Understand why anyone who speaks for or against Trickle-Down Economics as a concept is, for lack of a better term, an idiot. This is my explanation on why it doesn’t exist.
A strawman argument is where in a debate, Side A states a simplified (and incorrectly stated) caricature of Side B’s position to easily refute it. After all, a man made of straw doesn’t fight back.
Such is the term “Trickle Down Economics”, or TDE as I will refer to it in this article for brevity. The first documented occurrence of this term was by Will Rogers in 1924. Historical roots suggest the “Horse and Sparrow” theory was an earlier term. Since the 80’s when Reganomics was going on, the term TDE has come into common use.
However, TDE is an empty phrase. It describes nothing yet means whatever the speaker desires it to be, a lot like “Global Climate Change.”
TDE is not a codified and detailed economic plan, nor set of formulas that describe outcomes based on observable criteria. Keynes used mathematical formulas that try to support his assertions in his book The General Theory of Employment, Interest and Money and defines “Demand-Side Economics.” The Laffer Curve is also a clearly defined economic theory backed by mathematical models. If anyone were to legitimately decry how TDE is wrong (and not make yourself look like an idiot in the process), you must show exactly what TDE is, the theory behind the assertion and how the author uses analysis to describe it. TDE has none of this.
Just to prove my point, here is the list of every scholarly work and analysis advocating TDE:
If you missed the joke, there are none. Zero. Zip. Zilch. Therefore, railing against TDE is nothing more than a strawman attack.
Anyone who speaks in favor of TDE is an idiot of a greater level of those who speak against it. They are greater idiots because they are in favor of something that doesn’t exist. If they had a whit of knowledge, they would not be speaking for it.
Now, “Supply-Side Economics” (based on the Laffer Curve), otherwise known as Reaganomics, has had many people try to brand it as TDE.
This article from The Guardian is typical of how idiots try to brand Reaganomics as TDE:
Laffer was an associate of the Reagan administration, which had a staged cut in the marginal higher rate of personal income tax from 70% to 28%. The effect on the budget deficit was also striking. Reagan doubled it to $155 billion and tripled government debt to more than $2 Trillion.
Did you see the switch? Did you see that guy riding a horse into a river and rode out on a zebra? The author starts by talking about cutting the tax rates, then in the next sentence he’s talking about the jump in the deficit, giving you the assumption that the two are related, when in reality tax rates and deficits have nothing to do with each other. They are connected through other steps, however they are not directly related to each other. Tax rates leads to government income. Deficits occur when there is more spending than income. The author performs a lie by omission by not explaining what I’m about to explain to you.
The annual income for the federal government was about $599 Billion in 1981 before Reagan’s tax cuts took effect. In 1988 as he left office, the federal revenue was about $909 Billion. That’s a 50% rise in tax revenues. Here are the numbers if you're interested.
Was that jump in revenues caused solely by the tax cuts? Not directly nor entirely. By putting more cash into the pockets of the average American and the businesses of the country, they could spend more on goods and services they desired. This increased consumer spending helped businesses grow and create more wealth for everybody.
So, if revenues went way up, why did the deficit increase as well? Simple, spending. The 1981 deficit was $79 Billion (Total income $599.3 Billion, spending was $678.2 Billion). In the years that followed, the deficits (overspending for each individual year) were (1982) $128B, $208B, $185B, $212, $221, $150B, $155B. Our first Trillion-dollar budget was in 1987. In 1988, again income was $909B, while spending was 1,060 Billion.
So, while the author was technically correct (deficits did go up), they went up because spending went up more than the income (which again grew 50% 1982-1988). However he implied that the tax cuts resulted in a loss of tax revenues because the deficits went up.
If you ever overhear someone speaking for or against TDE, ask them for a detailed definition beyond “cutting the taxes of the rich will help the lower socioeconomic classes.” Demand proof of a mathematical model that relates this. I never said the model was correct or workable, I am asking for them to show some scholarly work that has the concept of TDE and how it should work.
Challenge a Leftist on this. Ask them, “How do you know it doesn’t work? Have you tried following the TDE model?” They can’t, because there isn’t one. They will say something like, “It doesn’t work because it’s common sense that it doesn’t work.” If Leftists say something like this it’s because they know there is no model to follow (back to the strawman thing again).
Just remember, there is no such economic concept as TDE. If anyone tries to tell you it does or doesn’t work, all I can say is they are either stupid, a fool or both.