Restrictions on welfare

[480sx]

Did you really just link me to a Wiki article... that seems to rip on Trickle down more than it supports it?

Economic 'Freedom' index, based on how 'friendly or unfriendly' their policies were toward free enterprise(capitalism). Dude, Capitalism is different than the trickle down theory. Also, were talking for the most part federal taxes, not state taxes.

This is why Wiki often times fails, and should never be used as a real source unless quoting directly from the sources used to make the articles.

[Urabus GodofTraction]

Or i could say your trying to prove that a theory that came out of the Regan era that is now officially over, is still a valid economic theory. Either way really, you have yet to attack any of the core ideas of my argument, just some graphs that i pulled from the net.

Find me some proof that it is still a valid theory. Iv done my end, made my case.

Please explain why your graphs aren't comparable to the graphs I've listed.

I can ruin your core idea with your answer to one simple question: where do you get your money?

[Jimefam]

I believe in trickle down. It would absolutely work with the right business owners in place. The problem as always is balance, for instance the idea is that when business are doing well and growing so too should the income earned by the employees grow by a similar rate. A results oriented approach so to speak but that is seldom the case so what inevitably happens is what is happening now the lower and middle classes that are seeing their purchasing power decrease as their income doesn't keep pace with inflation choose a "redistributor in chief" as mccain likes to put it. The other extreme though are unions who always want more regardless of results or lack thereof and choked the life out of most of our unionized industry. The car industry being the most recent victim. I also hate the idea that the government is going to be more heavily regulating our economy but the simple truth is that it has proven to be necessary time and again as business leaders are shortsighted and think only of the immediate future.

[OriginalWheelman]

Did you really just link me to a Wiki article... that seems to rip on Trickle down more than it supports it?

Economic 'Freedom' index, based on how 'friendly or unfriendly' their policies were toward free enterprise(capitalism). Dude, Capitalism is different than the trickle down theory. Also, were talking for the most part federal taxes, not state taxes.

This is why Wiki often times fails, and should never be used as a real source unless quoting directly from the sources used to make the articles.

You asked for some proof that it is not outdated, not definitive proof it works. If there were definitive proof one way or the other there would not be an argument. I quoted the part of the article that supports the argument, but linked the article out of fairness. The article talks about both sides of the argument. It was a 2 minute search and I linked the first supporting argument I could find. I personally am not convinced either way, trying to argue with me that it doesn't work is a waste of time. I'm merely pointing out you can find evidence to support it as well. But instead of accepting the data, which IS QUOTED DIRECTLY FROM THE SOURCE, you choose to tear apart Wikipedia instead. You are quick to defend your source which is less credible than wiki I may add, but are quick to tear apart the opponents source with the same scrutiny. This shows me that you are already close minded on the issue. If you really want to be objective you could at least entertain the notion that it works. If you can't see the strengths of another side of the argument how can you make a educated assessment? You can't. You are too busy filling the pro column for the side you for what ever reason have taken, and you are trying desperately to fill the con column for the other side. Until you can look at this objectively there is no point in discussing it with you.

[480sx]

C - First, to entertain you.. I make money by working for my cousin who is self employed, by maintaining our farm, and by running my own part time automotive/fab business.

PG 37, the graph you refer to is household income. The graph i listed is Family income. There is a difference, im not sure exactly what, but its apparent when you go through that PDF file that they are not the same thing. I dont however know where this information is housed in the PDF.

PG 70, thats the right source for that i believe. Im not sure where the top 5 percent came from either.

OW - I try to look at everything objectively, but i have discussed this with PLS classes as well as done my own research on the theory and believe it to be crap. So i therefor am trying to get someone to prove me wrong, and you guys havnt done that yet. I havnt made the best case for it i will admit, but you'v all ignored my base argument and instead attacked my source which is simply a support for my argument. My argument can stand alone if you would like to discuss that.

