Cite?
You have an opinion which you state has value, yet feel you are unqualified to describe why, and claim this as an exemption to supporting your opinion.
Why it’s a fallacy is that an unsupported assertion is without rational value.
I’m going to try something different. Let’s actually fight ignorance instead of just arguing.
Here’s a cite that argues both sides of the question pretty well and damn fairly.
Stoid asked a legitimate question, admitting (as most OP’s do not) to not knowing the answer. It is not helpful to jump on a poster who admits ignorance for being ignorant.
Now, Scylla, yes, “trickle-down” did work for some people - just not the people it was claimed to help. The rich did indeed get richer, but there’s little evidence to show that anyone else did. Wealth was concentrated to a greater degree even than before the Crash in 1929. Meanwhile, there was a constant process of exporting wealth-producing industries to other parts of the world, further restricting the working class’s ability to stimulate the economy by themselves. There’s also this small matter of the tripling of the national debt, whose service payments account for huge percentage of the federal budget even today, further crippling the government’s ability to do anything now.
So in what way do you claim that trickle-down theory “worked”? Why should we believe it would “work” today? If you tell me that people who already have dishwashers are going to buy more, and that people on the edge of bankruptcy should simply go away and decrease the surplus population, I’m going to be disappointed. Shrugging and saying “So what?” is not a responsible answer to anything, mi amigo.
So instead of giving a cite showing the success of trickle-down economics, you’re linking an argument about the success of trickle-down economics in which the results are clearly inconclusive. Okie dokie.
Book recommendation for ya, Scylla. (I’m just chock full of book recommendations this week!) The Triumph of Politics, by David Stockman. You’ll like Stockman; he’s an economist and a Reagan guy! Alternatively (or in supplement), I’d recommend The Education of David Stockman and Other Americans, by William Greider. It was written, I believe, in 1983, and draws substantially on interviews with Stockman and other Reagan officials.
I’ll sum it up for you. The Laffer curve: not so good in theory. Trickle-down economics: not so good in practice.
Enjoy. 
There seems to be a lot of confusion around the terms “Trickle-down economics”, “Supply-side Economics”, and “Reaganomics”. They are all somewhat related, but should be treated separately.
Permit me to be pedantic for a second and cover what most of you already know:
The essence of “Supply-Side” is that cutting taxes has a stimulative effect on the economy. Leaving money in the producers’ hands rather than taxing it allows them to invest more, which creates jobs and increases production of goods and services. The ‘pie’ gets larger, so even though tax rates are lower, overall tax revenues will not be as low as if there was no stimulative effect at all.
Enter Arthur Laffer, and his infamous ‘Laffer Curve’. The basics of this curve can be seen from simple math. If tax rates are 0%, the curve (tax revenue) is at a minima of zero. If tax rates are 100%, the curve again is 0 (or close to it) because people have no incentive to work. So somewhere between 0 and 100% you will have one or more maxima at the optimum tax rate(s).
If we are taxing people at rates above the optimum, then cutting tax rates would actually increase tax revenue. If we are below it, then it won’t.
Reagan’s budget people latched on to this as a way to have their cake and eat it too. By making the a priori assumption that we WERE above the optimum rates, they could fight both for tax cuts, and for cutting the deficit. They argued that tax cuts would increase revenue. That’s ‘Reaganomics’.
Note that I don’t think anyone disagrees with the basic premise of the Laffer curve - the argument is over whether or not we are in fact above or below the optimum tax rate. Also, there is no disagreement that cutting taxes has a stimulative effect on the economy, so that tax revenue will not decrease by the total amount of the tax cut. The argument is over just how much that stimulus would be, whether it would be greater if the cuts were made elsewhere, and whether social justice is served.
‘Trickle-Down’ is the theory that if you want to help the poor, you can do so by cutting taxes on the rich, because then they will either invest more money, leading to growth, or spend it, also leading to growth. And when they spend it on goods, the people who make the goods benefit. When they invest it, the companies they invest in expand and hire more poor people. Again, I don’t think there is any disagreement that this effect takes place to some degree - the disagreement is in the details.
