiency standards, etc.), nor add mountains of paperwork so that it's harder for new businesses to get started, which is effectively pro-big business and anti-small business. In addition, lobbying should be outlawed.
In terms of taxation, no matter where in the economic cycle taxes are levied, the customer always pays. Raise corporate taxes? The raise prices in response. Raise taxes on the raw goods used to make products (thereby raising the price that companies have to pay for the materials), and the price again gets passed on to the customer. Too much taxation on the pre-customer side of the economy means businesses must raise prices or go bankrupt in the long run.
Do you really think it costs $10 to make a hamburger if you count all the steps from farm to McD wrapper? It's more like $3 or less in a purely non-taxed economic environment. But when you account for all the taxes applied on the farmer, butcher, processor, truck drivers, storage facilities, McD's itself, and all the supporting items used to transport the things needed to make the hamburger (gas, plastic containers and wrapping, mandatory minimum wages and benefits, etc.) drive up the prices. Thus we see higher prices, and most of the taxes we pay are hidden and simply passed on to us. We complain about the taxes we see (see the above discussion in this thread), but in reality we pay far more taxes in ways we don't see.
I'd rather that the government operated on a severely limited budget tightly within the strict limitations placed on it by the original understanding of the Constitution's 17 enumerated powers as it was written (meaning: get rid of the FDR interpretation of the General Welfare clause). Then apply a flat tax to all individual income, capital gains, property, and point of sale. There's no logical or rational reason the same product is taxed multiple times at every step along the way from conception to development to construction to sale. Whatever the government can get from that setup, that's the budget the government has to work with. Since we existed for longer as a country without an income tax than with one, it's an entirely possible and ethical way of funding the government.
Doing this would do a number of things: it would bring more certainty to retirement planning (if you know what your taxes will be, it's easier to plan), family budgets, reinforce the faith and credit of the US, strengthen the dollar abroad, and add a measure of calm to the markets because the Fed would be less inclined to intervene by manipulating the interest rate it chooses to offer the market.
But, alas, that's not the world we live in. And so we are reduced to arguing about one politician's tax cuts vs another's proposals (if there are any that are clearly articulatable) instead of solving the core problems that create the political footballs we find so distracting and enraging.
