Reagen was right after all.

I was reading an AP story about the rich feeling the pinch of the sluggish economy when the following line jumped out at me "The problem is that when the wealthy get stingy, it trickles down to the rest of us."

ETA It gets better

<snip>The DiRenzos aren't unlike many American families cutting back to weather a downturn. They're just richer.

To be sure, the poor and middle-class are being hurt more, but upper crust thriftiness could reverberate across the rest of the economy.

The 10 percent of households with the highest incomes account for nearly a quarter of all spending, according to data compiled by research firm Moody's Economy.com from a 2006 federal survey.

"That does suggest those folks are important for the spending outlook, and the overall economic outlook," said Scott Hoyt, Moody's director of consumer economics.

Other government data show households in the top one-fifth of the U.S. population ranked by income earn about half of all total personal income before taxes—an imbalance that gives the wealthy immense economic clout, said Sara Johnson, an economist at the research firm Global Insight.

"Consumer spending makes up 70 percent of gross domestic product, and when one group accounts for a very substantial share of consumer spending, they also account for a large share of the economic activity that creates jobs," Johnson said.</snip>


Reagenomics shmagenomics, muhahahaha victory is sweet.

This isn't "trickle down economics" this is common sense. If Mr. Rich and his wife can't afford that new luxury item, the luxury item company which employs middle class Americans has to cut jobs which hurts the middle class.

1. Common sense is not always all that common.
2. Just because it's common sense doesn't mean that it can't have a name.

1. Unfortunately you are correct.
2. It's a stupid name made up by people in an attempt to disqualify supply side economics (aka economic reality).

I didn't realize the term was used to poke fun at supply side economics. Actually I think "trickle down economics" is a pretty accurate description of the theory and have no problem using it.

But if all that energy is being expended on a one time shot luxury item that then that leaves less room for working on things all of us can enjoy. I know this doesn't make much sense..

Actually that's not true. A rich person having a large mansion does not leave less stuff for the rest of us. The economy keeps expanding by the minute. Restrictions meant to "even the playing field" actually do that opposite. Generally speaking, the more free a country is economically, the more prosperous it is*.



*source

DQ Study some economics and then talk about who's "right"



Now, to clear things up. Obviously if you're talking about a sector that sells upper tier items you depend on the spending of rich people. Yes, you can say that it's an instance of money "trickling down" within the economy, but that has absolutely nothing to with Supply Side Economics (which is what you call "trickle down" or "Reaganomics").

Supply Side Economics is a school of thought within monetary policy that the best way to activate the economy is to stimulate the factors of production, which in practical terms is to inject money into big corporations. The alternative to this is Demand Side or Keynesian Economics, which believes in injecting money into the economy from the bottom, ie making more money available to consumers.

In the US, Supply Side (or "trickle down") economics have largely failed since corporations that get tax breaks or other incentives rarely increase workers salaries or lower prices for consumers. In the Japanese era of high economic growth (ie the 1960s and 1970s) demand side economics worked since the more money workers made, the more they consumed. After the bursting of the economic "bubble" in the late 1980s, however, demand side economics in Japan failed too, as consumers started to save more money instead of spending it.

Well I am actually studying economics so perhaps we can talk.


That's not the whole story. Another way to stimulate the factors of production is to reduce government's footprint (ie: cut taxes and restrictions on trade). The less the economy is held down by the government, the more it can grow.

Class warfare is a typical tool of the left.

That's all part of supply side economics.

Wow, what does that have to do with this topic?

ETA: Supply side economics does have a bad reputation for having to do with corporate corruption, and in the US as being a tool of the so-called "Military Industrial Complex" but I didn't even address that. Besides demand-side economics is not a tactic of the economic left.

You used the usual tactic of making Big Corporations™ the bad guys and the poor wittle consumers the victims.

No I did not. It is a fact that in the US economic incentives given to big business have not "trickled down" to the bottom of the economic food chain. Call that whatever you want. Yes, there is a widely held "gut feeling" that it has to do with corporate corruption, but I didn't even address that initially. There are plenty of forms of market failure that could cause Supply-Side economics to fail, so it isn't even necessarily a value judgement on corporations.

ETA: Since you seem enamored with the rhetoric of the right I'll give you a right-wing style example of supply side market failure: Outsourcing to overseas corporations.

That's not a supply side market failure. That's a result of our education system. We reward teachers based on seniority rather than performance and do not give parents a way to choose between public schools so that schools earn their funding. Therefore we end up with a substandard education system, producing workers that can not compete at the level that they should.

Actually that has absolutely no basis in reality.

1. The main problem with a lack of good teachers in the US is the fact that teaching positions are horribly underpaid, regardless of seniority or performance.
2. I agree that parents should have a choice between public schools, but...
3. The fact that people are not paid a living wage in India, China, Mexico and other 3rd world nations coupled with the fact that some of their currencies (notoriously the Yuan) are obscenely undervalued means that American workers can't compete price-wise, even though they, in many (most?) cases, provide better work.