It’s increasingly difficult for most conservatives to truly defend the
concept known as ‘trickle down’ economics these days. Granted, most
wealthy, orthodox capitalists don’t bother or care to quite often, short
of when they can label themselves ‘job creators’ in the process. But
throughout the debate over just how best to cater to an economy’s needs
rages between those in the corners of concentrated wealth versus those
of a more shared prosperity thinking, the phrase “supply side
economics,” seems to consistently remain something thought as viable.
Now despite these two ideas being technically different, the idea
that cutting taxes for the top earners and wealthiest individuals to
spur private investment and keep the economy growing remains the same no
matter what you call it, and proponents of the models in the midst of
their ongoing continuing victory in pushing such, continue to press for
more. However, recent data which analyzed economic activity under
Presidents Reagan, Bush, Clinton and Bush II, is beginning to cast
serious doubt as to the effectiveness of this top-down economic model.
Contrary to the market-enthusiast’s rhetoric, the strongest periods
of economic growth since Ronald Reagan’s proposition of the trickle-down
model, have come not when taxes on the financier and investor classes
have been reduced, but to the contrary — when taxes have been increased.
A strange contradiction to the lines espoused by supply-side
enthusiasts is that cutting taxes is the single, central and most
crucial aspect to encouraging economic growth. However following
President Clinton’s 1993 tax increases on corporate entities and wealthy
individuals, the US saw substantial economic growth which came and
lasted relatively until the end of the respite from supply-side policy
models. Once George W. Bush assumed the office and pushed for a return
to the wealth-favoring tax policies, the stagnation experienced under
Reagan and Bush Sr. resumed its course.
There’s no shortage of complicated, often contrived answers in
support of supply-side thinking, which are trotted out to explain away
the findings of such data. Market regulation isn’t taken into account,
innovation in the tech sector spurned the growth of the 90s regardless
of tax models, the housing bubble resulting from a broken home lending
system…the numbers of externalities in play make it impossible to truly
point to a singular policy or set of policies as ultimate evidence of
the theory’s potential or failure.
Yet to take something from the playbook of those who typically
favor socio-economic Darwinism to managed economic models, it could be
argued that the cushy tax cuts for the wealthy and corporate elite,
simply failed to provide the incentive they needed to properly invest.
With low marginal tax brackets and endless series’ of loopholes and
shelters for those of substantial wealth and resources to enjoy, the
motivation and incentive to put their money back into the economy by way
of investment simply wasn’t there.
Their wealth, which was protected from taxation, could accumulate and
amass without the additional need for investing such as venture
capital, hence causing markets to struggle, placing additional
incentives on them to augment their stalled investment revenue by
streamlining everything from labor costs to the end value of their
products or services. In effect, the entirety of the market economy
suffered because those at the top became ‘lazy’ with their money.
While much of the right wing, which itself is heavily dominated by
corporate interests in one form or another these days, continues to bang
on the drum of low taxes driving strong economies. Whereas once taxes
were said to result in economic stagnation (now proven to be wrong on
its own), they are now quite commonly referred to as a form of
totalitarian slavery, perhaps in an attempt to distract from the
demonstrated failure of their policies in practice.
So could it be that as these old models and their inherent
failures become more obvious, those who support such are simply getting
desperate? Its possible, though with a congress comprised of so many
corporate spokespeople and privately wealthy individuals, it’s unlikely
that the U.S. is going to see any real reversal of this failed theory
any time soon.
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