Does trickle down economics/austrian economics/conservatives

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Does trickle down economics/austrian economics/conservatives have any idea to create jobs besides just tax cuts ?

http://en.wikipedia.org/wiki/Trickle-down_economics

cut regulation

Regulations actually create job. Just think how many tax preparers would be out of business if the tax forms were drastically simplified.

Deregulation of the banks is a big part of what caused the recession in the first place. As for environmental regulation, that's there for a reason. To be honest, there isn't anything like enough of it. It continues to fail to make our society sustainable.

I don't know if trickle down economics work or not, but I do know that I find them morally wrong. The rich should have to pay more taxes than the poor, not less.

Tax cuts have magical powers! The invisible hand is like the fairy godmother's wand, it just magically fixes everything.

Artificially low interest rates set by the Federal Reserve created the housing bubble which caused the recession. The free market when left alone will regulate itself.

also, the rich do pay more in taxes

The free market, when left totally alone, will often lead to the rich and powerful having far too much control over the majority.

And, in the U.S. at least, the rich pay less taxes (as a percentage) than the poor.

Sometimes. Warrent Buffet's secretary has a higher tax rate than he does. And note that I said part of the cause of the recession. Countries that did not deregulate their banks, like Canada and Germany, are doing a lot better. As for the free market, it can be rather unstable. The 20s didn't have too much regulation and at the end of that we got the Great Depression. Regulation was put in place after that for a reason.

Last edited by AstroGeek on 04 May 2012, 5:35 am, edited 1 time in total.

The three shouldn't be lumped together too quickly.

"Trickle-down" economics, which is probably better termed supply side economics, basically says that by removing taxes and regulations jobs will be created. The rationale is that certain tax cuts favor capital investment, which is necessary for businesses to grow and require more labor. Also, reducing regulations decreases the cost of doing business which will thus cause greater growth in businesses which will increase the demand for labor.

Austrian economics doesn't really believe in "creating jobs" as a policy initiative, but rather they think the concept is rather confused. Austrian economists see the existence of jobs simply to be instances where the exchange of money for labor is in the best interest of both sides, and in general, they tend to favor free markets so as to allow these exchanges to be found and used with efficiency. Their general belief is that the best policy for governing society is laissez faire.

"Conservatives" is a political category. It's difficult to extrapolate much from other than that conservatives identify with businesses, and they identify with a market economy, and they will try to act on those identifications, even though there will be some conflicts.

Yessum. Canadian banks are highly regulated, and just so happened to not get hit anywhere near as hard as American banks. regulation is NOT a bad thing.

Also, trickle down economics are a proven failure. All they do is make rich people richer.

Interest rates are much lower now than they were back then.



Yeah, right.



Aw. Those poor, poor rich people.

A big part of what caused the recession as I've stated before was government meddling where they shouldn't and not meddling where they should. The U.S government had no business dealing in home loans or running programs that let people who did not have the income to pay off their loans borrow money. On the other hand, they did have business ensuring that banks did not run 70:1 leverage and similar types of risk.

The core problem was that at the time, everything was tied to the housing market not collapsing. There were CDOs (Collateralized debt obligations) which allowed banks, institutions and such to invest in home loans. You had CDS (Credit default swaps) on those CDOs, which were not regulated well enough.

You had a federal reserve keeping interest rates low during a boom period, thus ensuring more and more capital would enter financial markets. Which combined with previous Greenspan Puts, created a market where risk was of no greater concern.

The US economy is consumer driven, thus when consumption falls it stagnates and by keeping taxes low during a boom the government ensured that they wouldn't have cash on hand to do adequate Keynesian policies when they needed to during the bust. The bailout should have been multiple times the size they actually were in order to accomplish what they were trying to do.

The rich do pay quite a lot in taxes, the top 10% across the OECD area pay roughly one third of total tax income. In the US the "rich" contribute 45% of tax revenue.

I recommend this article in The Economist http://www.economist.com/node/21530093 to illustrate that even a 1% increase in tax rates have much larger impacts, which do not have to result in a 1% increase in tax income for the state.

If anything, what the US needs to do is look at the Corporate tax policy which makes it much more beneficial for US based corporations to re-invest earnings in a foreign country as opposed to bringing them home for investment.

Actually, you'd be surprised how much more cautious banks and investors would be when they have to bear full responsibility for their losses rather than fobbing it off on taxpayers. As it stands, however, deregulating markets while that "moral hazard" exists has proven to be disastrous.



Oh, give it a rest Panda. Even if the Bush Tax cuts expired tomorrow and the "Buffet Rule" were signed into law, the added tax revenues wouldn't bring us even remotely close to balancing the budget.

Trickle down economics does not and cannot work. As long as those at the top can control wealth distribution they will always take more than they should by market or any other standard. That then leads to an accumulation of wealth at the top which means those on the lower rungs slowly lose their buying power and eventually the economy begins to wind down.

The problem is that the wealthy like to talk about micro-economics, while society minded people like to talk macro-economics. And never the two shall meet.

Cutting taxes for the rich even further will only enlarge the budget deficit again.

That's certainly arguable. The real question, however, is by how much? Would the difference be markedly sizable? I'm not arguing from the standpoint of whether the rich should "pay their fair share" or not. My point of contention is that soaking the rich is not as meaningful a solution to our budget problems as it is all too frequently touted to be.