Trickle-down economics
This theory has been disproved many times in our history,
yet the dingbats are still in love with it.
It has never worked, but they still keep preaching this as the ultimate
solution to all our economic problems.
Here is a hypothetical example: You own a small factory manufacturing
gizmos. Currently your capacity is 1,000
gizmos each year. Each gizmo retails for
$1,000, and you realize 30% net profit.
So far you have been able to sell your entire production each year, but
the past few years have been tight. The
number of middle class workers who can buy gizmos is shrinking.
You currently employ 20 workers. At times you have
considered expanding your production which would enable you to hire a few more,
but the market just is not there. This
would require some investment on your part, and entail a risk that you might
not be able to sell more gizmos.
The government is constantly talking about how we need to create more jobs, but
you just can't see any economic advantage associated with the risk of
expansion. But then the government says that in order to encourage job
creation, we're going to give you a big tax break.
So you and your accountant look at the numbers. Yes, you
could invest in expansion, take the risk, hire a few more workers, and maybe,
perhaps show an increase in revenue. OR,
you can do nothing, enjoy the increase in net revenue resulting from the tax
break, make up excuses why you can't create more jobs, and investigate moving
your entire operation to China.
So, more money to the top does not necessarily mean any will
trickle down to the workers. What it
usually means is that the rich get richer.