Split Thread Trickle-down economics

Part of the trouble is that these so-called business stars in the IMF believe in trickle down economics. It's like beating against the wind.
 
The IMF seems to have changed its tune about trickle down economics, but nothing has been done about it. IMF loans still come with all sorts of cuts and closure clauses:

https://psmag.com/economics/trickle-down-economics-is-indeed-a-joke

"Trickle-down" economics began as a joke. Seriously.
If there’s one person most often associated with the origins of trickle-down economics, it’s President Ronald Reagan. Few people know, however, that the phrase was actually coined by American humorist Will Rogers, who mocked President Herbert Hoover’s Depression-era recovery efforts, saying that "money was all appropriated for the top in the hopes it would trickle down to the needy."
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Henri McPhee said:
The IMF seems to have changed its tune about trickle down economics, but nothing has been done about it. IMF loans still come with all sorts of cuts and closure clauses:

https://psmag.com/economics/trickle-down-economics-is-indeed-a-joke
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Loans coming with terms that mean that the country receiving the loans needs to reduce expenditure isn't any kind of support for trickle down IMO.

I think it is financially sensible that if an organisation is making a loan that they get some kind of say in how the country receiving the loan continues to act - otherwise there's a risk that you're just throwing good money after bad.
 
IMF bailouts usually do require fiscal tightening (spending cuts / tax rises) and policies to reduce inflation (usually a combination of devaluation and high interest rates). These are all contractionary (apart from devaluation which goes slightly the other way) and spending and subsidy cuts are usually income-regressive too.

AFAIK "trickle down" typically means cutting higher tax rates (also income-regressive) but that's not usually an IMF demand.

IMF policies are better considered to be those that a "lender of last resort" would impose, the IMF steps in when there is nobody else around who will. So in an important sense it is a last-ditch safety net. In the absence of a bailout from the fund it can easily be imagined that the outcome for a country would be (i) even more contractionary and (ii) even more regressive.
 
Henri McPhee said:
I don't think trickle down economics is academically satisfactory.
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I think that’s a better way to put it.

Personally, I see money “injected” at the top “trickle down” in myriad ways. It seems undeniable, and later I can give an example. But the question is, is it the most effective way to stimulate an economy. I think that depends on myriad factors, so that there’s no simple answer.
 
Fast Eddie B said:
I think that’s a better way to put it.

Personally, I see money “injected” at the top “trickle down” in myriad ways. It seems undeniable, and later I can give an example. But the question is, is it the most effective way to stimulate an economy. I think that depends on myriad factors, so that there’s no simple answer.
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There is however a simple answer to the hilited part: NO … it´s certainly not the most effective way.
 
Fast Eddie B said:
I think that’s a better way to put it.

Personally, I see money “injected” at the top “trickle down” in myriad ways. It seems undeniable, and later I can give an example. But the question is, is it the most effective way to stimulate an economy. I think that depends on myriad factors, so that there’s no simple answer.
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I guess it depends on whether you are viewing it in the context of deficit spending or not. If you were to balance it with spending cuts such that the who thing were revenue neutral I’m not convinced there would be a net stimulus effect.

If you are talking about deficit spending I think that it’s generally accepted that in most (but perhaps not all) it’s better to stimulate an economy is though monetary policy. If you want fiscal stimulus anyway, my expectation is that in most the top is probably not going to be the best place to apply it, but this could depend on why you decided to go the fiscal stimulus route.
 
This trickle down economics is the theoretical economics for a few rich. It's just cutting public spending. Northamptonshire and Somerset local authorities in the UK are going bankrupt.
 
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Not everybody agrees about trickle down economics. This is an article in the British Guardian newspaper:

https://www.theguardian.com/comment...ckle-down-economics-broken-promise-richest-85

This applies to both companies and individuals. Small business gets clobbered by taxes and business rates, while big business turns around and says to the state: "This is how much tax I fancy paying this year, take it or leave it". The rich no longer create jobs, through a process of consolidation, takeover and merger, they actually destroy them. Zero-hours contracts are the way of the future; in a society that is hungry, desperate and devoid of political engagement or unionism, why would anyone offer terms and conditions that give individual workers any standing?
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Henri McPhee said:
Not everybody agrees about trickle down economics. This is an article in the British Guardian newspaper:

https://www.theguardian.com/comment...ckle-down-economics-broken-promise-richest-85
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no one agrees with trickle-down.
It was invented as a fig-leaf to justify wealth transfer from average taxpayers to the rich. It was never an actual economic theory.
Also, there is no such thing as Supply-side economics: there is only supply and demand. Sound economy policy is to keep both in balance. Promoting one to the exclusion of the other cannot possibly work.
 
I still think this trickle down theory of theoretical economists is really just bankers speak for trickle up remuneration policy and cutting social security to cut public spending. The trouble is it seems to be being applied all over the world, including Brazil and Russia. They should be furthering the interests of the people. An example of this is from today's Daily Mail newspaper:

https://www.dailymail.co.uk/news/ar...pay-rise-despite-austerity-public-sector.html

John O'Connell, chief executive of the TaxPayers' Alliance, told the newspaper: 'The sheer scale of this payrise is bound to raise questions as colleagues across the public sector face only a modest pay rise — if they are lucky.
'To families struggling with rising bills, a pay rise of this magnitude will be unthinkable.'
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Henri McPhee said:
https://www.dailymail.co.uk/news/ar...pay-rise-despite-austerity-public-sector.html
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It's the Daily Fail!!!

Assuming we can believe anything in that article....

Top judges are in line for a pay hike of up to £27,000 despite austerity being imposed on the rest of the public sector, it has emerged...

It will cost taxpayers up to £3 million annually,
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3 MILLION pounds! This outrageous extortion will surely bankrupt the nation. :rolleyes:

But why are they getting it?

The move - intended to tackle a recruitment crisis - would add between £21,572.16 and £26,965.20...

Counsel for the judges Michael Beloff QC said the pay rise was to compensate the judiciary for a £25,000 tax charge they suffered by having to move into a new pension scheme.
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Trickle down, trickle up, or trickle through?
 
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