New Thoughts About Trickle Down

[shostakovich]

The first time I heard of the "trickle down theory" it seemed to imply wealth that starts with the richest will, in part, ultimately reach the poorest. Call me dense, but I don't see it happening. With the expanding gulf between rich and poor, wealth appears to be trickling up.

There's something that trickles down, though. It's cost. Oil prices go up, and we all share the cost. A manufacturer needs improvements, and the product costs more. A utility must refurbish, and costs are passed on. From this viewpoint, "trickle down" is a problem, not a solution. So what is the solution?

The first part is to realize that wages are not too low, but too high. This is demonstrated by outsourcing and illegal immigration. Now let's say some company is facing bankruptcy. The first thought is layoffs. It should be the last. It's the perfect opportunity to lower wages to cover shortfalls. This is not like taxation, as the solution is administered with no outside intervention. The CEO income is reduced at a higher percentage than the incomes of those who can afford it less, and there are no bonuses, of course. Forget Fortune 500. Think Decency 500. That would be LEADERSHIP.

Now let's take an example of a company that is beyond bankrupt. It's the federal government. If all federal employees took a graduated pay cut, the deficit would be gone in a hurry, and surpluses would abound. First applied to the federal government and the corporations that need "adjusting", the idea could "trickle down" to state and local levels as well as small companies. This would eliminate deficits, bring down prices, reduce unemployment, and make outsourcing less appealing, all without raising taxes.

There, that wasn't do difficult.

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The above is the text of a letter I sent to Newsweek. Since the likelihood of a given letter being published is small, I wanted to share it with you.
Shos

[analog]

Originally posted by shostakovich:

...With the expanding gulf between rich and poor, wealth appears to be trickling up.

Yes, what's trickling down is debt. Judging by the TV ads for equity loans, the trickle must be quite a torrent.
I think it's the natural outfall of shifting our priority from manufacturing to financial management. Americans have by and large lost the ability to distinguish useful from non useful work.

Around 1960, C Northcote Parkinson said of the British: '...it is considered in some circles perfectly feasible and natural that a people can exist by reading one another's memoranda.' (The Law of Delay). We're just a couple decades behind them.

I hope you'll send the letter to your senators as well.

[OperaTenor]

HI Shos,

I like how yer thinkin'.

[balky]

to me, the tricle down theory could work, only if it is used faithfully. some people use it to deceive others. they will claim that they will alleviate poverty by using this theory, but they are actually more interested in what they can gain, not what they can do for others. it all boils down to one word: greed. if greed was ever reduced in the world, perhaps many will have better living conditions.

[Shapley]

Shos,

All I can tell you is that my salary has never been paid by a poor man.

V/R
Shapley

[OperaTenor]

Originally posted by Shapley:
Shos,

All I can tell you is that my salary has never been paid by a poor man.

V/R
Shapley

Really? How did you manage to control that while you were in the canoe club?

[Shapley]

OT,

Are you saying Uncle Sam is poor? I thought, in your argument in favour of Government-financed health care, that you have called us the "richest nation in the world".

V/R
Shapley

[OperaTenor]

I knew you'd misinterpret that.

I knew that as well as I know you really know what I meant: You were paid with tax dollars, the vast majority of which came from the middle and lower-middle income brackets, thanks to the measures taken, mostly by Ronaldus Maximus and GWB, to make sure their constiuents pay as little tax as possible, IAW trickle down theory.

[Shapley]

OT,

Middle and lower-middle income brackets are not poor people. Also, Ronaldus Maximus lowered the tax brackets for, but did not eliminate the taxes on, rich people. The Wealthy did, and do, pay the majority of taxes. Poor people do not pay income taxes, and pay few if any Federal taxes, ergo, I was not paid by a poor man.

V/R
Shapley

[Selma in Sandy Eggo]

Originally posted by shostakovich:
If all federal employees took a graduated pay cut, the deficit would be gone in a hurry, and surpluses would abound.

I'm willing to take a 10% pay cut, if all the teachers and cops and city clerks and other tax-paid public employees get a pay cut, too.

Why do I always get targeted when somebody's complaining about taxes, while the lady who writes up the incomprehensible booklet for the state DMV gets ignored?

Can we include the retirees, too?

<small>[ 02-06-2006, 01:28 PM: Message edited by: Selma in Sandy Eggo ]</small>

[Shapley]

OT,

Just to pour a little salt on the wound, here is the Treasury Department's fact sheet on tax payments, which will dispell the myth that the income tax burden rests on the lowest income levels:

http://www.treas.gov/press/releases/reports/factsheetwhopaysmostindividualincometaxes.update.pdf

Keep in mind that a person who pays 5% on a $200,000 salary still pays more taxes than a person who pays 20% on a $20,000 salary. As it is, however, the higher the income the higher rate, despite the improvements made by Ronaldus Maximus and President Bush to make the tax structure more fair.

V/R
Shapley

[BigJon@Work]

Almost every objection against trickledown is an objection to kleptocracy. Unearned rewards. I'm opposed to theft at all levels as well. Trickledown without theft will work.

