The 'Trickle-Down' Lie
New York's new mayor, Bill de Blasio, in his inaugural speech, denounced
people "on the far right" who "continue to preach the virtue of
trickle-down economics." According to Mayor de Blasio, "They believe
that the way to move forward is to give more to the most fortunate, and that
somehow the benefits will work their way down to everyone else."
If there is ever a contest for the biggest lie in politics, this one should
be a top contender.
While there have been all too many lies told in politics, most have some
little tiny fraction of truth in them, to make them seem plausible. But the
"trickle-down" lie is 100 percent lie.
It should win the contest both because of its purity -- no contaminating
speck of truth -- and because of how many people have repeated it over the
years, without any evidence being asked for or given.
Years ago, this column challenged anybody to quote any economist outside of
an insane asylum who had ever advocated this "trickle-down" theory.
Some readers said that somebody said that somebody else had advocated a
"trickle-down" policy. But they could never name that somebody else
and quote them.
Mayor de Blasio is by no means the first politician to denounce this non-existent
theory. Back in 2008, presidential candidate Barack Obama attacked what he
called "an economic philosophy" which "says we should give more
and more to those with the most and hope that prosperity trickles down to
everyone else."
Let's do something completely unexpected: Let's stop and think. Why would
anyone advocate that we "give" something to A in hopes that it would
trickle down to B? Why in the world would any sane person not give it to B and
cut out the middleman? But all this is moot, because there was no trickle-down
theory about giving something to anybody in the first place.
The "trickle-down" theory cannot be found in even the most
voluminous scholarly studies of economic theories -- including J.A.
Schumpeter's monumental "History of Economic Analysis," more than a
thousand pages long and printed in very small type.
It is not just in politics that the non-existent "trickle-down"
theory is found. It has been attacked in the New York Times, in the Washington
Post and by professors at prestigious American universities -- and even as far
away as India. Yet none of those who denounce a "trickle-down" theory
can quote anybody who actually advocated it.
The book "Winner-Take-All Politics" refers to "the
'trickle-down' scenario that advocates of helping the have-it-alls with tax
cuts and other goodies constantly trot out." But no one who actually
trotted out any such scenario was cited, much less quoted.
One of the things that provoke the left into bringing out the
"trickle-down" bogeyman is any suggestion that there are limits to
how high they can push tax rates on people with high incomes, without causing
repercussions that hurt the economy as a whole.
But, contrary to Mayor de Blasio, this is not a view confined to people on
the "far right." Such liberal icons as Presidents John F. Kennedy and
Woodrow Wilson likewise argued that tax rates can be so high that they have an
adverse effect on the economy.
In his 1919 address to Congress, Woodrow Wilson warned that, at some point,
"high rates of income and profits taxes discourage energy, remove the
incentive to new enterprise, encourage extravagant expenditures, and produce
industrial stagnation with consequent unemployment and other attendant
evils."
In a 1962 address to Congress, John F. Kennedy said, "it is a
paradoxical truth that tax rates are too high today and tax revenues are too
low and the soundest way to raise the revenues in the long run is to cut the
rates now."
This was not a new idea. John Maynard Keynes said, back in 1933, that
"taxation may be so high as to defeat its object," that in the long
run, a reduction of the tax rate "will run a better chance, than an
increase, of balancing the budget." And Keynes was not on "the far
right" either.
The time is long overdue for people to ask themselves why it is necessary
for those on the left to make up a lie if what they believe in is true.
Poster's
comments:
1) Should I work in Tennessee to pay for New
York City's probable coming problems?
2) Or should
they?
3) It is to my guessed advantage to go with
option (1), though a dose of tough love would also help.
4) Or just wait and see what happens? After all,
I can be wrong, too. I just don't think so, and would rather act now than react
later. Mostly that means just making up my mind ahead of time. Hopefully New
York City doesn't suffer enough for me to pull my plans and present thoughts off the shelf, which I may have to do.
5) Consider
just giving priority to your Family and friends where you live. Now that is a
big enough assignment.
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