Apparently, the Associated Press believes that trickle-down from the rich only impacts folks below them when the rich quit spending:
http://ap.google.com/article/ALeqM5iDN-xMIqKO_HWhozgVSUdkNtLzPQD92B73SO0
Personally, I think it works both ways - they spend, the “working class” benefits by servicing the needs of the rich. If they quit spending, the “working class” takes a hit. For years, though, I’ve heard that trickle-down is invalid…
…what say you?
I read that article. Though the top 10% may have accounted for a quarter of all spending,
Cite.
so they don’t spend nearly to the level of the lower 90%. I’d expect that there consumption of non-necessities doesn’t decrease as much either, except perhaps for the Wall Street people not seeing a bonus this year.
In any case, the article is not an economic treatise, and certainly seems to imply that trickle down works when they have money (or there wouldn’t be an impact otherwise.)
Every recession has stories about how the yacht salesmen are suffering. This one also. Boo hoo.
But the much lower level of spending relative to income of the rich indicates that if that money went directly to the bottom 90% (through a different tax cut policy) their spending would increase more and the economy as a whole would improve on the demand side. Plus, I can’t imagine a better falsification of trickle down than the pitiful income growth of the bottom 90% over the past 7 years.
Yeah, “trickle-down”…
You know, they’re lying when they tell you what’s trickling down is liquid gold.
Tinkle down never worked but it at least had a piece of logic before the rich went international. They bank, shop ,travel and hide money all over the world now. No one can buy American since we don’t make any thing anymore.
I think you’re confusing what “trickle-down doesn’t work” means. Clearly, people spending money helps the economy and to some extent everyone participating in it. However, trickle-down theory was used to justify lowering taxes for the wealthy, saying that the boost to the economy would compensate for the lost revenue. Critics say that this policy leads to budget deficits that cause more harm than the trickle-down provides benefits.