12 thoughts on “Trickle Down Economics Dismantled

  1. Reblogged this on digger666 and commented:
    Many thanks to The Secular Jurist for bringing this interesting piece to our attention. While the piece is interesting, it also suffers from some minor flaws.

    The piece would have benefitted from editorial support and review prior to publication. This could have eliminated some of the syntactical diversions.

    There is, however a more serious issue: while I have no argument with the thrust of the conclusions, they are undermined by the contention that incomes of the lowest 80% of the population are not affected by rise in incomes of the highest 20%. Actually, incomes for the bottom 80% have been either static or falling, both in relative and real terms for the last three decades. In no other way can the increase in percentage of wealth expropriated by the very wealthy be understood, other than to see the remaining 80% trying to divvy up a constantly decreasing slice of income among themselves.

    “Why was supply-side economics implemented?”, my illustrious correspondent asks. We could assemble the pieces of a puzzle; why certain economists supported the idea; what was the interest of the media on propagating this ideology; why many politicians adhered to the principle… If we examine each of the components or pieces of the puzzle, we come down to the issue of power and Marx’s observation that the prevailing ideas in any society are those of the ruling class.

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    • Yes I must admit my piece could have used some editing. I scribbled it up in the extra hour I had after finishing my work for the week. I probably should sit on my posts for a bit before publishing them so that I can review them.

      Anyways, I understand that incomes for the bottom 80% have been stagnant or falling while the top has been increasing. When I stated there was no relationship I meant that according to the statistics run by Bertrand and Morse there was no statistically significant relationship between the two. That means that if there is a relationship it was not strong enough to have the confidence to needed to reject the null hypothesis.

      Now it is possible that increases in income for the wealthy have led to the stagnation of the bottom 80%. But a statistical test would not see that. The statistics are going to look for co-variation, that means that it looks for when an increase in one variable (top incomes) and a corresponding increase or decrease in the other variable (bottom incomes). If one of the variable is not changing very much at all then it has very little variance. If it has very little variance then it is very difficult for the statistical test to see any relationship.

      Now what does all of this mean? It means that the statistical tests would be able to detect if increases in top incomes led to either an increase in bottom incomes or a decrease in bottom incomes. Though the test did not find either of those relationships. But the statistical tests can’t tell if an increase in top incomes led to the stagnation of bottom incomes.

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    • ” If we examine each of the components or pieces of the puzzle, we come down to the issue of power and Marx’s observation that the prevailing ideas in any society are those of the ruling class.”

      Modern society must fully scrutinize these “prevailing ideas” if it is to cope with humanity’s challenging future. It is insufficient to know how problems occur. We must also know why they occur. At some level, above the misguided rank-and-file support for supply-side economics, the negative consequences (economic inequality) of that theory were understood. Therefore, trickle-down wasn’t just a failed experiment, it was a deliberate act. And, those responsible have not been held accountable.

      Lord Acton wrote that power tends to corrupt, and absolute power corrupts absolutely. Without an educated populace fully participant in democracy, the corruption of power cannot be assuaged.

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  2. Unfortunately, I think the ship has sailed on fully participant democracy but the educated populace is still viable if, and its a big if, the people living in darkness want to see the great light or if they prefer to stay in the cave staring at shadows. Trickle down economics and austerity are both forms of economic warfare but it is hard for Americans to understand you can wage war without firing a single shot.

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    • Compulsory voting systems exist in many nations. In 2010, Australia’s voter turnout rate (http://www.idea.int/vt/countryview.cfm?id=15) was over twice as high as that in the U.S. (http://elections.gmu.edu/Turnout_2010G.html)! The issue isn’t that full participation cannot happen, it’s that it isn’t happening in the U.S. And, that is what we must fight to change.

      Whether Americans are naturally inclined towards political naivety and ignorance, or are just being deceived by a self-serving establishment, is open to a whole lot of speculation and debate.

