The problem with saying something is 'unfair', when it is inarguably unfair, is that some people think it's not fair that some people make more money than other people. Until people realize that: people earning more than others based on what they can bring to the table is entirely fair, you will never convince them that something that is perfectly fair is fair.
A free market will always be fair (as long as it is regulated lightly to prevent monopolies and other unfair advantages, the latter being something the US lacks currently), as it gives to the producer the value of what he's produced. Socialism will never be fair as it takes from people who've earned more and gives to people who've earned less.
That's not to say that we should let the impoverished die since they're not bringing anything to the table, just to point out what's fair.
I would also add that regulation can certainly be a bad thing, as our lobbyists love to convince congressmen (and members of the executive staff) to give their companies an unfair advantage, which stifles competition, which is the entire purpose of a free market.
The unfair advantage being one that's gained via regulation that hurts 'the little guy'.
What is social engineering? I liken that term to activist judges. If a program doesn't agree with my political leanings does that make it social engineering? Or are all government programs whether they benefit the working class or the 1% a form of social engineering?
Re "a free market will always be fair," it is time we woke up to the fact that the concept of a free market was invented by economists who needed a hypothetical model system within which they could make impressive predictions about human behavior.
In practice, there is no such thing as a free market. There are always distorting influences such as fraud, violence, intimidation, collusion, irrational behaviors, religious or ethical restraints, misinformation, disinformation, social engineering, etc.... The list could never be completed, but you get the idea. Unless you don't want to.
1Hammer, I don't believe people think it is not fair that some people make more than other people. I believe people think that when someone makes a lot of money that they made by taking advantage of workers or lobbying the government for sweetheart contracts or huge tax cuts they believe that is unfair. Or by lobbying government to remove usury laws in the case of the credit card companies. Also I think people are aware that corporate tax rates and the top marginal personal tax rate are at one of the lowest levels in some time and for a long time. Why hasn't that wealth that has accumulated at the top trickled down in the form of higher wages and better paying jobs?
Amen Tall Mike. TANSTAAFL Could be altered to be TANSTAAFM plus the most vocal of Free Marketeers would probably be hard pressed to make a profit without some form of government contract or preferential tax policy.
tuco, there is no reason for wealth to trickle down unless we create incentives for it to happen. And yes, a large number of government programs are social engineering, but that is not necessarily a bad thing.
Look at the present Republican Nominee. He has benefited greatly from the preferential tax policies for Real Estate Developers. He also benefited from the corporate bankruptcy laws. Yet the personal bankruptcy was changed in 2005 to make it harder for individuals to "enjoy" that privilege.
TallMike the incentives are not radical or new. Raise the tax on unearned income. Tax breaks for job creation instead of for moving you manufacturing jobs offshore. Federal and State purchasing must be done with 100% made in America goods and services.
TallMike that is something that has always baffled me. You said, "There is no reason for wealth to trickle down" Exactly. Why then do so many people think it will? It is amazing to me that so many people who have been hurt by trickle down economics still believe in it. Why? Was Reagan that good of a salesman? I remember him selling cigarettes on Death Valley Days but.... Damn.
Raising the tax on unearned income discourages investment in businesses, which works against job creation, doesn't it?
Later... Breakfast calls.
Unearned income is not business investment.
Enjoy. I have to get out of here myself.
EZPZ, very generous with moves right where you look for them. 8.
"Why hasn't that wealth that has accumulated at the top trickled down in the form of higher wages and better paying jobs?"
...and benefits, and entitlements. Oh wait.
I mean if what you bring is so valuable to the market that The Man is taking advantage of you, go find someone else to pay you what you deserve. If they can replace you for the same cost, you're overvaluing your worth. I know this sounds harsh, but it's reality.
I never understand why liberals think that forcing the rich to pay for entitlements and give benefits doesn't count as compensation. Heck, it's tax free, you should be counting that as more than the base salary that would replace it. But when you start looking at how much salaries have increased along with other benefits, you realize the employee is getting more than it was 40+ years ago.