I guess my original question shouldnt have been find me proof that its still a valid theory, because it is still a theory(although i personally believe there is enough information to discredit it). I should have asked find me proof that it works.

The reason i went after Wiki is the writers use of that direct quote to support his argument. It is flawed in ways i previously discussed.

To say that the information in that artical obtained by CBO.ORG is shadey is..

I also hate the idea that the government is going to be more heavily regulating our economy but the simple truth is that it has proven to be necessary time and again as business leaders are shortsighted and think only of the immediate future.

Exactly. If people could take care of themselves we wouldnt need a government. Look at this mess wallstreet has us in right now. This recession was forcasted for years and everyone turned a blind eye towards it and kept up with the high risk loans(lots more to the economic problem than this, just a small example).

The TD theory sounds great until the economy hits hard times. Then, the majority of the wealthy cuts the 'water supply' for fear of over extending themselves, and people lose jobs, get pay cuts, ect.

[OriginalWheelman]

OW - I try to look at everything objectively, but i have discussed this with PLS classes as well as done my own research on the theory and believe it to be crap. So i therefor am trying to get someone to prove me wrong, and you guys havnt done that yet. I havnt made the best case for it i will admit,

You've researched and discussed it at length and made up your mind on it. I can understand why you are firm in your view. However, that is not how you have approached it in this thread. What you have done is post a lot of graphs from some other person's argument.

To say that the information in that article obtained by CBO.ORG is shady is..

While the data may be from a credible source originally, the data in that report could be manipulated to show more of one side than the other. Perhaps by omitting data that would show some cracks in the theory. In order for someone to discredit your use of it, they would need to research your source and discredit it, and that is a lot to do for a forum disagreement.

But, you've all ignored my base argument and instead attacked my source, which is simply a support for my argument. My argument can stand alone if you would like to discuss that.

I was just playing devil's advocate. I haven't attacked a thing you said, I merely answered your request.

I guess my original question shouldn't have been find me proof that its still a valid theory, because it is still a theory (although i personally believe there is enough information to discredit it). I should have asked find me proof that it works.

That's a much better question. However, could you definitively prove that it does not?

The reason i went after Wiki is the writers use of that direct quote to support his argument. It is flawed in ways i previously discussed.

The only reason I quoted wiki is because the article was a direct quote from a study. I did not personally look at the study, so I credited where I had looked, as to be accurate.

[Urabus GodofTraction]

PG 37, the graph you refer to is household income. The graph i listed is Family income. There is a difference, im not sure exactly what, but its apparent when you go through that PDF file that they are not the same thing. I dont however know where this information is housed in the PDF.

PG 70, thats the right source for that i believe. Im not sure where the top 5 percent came from either.

Choosing between families and households isharder. Families—people living together who arerelated by blood, marriage, or adoption—frequentlyconstitute single units for most decisions about consumption.The prototypical case of a married couplewith children fits that description most completely.Such families combine the incomes of the two parentsto provide for the entire unit. At the same time,extended families combine subfamilies that mayshare only housing expenses and make other decisionsabout consumption as subfamily units.A household—all of the people living in a singlehousing unit—is usually also a family; nevertheless,a small but growing fraction of arrangementsinvolve unrelated people sharing a house or apartment.Such nonfamily households form a single unitfor their consumption of housing, but, like extendedfamilies, they may divide into smaller groups forother consumption choices. Many nonfamily householdsconsist of unmarried couples, with or withoutchildren, whose consumption decisions differ littlefrom those of married couples. To separate suchhouseholds into smaller consumer units to assesstheir income would misrepresent their relative economicpositions.Focusing on families thus incurs two kinds ofmistakes: it combines subfamilies that act independentlyin their decisions about what to consume, and itseparates nonfamily groups that act together. In contrast,the use of households inaccurately combinesgroups that act independently (both subfamilies andunrelated subgroups) but correctly counts as a singleunit households composed of unrelated groups thatcombine resources to finance consumption. Over 90percent of all households consist of a single family;because the household and the family are identical,the choice of unit does not matter. Using either alternativecorrects mistakes that the other makes but introducesnew errors. Data limitations preclude knowingwhich approach misclassifies fewer units, so eitherchoice is to some degree arbitrary. Because allmembers of every household make a combined decisionabout the housing they “consume,” householdsare the unit used in the principal analysis of thisstudy.

