Current Events — HabitableZone

Current Events » in reply to Multipliers and "trickle up.

trickle up, trickle down, just don't get trickled on

In an economy wealth trickles up, or there would be no rich people. It also trickles down or the rich would end up with 100% of the wealth. The idea with a stimulus is you do it to whichever part is suffering. If capital was lacking in an economy you could improve things with tax breaks to the wealthy. If wealth is lacking at the bottom (like it is now) you stimulate by spending and tax cuts lower down.

Multipliers just say when you spend money others benefit from it and when you save it (even if invested) it only helps if there is a shortage of money to borrow. So to give money to people who save it when interest rates are at a historic low is just either nuts or paying off the campaign contributors with some nonsense economics as a fig leaf.

Stimulus is different from the tax cut debate because the money is borrowed so the government should spend it in a way that maximises the multiplier and thereby future tax receipts. If they don't it just makes more debt. taxing producers less doesn't work because they have to make their money from poorer people who buy their products. Unless the producers would all retire and invest their money, but then all the jobs go overseas and products are imported.

Log in or register to post.

The whole thread (20 posts)