- cross-posted to:
- progressivepolitics
- cross-posted to:
- progressivepolitics
This is the only voice I hear that gets at the actual issue facing our politics and economy.
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I’ve been enjoying his stuff, but tbh I haven’t been researching the other side and I’ve just been taking his thoughts as supposed truth (im not saying it’s not, I’m just saying the way I’m collecting “facts” on the topic is flawed). Can someone more economically minded give me the run down of the counter argument?
https://academic.oup.com/ser/article/20/2/539/6500315
The economic consequences of major tax cuts for the rich
This article contributes to this debate by utilizing a newly constructed indicator of taxes on the rich to identify all instances of major tax reductions on the rich in 18 Organisation for Economic Co-operation and Development (OECD) countries between 1965 and 2015. We then estimate the average effects of these major tax reforms on key macroeconomic aggregates. We find tax cuts for the rich lead to higher income inequality in both the short- and medium-term. In contrast, such reforms do not have any significant effect on economic growth or unemployment. Our results therefore provide strong evidence against the influential political–economic idea that tax cuts for the rich ‘trickle down’ to boost the wider economy.
Yo thnx. Nice to see actual papers on the topic. Seems Gary’s got it together.
I’m no econ expert.
But I think the argument goes that the rich aren’t sitting on wealth - they’re reinvesting it and making jobs.
I think that’s BS if you look at in terms of class struggle and power dynamics.
Not an economist, but I am a mathematician.
It is 100% BS. 99.999% of the rich don’t get/stay rich by spending money. They buy a mega yacht and create a few hundered jobs for a couple months at best.
Economies grow when money moves. A billionaire spends 500M on a single yacht and that 500M moves to the yacht manufacturer and their suppliers. That same 500M spent $50 at a time by 10M people spreads that money across hundreds of thousands of businesses at minimum. That means it can be spent by more businesses on paying labor or expanding stock. That is more people getting money to spend money.
The concept of “trickle down” economics should function just as well as “trickle up” economics, but that requires that the wealthy spend as liberally and as widely as it being more spread out on the bottom. This the failure point. It will all end up at the top anyway, it will just make the world a better place getting there if it starts at the bottom.
This is why estate taxes are so important. That’s the point that some of that inequality can regress.
Yachts - sure. I get your point.
But what this guy focuses on is less luxury goods and more assets - something like - ‘you’re rich, and your finance guys are making money for you. Its only logical that they invest those funds in whichever assets get a good return. Not just stocks - all aasets that are going to make you passive income. One asset class is the housing supply - you can invest in a corp that buys up old houses and rents them out. Now you’re getting a good return, but you’re competing with the middle class for ownership of those homes.’
Yeah, I hadn’t gotten into the “how to fix” part. Estate taxes, VATs on intermediary products, and wealth taxes are all great ways of redistribution, which is required for a functioning economy that grows at all levels, not just one.