Basically, your graph uses "family" to created emotionally charged opinions.

OW - I try to look at everything objectively, but i have discussed this with PLS classes as well as done my own research on the theory and believe it to be crap. So i therefor am trying to get someone to prove me wrong, and you guys havnt done that yet. I havnt made the best case for it i will admit, but you'v all ignored my base argument and instead attacked my source which is simply a support for my argument. My argument can stand alone if you would like to discuss that.

I guess my original question shouldnt have been find me proof that its still a valid theory, because it is still a theory(although i personally believe there is enough information to discredit it). I should have asked find me proof that it works.

C - First, to entertain you.. I make money by working for my cousin who is self employed, by maintaining our farm, and by running my own part time automotive/fab business.

You work in a microcosm of the trickle-down effect:If your cousin is taxed more, he'll raise prices. If he cannot, he'll pay you/himself less. If he's taxed less, he can lower prices, or invest in farm equipment etc (thus giving money to a company that pays it's employees), or pay you/himself more. No matter what, that money is pumping back into the economy.

Exactly. If people could take care of themselves we wouldnt need a government. Look at this mess wallstreet has us in right now. This recession was forcasted for years and everyone turned a blind eye towards it and kept up with the high risk loans(lots more to the economic problem than this, just a small example).

The TD theory sounds great until the economy hits hard times. Then, the majority of the wealthy cuts the 'water supply' for fear of over extending themselves, and people lose jobs, get pay cuts, ect.

Wall street did not "get us into this mess."Government over-regulation and forcing banks to make poor loans (or else they're "racist") got us into this mess. Banks don't naturally make large amounts of high-risk loans. Hell, they don't WANT to make large amounts of high-risk loans. They were told to, though.

When the economy hits hard times, "the people" (loaded phrase right there) lose jobs and take paycuts. If they didn't, the economy wouldn't be having a hard time! The money comes from somewhere... And where does the money go when the wealthy "cut the water supply"? Do they stuff it under their mattress? No, it goes into banks, or any venture that's making a profit. If that profit happens to be overseas, then, well, those people now earning more overseas will buy the now-cheaper goods from the US.

Trickle-down requires an understanding of macroeconomics. Anyone with an understanding of macroecon that doesn't support trickle-down is engaged in "me me me me me" class-warfare.

[mattblancarte]

If your cousin is taxed more, he'll raise prices. If he cannot, he'll pay you/himself less.

Bingo. Employees are a HUGE expense to businesses of all sizes. When margins decrease, they are one of the first things to be cut down.

[Jesda]

Its really simple.

When government levies any tax, whether its the intake of income or a tax on sales/purchases, it discourages economic activity. Taxes are an often necessary evil, but government should ALWAYS take into consideration its consequences -- the amplification of scarcity.

Costs increase. Firms as well as households are forced to make compromises. Because of your income tax and sales tax, you must decide, with your resources, what to purchase or not purchase, or what opportunities to pursue or pass on. The same is true for businesses.

Politicans LOVE to pit households and firms against each other, dividing them into teams (political parties). Team politics is how you get voters emotionally involved, how you raise money, and how you create false fears. Its how you get a-hole politicians who claim to want to "fight" for your piece of the pie, a pie that's too large and shouldn't exist as it does.I digress...

My point is that households and firms are forced to make similar compromises. If a firm's taxes or costs increase, it rids itself of costs or raises prices for end users. As evidenced by recent rising energy costs, firms will get rid of staff first, then raise prices depending on how competitive their markets are. Households suffering from wage losses or increasing living costs end up spending less on products and services or find themselves lowering their living standards.