<small>[ 02-06-2006, 02:41 PM: Message edited by: BigJon@Work ]</small>

[barfle]

Originally posted by Selma in Sandy Eggo:
I'm willing to take a 10% pay cut, if all the teachers and cops and city clerks and other tax-paid public employees get a pay cut, too.

Can we include the retirees, too?

While my federal employee's salary is paid by patent application fees (the PTO receives NO tax money, and until a couple of years ago was revenue-positive for the US Treasury), somehow I don't feel shos's admonition was to cut welfare benefits, military pay (although a bird colonel [O-6] with 24 years gets over 100G), or the quality of mess hall chow.

[shostakovich]

"Yes, what's trickling down is debt. Judging by the TV ads for equity loans, the trickle must be quite a torrent.
I think it's the natural outfall of shifting our priority from manufacturing to financial management. Americans have by and large lost the ability to distinguish useful from non useful work."
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Hi Analog. Good observation.
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Hi Shap. Glad trickle down works for you. There are levels below you that it doesn't reach, and some whose trickle is subsumed by inflation. Mine is in that last category.

Hi Selma. Thanks for getting the ball rolling. You're a team player.

Hi Barfle, it's hard to imagine no part of your benefits emanate from taxes. If they do not, you are exempt from the Shos Solution. I did, however, include welfare payments in their tiny adjustment and the bird colonel in his more significant cut. My own Social Security check is also fair game.

Of course Hell will freeze over before Congress votes itself a pay cut. I'm just offering them a chance to be heroes. Besides, the cuts can be revised once the deficit is eliminated and a surplus exists for a "rainy day".
Shos

[barfle]

Originally posted by shostakovich:
Hi Barfle, it's hard to imagine no part of your benefits emanate from taxes. If they do not, you are exempt from the Shos Solution. I did, however, include welfare payments in their tiny adjustment and the bird colonel in his more significant cut. My own Social Security check is also fair game.

There are a few Federal agencies that are self-supporting through sales of their services. The PTO is the one I'm most familiar with, and the office does not receive tax money. It is supported by those who apply for and receive patent and trademark protection for their intellectual property. Although some inventions are assigned to the Federal Government (usually through the DOD), video recording technologies are pretty much in the commercial environment.

[Disclaimer] I do drive on public roads occasionally, and I commute on a subsidized public transit system (although the DC Metro gets very little federal money directly). In those cases, I'm like everybody else.

Actually, I have received much more in tax dollars in other jobs than I do now. At one time, I worked for Hughes Aircraft Company, a defense contractor, and my dad worked for defense contractors his entire career, so I was raised indirectly on tax money. [/Disclaimer]

[Shapley]

Shos,

RE:Hi Shap. Glad trickle down works for you. There are levels below you that it doesn't reach, and some whose trickle is subsumed by inflation. Mine is in that last category.

Yes, trickle down works for me, and for the guys who work under me, and the guy who sweeps the floors and the one who stocks the storeroom. As far as I can see, the principle people who do not benefit from trickle down are those who have surrendered control of their paychecks to factors independent of economic realities: Labour Unions, the Government, fixed-rate investments, etc.

V/R
Shapley

[shostakovich]

Thanks for the comments, guys.
Shos

[dai bread]

I take it your wages have risen, Shap?

A rather hefty number of people here found themselves without any wages at all when when wealth was torrenting up. Now that the people who conducted the New Zealand experiment have found out what happens, we have more or less come right. There are still more unemployed now than there were before the experiment started in 1984, but wealth is now only trickling up.

Trickle down is a lie.

[Shapley]

Dai,

Unemployment here is down to 4.9% again, the lowest since before 9/11. Average weekly earnings having risen by about 4% in the past year.

The biggest factor in 'trickle-down' is that the wealthy tend to invest or spend their new-found wealth, creating jobs for those who work in the facilities they invest in or build the luxury items they purchase. A few years back, our Congress, in it's infinite wisdom, initiated a 10% 'luxury tax' on things like yachts, luxury cars (defined as vehicles selling for more than $30,000), and private aircraft. The result of this was a decrease in demand for yachts, vehicles costing more than $30,000, and private aircraft, and a loss of jobs in those industries. To make matters worse, foreign car makers began marketing fully equipped luxury vehicles for $29,500, a price American car makers were unable to match, costing the American car manufacturers a significant share of the luxury car business. Congress very quietly repealed the tax.

V/R
Shapley

[BigJon@Work]

Originally posted by dai bread:
A rather hefty number of people here found themselves without any wages at all when when wealth was torrenting up. Now that the people who conducted the New Zealand experiment have found out what happens, we have more or less come right. There are still more unemployed now than there were before the experiment started in 1984, but wealth is now only trickling up.

Trickle down is a lie.

We've discussed the situation in your country before. Some of the newly wealthy stole their wealth and should be prosecuted. The others earned their wealth by your own admission. So are you saying you are comfortable with the government taking their wealth away and giving it to someone else?

As for the job loss, didn't you also admit that many of the jobs lost were of the make-work variety? Those jobs are typically not too good for long-term productivity of the country.

Please tell me who lied, other than the thieves.

<small>[ 02-09-2006, 05:04 PM: Message edited by: BigJon@Work ]</small>