Who Is Mistral Dawn?
Mistral Dawn is a thirty-something gal who has lived on both coasts of the US but somehow never in the middle. She currently resides in the Southeast US with her kitty cats (please spay or neuter! :-)) where she works as a hospital drudge and attends graduate school. Taken By The Huntsman is her first effort at writing fiction and if it is well received she has ideas for several more novels and short-stories in this series. Please feel free to visit her on FaceBook or drop her a line at firstname.lastname@example.org
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Tuesday, August 1, 2017
Why There's No Trickle in #TrickleDown
Hey Everyone!! :-)
Today, I'd like to talk about one of the favorite talking points of Republicans, trickle-down economics. This is the idea that if you cut taxes on the wealthy and on corporations, they'll take that savings and reinvest it into creating jobs and the economy will flourish. Of course, we've spent the last forty years, or so, proving that's complete and utter bullshit, but they still love to talk about it as if it were real. So, I thought maybe it would help if I explained why it doesn't work.
First, you have to think about why jobs are created. Jobs are created because there's work that needs to be done. That's it. It's that simple. If a company has work that needs to be done, and they don't have anyone to do it, a job is created and someone is hired to fill that void. Pretty simple, right?
Well, you'd think so. Except the politicians in this country have been adhering to a narrative that completely ignores the fundamental principle underlying all economic growth. Demand. No matter what system you come up with to meet demand or how you implement that system, without demand you have nothing. Without demand, there's no commerce. Not barter-based. Not currency-based. Nothing. Nada. No trade. No deals. Demand is everything.
So, when politicians insist that the rich and corporations will create jobs if they have more money, they are ignoring the fact that no one has ever, anywhere "created a job." That's just not something that happens. Ever. Politicians like to talk about corporations and other employers as "job creators," but they aren't. In actuality, what employers are is labor consumers.
Because the only time anyone employs someone else is when they have work that needs to be done. They don't "create a job" just because they want to employ someone; they employ someone because they have a job that needs to be done. Just like you don't "create food consumption." You consume food because you're hungry. You have a need to fill, and so you act to fill it. Employers consume labor because they have a need to fill. They don't hire people just because; they hire them because there's something that needs to get done, and they need someone to do it. And that only happens when demand is high.
So, just giving employers more money isn't an incentive for job growth. After all, unless there's demand that needs to be met, there's no need to hire anyone to meet it. Unless you increase the amount of work to be done, employers are much better off just sticking that extra money in their pockets and leaving it there. Which is pretty much what they've been doing for the last forty years.
You'd think this would all be pretty obvious, but apparently it isn't. And what's worse, people don't seem to understand that by redistributing the wealth upwards, you're pretty much guaranteeing that demand for everything will go down, and so not only will more jobs not be created, jobs that already exist will be lost.
Why? Well, because demand requires two things. First, it requires a need, real or perceived, that can be filled. And, second, it requires capital; something to trade or exchange in return for goods or services.
Now, the wealthy don't have a lot of needs because most of them have already been met. So, you aren't likely to get a whole lot of demand from them. And the poor, well, they've got all kinds of needs, but they don't have any capital. So, you don't get a whole lot of demand from them, either. In order to have a booming economy, it's necessary to have a thriving middle class. People who haven't had their every need and want met already, and who have the capital to use to rectify that deficiency.
When you have a healthy middle class, demand goes up and so does job growth. But trickle-down economics creates the exact opposite situation. It concentrates wealth at the very top, creating a few ultra-wealthy individuals, a large number of very poor people, and very few -- if any-- people in the middle.
And that's where we are now. Of course, if Trump and the Republicans get their way on taxes, that problem will just get worse. But it's pretty bad right now. Personally, I think it's time to change things so as to give a larger share of the wealth to the poor and middle class by lowering their taxes and raising their wages, and force the wealthy and corporations to reinvest in the society that has benefited them so much by taxing them in proportion to that benefit. That way, we'll increase demand and so grow the economy and job numbers. What do you think?