My point: Wealth doesn't trickle up or down. It flows among firms and households that interact, directly and indirectly. Big government is like a rubber plug in a water pipe.

[480sx]

Basically, your graph uses "family" to created emotionally charged opinions.

Idk about that. If you go through that study, there are places where it compares family income to household income. Page 69 for example.

You work in a microcosm of the trickle-down effect: If your cousin is taxed more, he'll raise prices. If he cannot, he'll pay you/himself less. If he's taxed less, he can lower prices, or invest in farm equipment etc (thus giving money to a company that pays it's employees), or pay you/himself more. No matter what, that money is pumping back into the economy.

Well i actually meant that he runs his own business and i work on a farm, not his. Your point was still made.

If he is taxed more, he will make less, usually. It can be as simple as that. While he COULD lower my wages, hes not going to and most employers wouldnt either, they would simply make less cash. Hes not going to fire me, he still needs my help to run his business. He could increase the coin op prices, but that usually is a double edged sword. Increasing a 25 cent per play game to 50c usually doesnt go over well. So he is simply stuck making slightly less money.

Wall street did not "get us into this mess." Government over-regulation and forcing banks to make poor loans (or else they're "racist") got us into this mess. Banks don't naturally make large amounts of high-risk loans. Hell, they don't WANT to make large amounts of high-risk loans. They were told to, though.

If you believe it was all the governments fault you would be very mistaken. The main problem from my understanding was the lack of regulation on the banking system. At least meet me in the middle, it was a failure of both government and wall street.

When the economy hits hard times, "the people" (loaded phrase right there) lose jobs and take paycuts. If they didn't, the economy wouldn't be having a hard time! The money comes from somewhere... And where does the money go when the wealthy "cut the water supply"? Do they stuff it under their mattress? No, it goes into banks, or any venture that's making a profit. If that profit happens to be overseas, then, well, those people now earning more overseas will buy the now-cheaper goods from the US.

I would think that with trickle down economic theory in place, the recession has the potential to be much deeper than if such policies were not in effect. I think a main driving force in an economy is the poor and middle class that are willing to spend money. With TD policies in place, they are being taxed at higher percentages than taxes on the rich. This takes lot of potential 'freed up cash' away from the economy. I suppose it works both ways really, but an economic policy focusing mainly on the rich just seems flawed to me.

I believe that while the trickle down theory might help the middle class(doubtful it helps the poor at all), it really doesnt do much if anything substantial. I would be in favor of an economic policy that helped the poor and middle class more than it helped the rich any day of the week. TD economics to me increases the divide between the poor and rich. The rich get a LOT richer, while the middle class and poor pretty much stay the same, maybe with negligible increases in income.

Macroeconomics is far from simple, the whole field is really murky.

[OriginalWheelman]

I'll tell you how we got into this mess.

*DISCLAIMER* These are my views on the subject.

1. Americans - They love to live outside their means. Most of America is owned by banks. My grandfather always told me that if you have a mortgage the bank owns your house until it's paid off. Furthermore the "keeping up with the Jones". Americans are always busy buying stuff they don't need, with money they don't have, to impress people they don't like.

2. The Organization of Petroleum Extorting Countries - OPEC, either worried about their long term relevance with the increase in alternative energy or the continual discovery of new sources of oil outside the middle east and tech to drill known reserves previously thought undrillable, raises limits production to keep / drive the cost of oil up while the other techs / sources are yet unavailable. They are "padding the coffers" since they know either way that their days are numbered. It reminds me of the pictures of dairy farmers smashing milk jugs during the great depression to keep milk costs up.

3. America commutes. We want it both ways. Live where we want to, work where we want to. This has driven the need for cars in America.

