Trickle Down or Up?

As always I write this column in response to a friend who try to convince me how wrong Reagan was when he develop the trickle down theory! Of course I always defend Reagan as one of the greater Presidents we have had , and I misspoke in my defense of him when it came to the so-call Trickle down. In my years at BYU and other academia I never heard the term trickle down in economics classes.

In fact, one could say that the trickle down theory was not what Reagan was advocating at all.

Where did it come from? Well some quote David Stockman, the President’s Budget director, But Stockman was not even among the first thousand people to make that claim that advocated a "trickle-down theory.

Liberals so love the term it they been using it as a catch phase for years saying that was what Reagan was advocating and in the same breath denouncing it! There is a tenacity to cling to use words similar to safeguard their vision of the world and of themselves.

What often confused to them is what many including myself would call supply-side economics, such as that advocated by Arthur Laffer.
Laffer, is a "supply-side" economist who became influential during the Reagan administration as a member of Reagan's Economic Policy Advisory Board (1981-1989).
In economics, the Laffer curve is used to illustrate the idea that increases in the rate of taxation do not necessarily increase tax revenue. . Increasing taxes beyond the peak of the curve point will decrease tax revenue.

So his theory is that tax cuts can generate more tax revenue for the government because it changes people's behavior, causing more economic activity to take place, leading to more taxable income, as well as a faster growing economy.

It really not hard to find examples of this in our own economic history , which predates Reagan, during the Kennedy administration.

Kennedy cut the tax rates, to provide incentives to change economic behavior and it increased economic growth and individual incomes to the point that, more tax revenue was coming into the Treasury than had been the case under the higher tax rates. That is exactly what happened.

But it seems so many liberals will forget that this gave more money to the Federal Government which it seems Congress like under Reagan decided to go on a spending spree.

In reality Liberals or the so-alled progressives do not see their use of spending as a problem, and none of this has anything to do with money trickling down from the rich to the poor.
The political notions are dependency of the poor not on not the people that supply the jobs which in most cases are the upper class, it is to make them depended on the political class for those jobs.

The left are not as much interested in supplying of jobs for the people as to hey are in controlling the lower class thought political power. Obama’s redistribution of the wealth in this country is example of this.

Those who need to reeducated themselves need to take economic classes and realized that for Tax, money comes out of the pockets of the poor in this country.

Thomas Sowell is a senior fellow at the Hoover Institute and author of Basic Economics writes:

“If education provides anything, it should be an ability to think -- that is, to weigh one idea against an opposing idea, and to use evidence and logic to try to determine what is true and what is false. That is precisely what our schools and colleges are failing to teach today.”

The sad part of it is that the liberals Progressives now believe that they need to express a new theory known as the Trickle up. This one has it roots in socialism in that all things come from the labor class. That would surprise many in industry including people like Thomas Edison, and maybe Walt Disney, whose Dreams of inventions were develop and cultured by the likes of JP Morgan and Bank of America.

Small Business fail by the thousands not because the workers who made it happen, didn’t do the job. Many factors including competition which some progressives/liberals can comprehend. Nor is this unique. No one who begins a company would expect to break even -- much less make a profit -- during the first year or two.


As much as they believe the workers are the real power it takes people like Bill Gates, Steve Jobs, Thomas Edison and even Walt Disney with the help of JP Morgan to bring the product to market. Without these men the workers are left without direction and without a cause. The one thing the Left never gets, is that the Rich which includes those leftist Movie stars never pay taxes, it is the common folks who see the price of products go up and realized they are the ones paiding the taxes for the wealthy and corporations.

The real tax relief would be to make all corporations Tax free. What a concept!