Now, in some cases ‘Reaganomics’ works, indisputibly. Remember the luxury tax? When it was enacted, government tax revenues actually dropped. Why? Because rich people stopped buying yachts and airplanes and such, and those industries were hit quite hard. Many people were put out of work, and the government lost tax revenue from worker’s salaries, plus had to pay extra social benefits. In the meantime, the Rich just spent their money on things that weren’t part of the luxury tax, like vacations abroad, and took the money out of the economy.
So to say that any one of these things has been ‘discredited’ is false. What we can argue about are things like whether the government needs the money more than the citizens, or whether the supply-side stimulative effect would be greater than the demand side (giving money directly to consumers).
Was Reagan right that tax revenues would increase after he cut taxes? Maybe, maybe not. Certainly not in the short-term, and planning a budget a year in advance that assumed big gains in productivity was pretty dishonest. But there is no arguing that overall government tax revenues were much greater by the end of his presidency than at the beginning, even though the top tax rate dropped from something like 70% to 28%. That’s what economic growth does for you. Whether ‘Reaganomics’ worked depends on how much of that growth you attribute to tax cuts, and there is simply no agreement among economists on that.
I should also add that the case for ‘Reaganomics’ was much stronger in 1980 with those historically outrageous marginal tax rates than it is in 2001, where marginal rates are already much lower.
But the government today is not arguing for Reaganomics. They are arguing that cutting taxes for the rich will have a stimulative effect on the economy. And that is certainly true. They aren’t arguing about government revenue at all, so terms like ‘Reaganomics’ and ‘Trickle-Down’ simply don’t apply.
Educated people can still disagree over whether the stimulus would better be applied to the supply-side or the demand-side, but the argument is on different terms. The requirements today are to get the stimulus happening quickly, and to increase consumer confidence. And quite frankly, I think that the Democrats are right in this specific instance. If you want the government to provide a stimulus that will take effect fast, and boost consumer confidence, the best way to do it, in my opinion, is to put the money directly into the hands of the consumers. The problems on the supply-side today won’t be solved with money - inventories are too high, and demand is too low. Until inventory levels reach lower levels, giving money to business just won’t have that effect.
But I still think that the best course is to do nothing. The fundamentals in the economy are excellent - interest rates are at historic lows, inflation is at almost historic lows, unemployment is low, and the infrastructure is sound. This slowdown will end all on its own. Plus, the tax cuts that have already been enacted will be kicking in bit by bit, helping it along. And the reconstruction in New York and the Military buildup will be kicking well over 100 billion dollars back into the economy by the time it’s done. That’s plenty.
If the government spends too much and sets up a serious deficit situation, it will drive up long-term interest rates, which will help to offset any productivity gains from the temporary stimulus.
Plus, it’s not good to be continually screwing with tax rates and rebates and such, because it makes the economy less efficient. Money transmits information. For instance, GE makes dishwashers, and uses their sales data to decide how many dishwashers to plan to make in the next quarter, based on their historical information. Government tampering in the markets adds ‘noise’ to that information. If GE sells 20 million dollars worth of dishwashers next quarter, what does that mean for the next one? Well, there’s now a complicating factor of all those $300 rebate cheques - how much demand was stimulated for dishwashers as a result? It’s impossible to know. So the chance of GE over-producing or under-producing dishwashers is now greater. The same goes for every other industry.
The government’s job in a free market is to set up a level playing field with as few distortions as possible, so that the markets can function as intended. All these constant changes will lead to longer term problems.
Elvis:
Yes debt tripled, so did GNP. The tripling of the debt was mostly a function of the high interest rates of the Carter era, not Reagan’s policies. I’ll remind you that the Government was paying interest in the high teens.
Ignoring this fact and ascribing the debt increase wholly to Reagan’s policies is either disingenuous or ignorant.
Gadarene:
So much for that experiment. I was hoping that a balanced cite would let you evaluate both sides of the argument. Oh well.