So now we have Americans not paying some of their bills already (credit cards) and paying a good chunk of their income commuting (fuel). Now we almost double commuting cost for Americans who can barely pay their bills to begin with. For example, before the fuel costs went so high my wife was spending $200 a month in her Civic to commute to school and work. Within 3 months we were suddenly paying almost $400. So now the Americans who can barely pay their bills are spending twice as much to go to work. This is leaving a lot of people with significant budget gaps. When bills stop getting paid, it's the the big ones people have the most trouble paying. And when your choice is not going to work or paying the mortgage... it's not a very good position to be in.

It was neither the government or Wall Street that screwed us. It was US.

[Urabus GodofTraction]

If he is taxed more, he will make less, usually. It can be as simple as that. While he COULD lower my wages, hes not going to and most employers wouldnt either, they would simply make less cash. Hes not going to fire me, he still needs my help to run his business. He could increase the coin op prices, but that usually is a double edged sword. Increasing a 25 cent per play game to 50c usually doesnt go over well. So he is simply stuck making slightly less money.

Nice guy. Still, increase in taxes means SOMEBODY'S got less money: the company to improve itself, the owner (or owners, with publicly traded stock), the employees, or the consumer.

If you believe it was all the governments fault you would be very mistaken. The main problem from my understanding was the lack of regulation on the banking system. At least meet me in the middle, it was a failure of both government and wall street.

The banking industry is among the most heavily regulated industries out there. LACK of regulation had nothing, nothing, nothing, nothing to do with it. "Wall Street" never fails. You can have idiot CEOs and stockbrokers, but Wall Street isn't the problem. I'll meet you 1/8th of the way: Mostly government, some short-cited banks.

[audtatious]

There is still a divide as to what is "rich" and that is a moving target. There are more "rich" making between 250k to 500k than there are those making multiple millions. So, simply increasing taxes on "the rich" (be it 250k, 200k, 150k, 120k) impacts different levels in different ways. People view "rich" differently as well. Ask someone making 250k a year if they are rich and they will look at those making a million a year and say "no way". Ask someone on welfare or making minimum wage if the person who owns a home and drives a new car is rich and they will probably say "yes". Proof is my daughter who thinks I'm rich.

Now, in regards to the "filthy rich", what do they do with their money? Let's say person A makes 10 million a year, what does he do with it? Does he simply stash it under the bed where it does nothing for him? Maybe put it in a savings account at 3%? Very doubtful. He will reinvest a majority into something and use the rest to "live large". While living large he buys a mansion, jet, expensive cars, jewelry, etc. Each of those products come from someone else who supplies them and others who manufacture them and others who provide parts and shipping to the manufacturer and there are those who build the parts and those who get the raw goods for the parts, etc.. The money invested is used to further grow corporations or other entrepreneurs in their endeavors which will potentially require more buildings, supplies.....and more employees. There is no guarantee that a working individuals job pay will necessarily increase for their particular job but it does offer more opportunity for people to find better jobs and to even have a job in the first place.

Punishing the producer does not help the consumer. You also have to realize that the "rich" are also consumers.

[wawazat8402]

Reading through some of the posts, it seems that most are just restating the fundamental difference between Republicans and Democrats in regards to the economy. The Republicans seem to prefer to work things on the supply side and Democrats just like to get it up front in taxes on the citizens. This is nothing new, and I dont think theres really any way to decide which is best. We each hold our personal opinions on how it should be handled, and there can be some strong arguments for each side.

[480sx]

Believe me, if there was a better option than a Democrat i would take it. I dont agree with either party on many issues, however i feel that the dems are less wrong than the repubs.

I mean honestly this is kinda just at a stalemate. I would still love to see some proof that the trickle down theory works, but its w/e.

In reality, the era of the trickle down theory is at an end, for now at least. The shift in the American demographic shows a strong move away from the Regan era thinking, and TD theory goes with it. BO has already promised sweeping tax reform, and we will witness first hand how well it works when compared to the last 30 years of trickle down economics. Just a shame it has to happen in a recession, but we should still get some usable data from this continual experiment known as macroeconomics. IMO, there is no 'ideal' theory yet, and its still a work in progress. Probably always will be.