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      • It seems to me that voting is half the battle. If your only choices are two stooges for the corporate class then does it matter if everyone votes. Venezuela has the best election system in the world and look how our media treated Chavez.
        Your right that its important to distinguish between willful ignorance and deception propagated by the establishment. But is someone tried to lead them out of the cave and they refuse to leave then what?
        My questions are in no way meant to offend or disrespect your blog. Just nice to have a healthy debate for a change.

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      • Oh gosh, no offense was taken Jeff! Your comments are most welcome.

        Let me redress your “two stooges” point with this: Along with millions of my Baby Boomer brethren, I felt the same way decades ago and “dropped out” (i.e. didn’t vote). The result was Reaganomics, so my negligence was partly to blame. Over the years, I’ve come to greatly appreciate the gift of democracy in spite of its obvious flaws. For without it, some form of authoritarianism is always the result – whether its right-wing fascism, left-wing communism, or a single-wing monarchy or dictatorship. The price of democracy is participation, and it cannot survive without it. Looking back, I must admit that my prior belief of voting as a futile exercise was completely wrong and just a symptom of youthful inexperience.

        What are we to do with cavemen who refuse to come out into the light? I say keep shining the light with the hope they’ll eventually come out. We can only try. Giving up is not a solution. Cheers,

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      • Jeff and Secular,
        I think the key to getting things working again is getting the those in the middle involved in politics again. Everything is driven by extremes on both sides and not by what the people actually want. We need to energize those that have been quiet and apathetic for years. We need a party that represents centrists and candidates that people actually WANT to vote for. I think people will want to be more involved if they had a real choice for change. Not the hope that Obama brought or the platitudes about change that we hear all the time. But a real candidate or party that will really strive to bring about change.

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      • Tracy, you’re actually making the case for a parliamentary system where there are multiple political parties more closely aligned to their respective constituents – a proposal I’m considering to write about.

        Regarding non-voters, studies have shown they are now mostly a left-leaning demographic than centrist. From: http://usgovinfo.about.com/od/thepoliticalsystem/a/whynotvote.htm

        “The survey found that nonvoters are disproportionately young, single, less educated and more likely to be of an ethnic minority than infrequent and frequent voters.”

        And from: http://usatoday30.usatoday.com/news/politics/story/2012-08-15/non-voters-obama-romney/57055184/1

        “The ranks of eligible non-voters lean toward the Democratic candidate in most though not all election years. The Democratic tilt among them is much greater in this survey [2012] than it was in 2004 or 2008 in the Gallup Poll just before Election Day.”

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    • Honestly I don’t think most people want to be politically aware. First off it takes a good bit of effort to stay on top of the issues. Not everybody has the time or desire to do that. Second the issues are complex and politicians try to obfuscate the issues intentionally which makes it difficult for many to grasp. Third both parties end up behaving the same in office with the exception of social issues which they need really try to address. So many don’t see a point in it. Fourth our actual choices for candidates are so piss poor that it comes down to a pick your poison situation which discourages many since they can’t pick a candidate they actually support. Fifth once politicians are in office they do as they please and don’t really care what the people want at all. So your choice doesn’t really matter.

      Put all that together and you have an apathetic public who doesn’t know and doesn’t want to know about politics. Personally I think this is exactly what the two parties want. They want us so frustrated yet apathetic about politics that we don’t even want to think about it. Then they have free reign to do as they please.

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      • That is exactly the current situation, and it spells big trouble for America’s future. When I was a kid in the 60’s, CIVICS classes were required and a component part of the K-12 education curriculum. Not any more. If we don’t stress the importance of democracy as a society, we can’t expect it from individual citizens.

        The view that our political system is collapsing is widely held and runs across the left-right spectrum. From my vantage point of observing American politics over five decades, the demise is directly attributed to the escalation of CORPORATISM; that is, the de facto merger of state and corporate power through the flow of money.

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      • I agree with your premise, I was part of that group for much of my younger life. I like to think that our perspective blogs help the cause just a bit but the reality is things will need to worse, much worse, before you will see mass resistance or protest. The ruling class has calibrated well the amount of bread and circuses to give the people to keep them complacent.

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