Knee-jerk cite, coming up.
You are completely mangling what I have said, Scylla, shame on you.
Here it is:
I understand everything that has been presented thus far. Much of it I already understood. I have based my opinions on these understandings. I am not completely ignorant or unable to comprehend what is being discussed.
However, I do not feel that I am qualified to ARGUE FOR MY OPINION. Period. I don’t feel that I have enough information across the board to * carry on a debate about it. * That doesn’t make me ignorant, or stupid and it doesn’t mean that the opinions I hold are meaningless or to use your phrase “without rational value”. What few assertions I have made are not unsupported, and what I have claimed is that my inability to ARGUE (not simply “describe”) * prevents * not * exempts * me from continuing to do the arguing.
I often have strong opinions about things being debated, but I pretty much don’t say anything or very little because I don’t feel qualified to be doing the debating. Prime example: when was the last time you saw me doing battle in a creation/evolution thread? Oh, never. Yet I have extremely strong opinions about the topic, based on much reading and education about it. I know that evolution is the mechanism that brought about the world as we know it. But I do not feel qualified to argue the subject. That doesn’t make me ignorant. It makes me smart enough to know my limitations.
You really should be more careful with language, Scylla, both yours and others. All debates are meaningless if the language becomes meaningless, and in this thread you are pushing it to become so. Stick with what is *** actually ** * being said, not your re-interpretations of it.
stoid
Not a defender of trickle-down economics by any means, but Reagan’s botched experiment with it was not the primary cause of increases in wage inequality over recent decades. Further, liberalization of trade was only a minor player. See Chart 2 on this page. By far the largest individual factor in increasing wage inequality between skilled and unskilled workers was technological progress.
Sua
Gadarene:
Hopefully this is more to your liking.
http://www.larrykudlow.com/reagan.htm
I don’t understand why it has to be one or the other.
When you have tax rates of 70% and inflation in the double digits, I think supply side economics make some real sense.
The economy is being stifled at the top.
Who asked for a “knee-jerk cite,” Scylla? Wasn’t me.
[QUOTE]
*Originally posted by Stoid *
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You’re kidding, right?
What I quoted, and what I responded to was actually what you said. Here it is again.
I have to admit that I like your rewrite better, but it’s not what you said.
I’m surprised you’d have the audacity to try to rewrite your post, and then accuse me of mangling it, especially since the original is available for viewing.
I see. What value should I ascribe to your opinion that this fiscal policy is foolhardy when by your own admission you don’t have enough information or knowledge, and are incapable of supporting it?
Please quote where I’ve said you were “ignorant,” or “stupid” or withdraw the accusation that I ever suggested such.
Well you’ve stated the opinion that Bush is mismanaging the situation and playing with our economy as if it were “Monopoly Money.” You’ve stated the opinion that you object to the tax-cut policy because it involves “instant gratification.” As of yet you have not acknowledged that that is fallacious reasoning though it was pointed out to you that that was actually a long-term policy change.
I maintain that both those opinions, founded (admittedly by you) without knowledge and on false premises are without rational value.
They would have value if they were merely provisionary hypothesis that were malleable to new information, and they might have value as object lessons, but beyond that what rational value do you think I should ascribe to these opinions.
What supports the “monopoly money” assertion?
What supports your objection to this fiscal policy response, now that we know “instant gratification” is a moot point.
Well, if you’re capable of “describing” your reasoning for your opinions and putting them into writing, why wouldn’t that be an argument?
Uhh, yeah, right.
Yep, everything I’ve said is available for viewing. And I’m surprised you have the audacity to claim I said X when Y is plainly in view. Still.
You’ve been playing this game with people alot lately, Scylla, but I’m not going to play it with you.
stoid
Well, what would you like?
I was kind of disapointed that my first cite was brushed off so casually, as I thought it was balanced and fair.
The argument there doesn’t seem to be that Reagonomics didn’t work, but that the side effects were extremely undesirable.
My second cite is more one-sided.
Have I fulfilled your request?
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Indeed.