[Urabus GodofTraction]

Believe me, if there was a better option than a Democrat i would take it. I dont agree with either party on many issues, however i feel that the dems are less wrong than the repubs.

I mean honestly this is kinda just at a stalemate. I would still love to see some proof that the trickle down theory works, but its w/e.

In reality, the era of the trickle down theory is at an end, for now at least. The shift in the American demographic shows a strong move away from the Regan era thinking, and TD theory goes with it. BO has already promised sweeping tax reform, and we will witness first hand how well it works when compared to the last 30 years of trickle down economics. Just a shame it has to happen in a recession, but we should still get some usable data from this continual experiment known as macroeconomics. IMO, there is no 'ideal' theory yet, and its still a work in progress. Probably always will be.

We're not.

in.

a.

God.

damned.

RECESSION!

Enough of this. It upsets me that America has been purchased by a few useless tax cuts.

[JerodKing]

We're not.

in.

a.

God.

damned.

RECESSION!

Enough of this. It upsets me that America has been purchased by a few useless tax cuts.

Well we're half way there with one quarter of negative growth.

[smockers83]

As the major econ guy in these forums, the trickle down theory does not exist in economic thought, end of story. It just doesn't. The trickle down theory is a political theory, nothing more, nothing less. If you want to learn why it doesn't exist, pick up a book called Basic Economics, by Thomas Sowell, one of the great economic minds of today. The argument and explanation against the trickle down theory is towards the very end and its very easy to understand. So, depending on your perspective, it is or it isn't a disproven theory because it either doesn't exist or it exists only in political circles.

Moving on to the mom's with six kids living off of welfare. Poorer people with a lot of kids is just a natural thing. If a family is poor and can barely provide for itself, the fact that they'll have more kids than the average family is normal. Reason being is because under these conditions, the children are less likely to survive. So a couple wanting to reproduce has to reproduce more than the average couple in order to increase the probability of success. Yes, from our perspectives it looks insane because as we get wealthier, we care more about the quality of our children than the quantity because they already have a high probability of survival.

As for the other restrictions such as drug testing, you can run into problems of invasion of privacy and what not because welfare isn't insurance and well, its the government. Its a good idea, I just don't think it'll fly. All of these ideas have been brought up before, this isn't original, but if you guys want to get your voice out, please do so. Plus, drug tests put high costs on the system. There are a few good ways to fix SS.

[smockers83]

Let's analyze a services field...say.....landscapers and those who do maintenance and spraying. They service people and charge them a fee. They are not creating jobs as they are a service to those who are willing to pay and can only grow and add jobs if more people are willing to pay for their services. Those who are charged a fee gladly pay it because they have the money for it and it's worth having someone else do it. Now, let's take money from those who purchase these services because they are considered "rich". What's one of the first things they are going to drop when money gets tighter (we are talking about those who make over 150k per Joe Biden)? Yep, what may be deemed an unnecessary service. So, all of a sudden a large amount of services are canceled. What impact does that cause? Well, the companies providing the services will lose revenue and start laying off their employees (probably folding as well), the companies that sell them supplies like fertilizer, landscaping rock, lighting, mulch, etc. will have less sales and will be potentially facing the same issue. The result is less employment and less money in the economy.

So, explain to me how avoiding the above is not to be considered trickle down economics?

Because that's just pure economic growth and contraction. If you want to make that trickle down economics, hell, everything is trickle down economics. Hell, me spending the time to type this out right now is providing a couple people at the power plant with a job, which in turn gives someone driving a truck hauling coal a job, which in turn gives a couple train engineers a job, which in turn gives coal miners a job. But the fact of the matter is that trickle down economics doesn't exist, as per my post earlier this morning. What you're thinking about is just economic growth/contraction and you're confusing that with the theory of trickle down economics, which again, doesn't exist in economics.