Then people will whine about how the cost of something like a house or a car has gone up over time, but ignore that the average house is more than twice as big as it was (and offers way more than the average house did). Same thing with cars. You get air conditioning and power everything standard now, but the average price has increased more than just inflation and they can't put two and two together to figure out why.
Okay, you didn't answer the question. You changed the subject. If Trickle Down worked as was advertised we should have full employment and wages would go up because of that.
That is unbelievable. 40 years ago my health care was "Free" with my job. BCBS paid by employer. Everyone had it. No deductible, no co-pay. In terms of "real" money adjusted for cost of living and inflation wages are flat and benefits are less since we have to pay for them out of our wages instead of in lieu of wages.
We had pension plans that were safe and highly regulated. Not something sold to us by wall street that was supposed to have made us all millionaires by now. Remember that? Remember how they sold 401Ks?
I have a 7 year hole in my retirement account. 7 years of lost future because we were told that a 401K was better than a pension. Let Wall St. manage your retirement. Let the market build your retirement. OOPS! Market go boom. You Lose. I am just lucky I wasn't ready to retire when it did.
No one is forcing the rich to pay for entitlements. The problem is when the top isn't tax at an equitable rate then the rest of us have to make it up. In school and property taxes. In everything else we get nickled and dimed with. When the money doesn't trickle down which it used to from the Federal Gov to the States then if you want good schools, emergency services, roads, etc. then you have to foot the whole bill yourself. That means higher taxes on the masses at the local and state level.
You say we don't understand that we get more for our money so don't complain about the cost of something. Well if you want good roads and schools and emergency services they cost something too.
Somebody has to pay for the tax cut or your infrastructure suffers. Who do you think has been paying for the Reagan and Bush tax cuts all these years? Paying in higher local and state taxes and fees, higher co-pays and deductibles in insurance?
So let's let the Chinese bankroll our wars and put our economy in the hands of Wall Street and the Big Banks. Move all our manufacturing offshore. If they complain we will just call them liberal takers who don't understand economic theory.
The problem with turning over everything to the Free Market is the market has to turn a profit. Government is not a business. The commons works differently, more like drwho's energy co-op.
tuco, earlier I remarked there is no reason for wealth to trickle down unless we create incentives for it to happen. Your first suggestion was, "Raise the tax on unearned income." I pointed out that raising the tax on unearned income discourages investment in businesses, which works against job creation. You responded, "Unearned income is not business investment." What? If someone invests in a business, they expect to benefit financially from their investment, and that financial benefit is considered to be unearned income. So if you raise the tax rate on unearned income, you discourage people from investing in businesses and thereby discourage the creation of jobs.
If you want to create a greater incentive for wealth to trickle down, one good way would be to lower, yes lower the tax rate on unearned income because that will encourage people to invest in businesses, which will lead to the creation of more jobs.
TallMike, the data refutes that; investment is strongly correlated to the business cycle not the capital gains tax rate. Check out Jared Bernstein's analysis.
lonibelle, if Jared Bernstein et al are correct that there is no significant correlation between investment and the capital gains and dividends tax rates, tuco's recommendation that we raise the tax rates on unearned income in order to incentivize a trickle-down would still be futile.
TallMike, I think his point was that we raise taxes on capital gains to be able to give tax breaks for actual job creation. That tax breaks properly targeted and revenue neutral are one thing; just cutting taxes on the top doesn't really do anything except enrich people who hardly need it.
Difficulty score 14.
No trickle down? Hogwash. Unless you think rich people hide their money under their mattresses, there has to be trickle down. That is the essence of the economy. Do you think there is a money fairy just pumping money into the economy?
No such thing as a free market? Hogwash. Of course natural monopolies like electric companies or gas companies need regulation, but anywhere there is competition the market can and should be free of regulation, subsidies and tax breaks.