It's often call Reaganomics, after the first President who espoused it, but economists call it supply-side economics. The theory behind it holds that the investor class will stimulate the economy more if they hold more money. The more government does to ensure the top wage-earners keep more of their money, the more they will invest it, thus stimulating the economy.
George Herbert Walker Bush, when campaigning against Ronald Reagan in 1980, called it "voodoo economics", which is a fitting term.
Because it doesn't work. It never has, in 40 years.
The first reason it doesn't work is that the American economy is not a closed system. There's an entire globe where the investor class can put their money, and very reasonably and predictably they're going to want to put it where they get the best return. That isn't because the rich and powerful are evil; it's because they're smart about where to put their money. This was how they got rich. So getting more money to the investor class provides no control over economic stimulus. They might invest their money in such a way to create jobs. They might not. They certainly won't unless there's a good chance of making substantial profit, and again, this is reasonable and predictable and in no way reflects poorly upon them.
The second reason it doesn't work is this:
If you give money to a rich man, he puts it in his pocket,
because he can.
If you give money to a common man, he spends it,
because he has to.
Now, when that common man is ready to spend that money, guess who's there to take it? That's right: the rich man. The rich man got rich by seeing opportunities and seizing them. If government stimulates the economy by putting more money into the hands of the middle and lower class, they will exchange that money for goods and services they need. The rich will provide those goods and services in order to obtain that money.
Think about this: if you ever wanted to buy something, there was someone willing to sell it to you, provided you could pay for it. That's how free enterprise works. And that's why demand side economics, as espoused by John Maynard Keynes, works. It expects free enterprise to step up and generate economic growth when the demand is there. It was the gold standard in economic theory for American government from the time of the second world war until Ronald Reagan came along. It was the period of the greatest increase in the middle class in global history. And it was crappy for Republicans, who cast their eyes to find something, anything else to help them win and keep power.
And let's not make any mistake: whether we employ supply side economics or demand side economics, the money will still end up where it always ends up: in the hands of the few and the privileged. In the latter, jobs are created and the common folk get goods and services. In the former, the economy stagnates with little to no wage growth. We've seen it for 40 years.
We've been led to believe that milk and honey will "trickle down" the chins of the high and mighty for the benefit of all, and it hasn't happened. The fact is, it's foolish to have ever thought it would work. It was voodoo from the start. We need to return to demand side economics. We need to increase the top tax rate and invest in infrastructure. Those who claim that this will cause the millionaires and billionaires to spontaneously "go away" ignore the fact that the increase in the number of potential customers is far too alluring for the wealthy to walk away. We can trust entrepreneurialism. It's what created America. Make more customers and stand back; watch greed do its work.
Remember this: put money in the hand of a rich man, and he puts it in his pocket because he can. Put money in the hands of a common man, and he spends it because he has to. And remember this: wealth is power. Concentrate wealth and you concentrate power.
2 Nominations
SJConspirator Feb 28, 2021,
Cannonpointer Feb 28, 2021
Go to original post on Feb 28, 2021 8:48pm
Go to nomination on Mar 01, 2021 2:26am