[audtatious]

Then what shall we call it in contrast to stagnating the producer in order to help the consumer? I have no problem calling it something that is "real" in economics

[Urabus GodofTraction]

Then what shall we call it in contrast to stagnating the producer in order to help the consumer? I have no problem calling it something that is "real" in economics

Supply-side economics.

[audtatious]

http://www.investorwords.com/4....html

That states they are one and the same?

OOOOF!!! This is my 20,000th post

[WDRacing]

Man, I wish I had a job where I could post on Nico all....wait

[smockers83]

Umm, how about what you and I described here, we just call basic economic activity? Because that's all it really is, its that simple. When goods and services are traded, money flows around. There is no theory behind that is there, or should we call it the Matt Buys Bread Theory?

Well we're half way there with one quarter of negative growth.

Popular definition, but very far from being correct.

Wall street did not "get us into this mess."Government over-regulation and forcing banks to make poor loans (or else they're "racist") got us into this mess. Banks don't naturally make large amounts of high-risk loans. Hell, they don't WANT to make large amounts of high-risk loans. They were told to, though.

Trickle-down requires an understanding of macroeconomics. Anyone with an understanding of macroecon that doesn't support trickle-down is engaged in "me me me me me" class-warfare.

As for Wall Street, yes and no. There was a push back in the mid 90s by Democrats to get banks to make more subprime loans to minorities, true. However, banks began to see this as a profitable business and many people invested in it and said the subprime business was a good one. The banks got lackadaisical about their lending standards on many of these loans.

As for your statement of trickle down, if someone supports it, they don't understand economics. I know you're majoring in econ, but you need to understand the flow of money and the basics of economic activity to understand that trickle down doesn't exist, especially in a macro setting. If anything, trickle down exists in the smallest of micro settings (note: this is not me endorsing the trickle down theory). Stop by a Barnes and Noble and head to the Business/Economics section and find the book I referred to earlier, don't buy it, just read the part about the theory in the last chapter.

Also want to comment on your money creation statement where you said a rich person deposits money into a bank and the bank loans it out. Yes that is true. Money creation comes in the form of deposit creation, yes. At the same time, a bank can loan out a lot more money on a single deposit than you may think. When a bank makes a loan, they create a deposit account for that person, whether its within their bank or if that person takes the money and deposits it elsewhere. They then can make a loan on that money, so they're making a loan from a loan really. So, the money doesn't have to come from the rich guy, it can come from the guy down the street who's about to default. That's why banks are in the crisis they are now because their cash is stretched thin and there isn't enough to go around because people aren't paying them back.
Modified by smockers83 at 2:26 PM 11/12/2008

[audtatious]

Only when I'm "here". I don't post while on the road so there will be less of me on here over the next month or so.....

[smockers83]

Supply-side economics.

Although a theory endorsed by some economists, it has failed. The debate over supply-side economics was over a few years ago.

[OriginalWheelman]

If a family is poor and can barely provide for itself, the fact that they'll have more kids than the average family is normal. Reason being is because under these conditions, the children are less likely to survive. So a couple wanting to reproduce has to reproduce more than the average couple in order to increase the probability of success.

Funny, I thought it was because we didn't have cable.

Furthermore, wealthy people reproduce less because they want to. They want to plan everything out, and a lot of them wait until after college to reproduce, and therefore reproduce later. Furthermore they have better access to birth control, and in general (from what I have seen and I live in a very economically diverse area) are less likely to keep a pregnancy early in life.

don't buy it, just read the part about the theory in the last chapter.

That's good for the economy :P

[Urabus GodofTraction]

I can't believe I'm about to do this...Well, here goes...

Umm, how about what you and I described here, we just call basic economic activity? Because that's all it really is, its that simple. When goods and services are traded, money flows around. There is no theory behind that is there, or should we call it the Matt Buys Bread Theory?

That's rediculous. By that logic, Keynesian theories don't exist either.

Excluding "trickle-down economics" because it's a political theory is missing the whole point of economics! Economics is enherently political! Certainly "trickle-down" is political, but it's built off of supply-side economics, which is a theory of macroeconomics. Perhaps you're so ingrained with supply-side economics that you see it as a fact. In that case, saying there's no theory behind it makes sense.

If you don't, then I've got no idea where you're coming from.

Of course money flows. HOW does it flow? WHY does it flow? How does it flow best? There various economic theories are an attempt to answer those questions. Economics is a lot like biology; it happens, and while we know it happens, we still attempt to explain why.

Doesn't exist, ha. Thomas Sowell can write all he wants (and I will poke at that book), but Richard Dawkins claims and sets forth reasons God doesn't exist, and that doesn't make it so (nor can the reverse statement be proven).

I've realized from my previous posts in this thread I come off a lot like you. So, 480sx, allow me to appologize.

I am able to prove the theory of supply-side economics any more than I am able to prove the theory of evolution. I believe that using the data and evidence gathered, I can make an excellent case supporting supply-side economics. I originally got on you because you claimed "trickle-down" was disproven. You can't. If you can, please, please get with me and we'll co-author a paper and win the Nobel Prize.

As for Wall Street, yes and no. There was a push back in the mid 90s by Democrats to get banks to make more subprime loans to minorities, true. However, banks began to see this as a profitable business and many people invested in it and said the subprime business was a good one. The banks got lackadaisical about their lending standards on many of these loans.

I agree, mostly. For this economy, I blame the following entities, in the following order: The people, the government, the banks. Profit-making entities exist to do that. A bank run by intelligent people answering to intelligent stockholders left alone by an intelligent (or ANY) government would not have failed.

As for your statement of trickle down, if someone supports it, they don't understand economics. I know you're majoring in econ, but you need to understand the flow of money and the basics of economic activity to understand that trickle down doesn't exist, especially in a macro setting. If anything, trickle down exists in the smallest of micro settings (note: this is not me endorsing the trickle down theory). Stop by a Barnes and Noble and head to the Business/Economics section and find the book I referred to earlier, don't buy it, just read the part about the theory in the back. Or maybe its his other book, Economic Facts and Fallacies. The two books look very similar and I want to buy them both soon, so I may have confused the title.

Also want to comment on your money creation statement where you said a rich person deposits money into a bank and the bank loans it out. Yes that is true. Money creation comes in the form of deposit creation, yes. At the same time, a bank can loan out a lot more money on a single deposit than you may think. When a bank makes a loan, they create a deposit account for that person, whether its within their bank or if that person takes the money and deposits it elsewhere. They then can make a loan on that money, so they're making a loan from a loan really. So, the money doesn't have to come from the rich guy, it can come from the guy down the street who's about to default. That's why banks are in the crisis they are now because their cash is stretched thin and there isn't enough to go around because people aren't paying them back.

We also need to get together and win the Nobel Prize. You've got all the answers that nobody else seems to have.

[Urabus GodofTraction]

Although a theory endorsed by some economists, it has failed. The debate over supply-side economics was over a few years ago.

Prove it.

That's all I'm asking.

P.S: You can't.

A professor once said you'd never see two economists agree on anything. Holy hell is he correct.

[smockers83]

The CBO did extensive modeling of supply-side economics and it didn't hold up. If I can find the study, I'll edit this post so check back. Parts of it do hold up, but its around the edges where it doesn't work.

What has been described so far in this thread is just Say's Law, which is not supply side or trickle down, its just economic activity.

Also, supposed supply-side policies by the Reagan administration were just policies to cater to the wealthy, as admitted afterwards.

And yes, you'll always find economists who won't agree because it is more of a social science than a mathematical science, so many things are open to interpretation and can be influenced by societal and political views.

*edit* Still looking for the report, but here's an article than ran in the WSJ about the report.http://www.freerepublic.com/fo...posts

I believe this is the report I'm looking for.http://www.cbo.gov/ftpdocs/41x...l.pdf
Modified by smockers83 at 4:15 PM 11/12/2008