Economists

[Sean Hayden]

It's part of American ideology. So is a belief that the wealthy have more desirable traits than the rest of us.

But, is that ideology actually the same as the theory put forward by economists?

[pErvinalia]

I'm actually not entirely sure on what the point of economics is. Before behavioural economics it didn't really have much connection with reality, I think. It's almost as if its reason for existence is to be used and abused for political purposes. I'm not sure how it contributes to anything other than that.

[Hermit]

It's part of American ideology. So is a belief that the wealthy have more desirable traits than the rest of us.

But, is that ideology actually the same as the theory put forward by economists?

Well, there is David Stockman, the godfather of supply-side economics, aka Reaganomics, aka trickle-down theory. He became the Director of the Office of Management and Budget from January 21, 1981 to August 1, 1985 after serving as the Republican party's Member of the U.S. House of Representatives from January 3, 1977 to January 21, 1981. Even while Reagan was still in the process of selling his budget to Congress, Stockman was quite candid about the president's Economic Recovery Tax Act of 1981, which the office devised under his leadership. This is what he said:

The original argument was that the top bracket was too high, and that’s having the most devastating effect on the economy. Then, the general argument was that, in order to make this palatable as a political matter, you had to bring down all the brackets. But, I mean, Kemp-Roth was always a Trojan horse to bring down the top rate.
...
It’s kind of hard to sell ‘trickle down, so the supply-side formula was the only way to get a tax policy that was really ‘trickle down.’ Supply-side is ‘trickle-down’ theory.

(Source)

[Sean Hayden]

That was a great read. But he's not an economist.

If you want to assert supply-side is trickle-down, then you should address Sowell's argument directly. I linked to it earlier, but in case others haven't seen it:

Repeatedly, over the years, the arguments of the proponents and opponents of tax rate reductions have been arguments about two fundamentally different things. Proponents of tax rate cuts base their arguments on anticipated changes in behavior by investors in response to reduced income tax rates. Opponents of tax cuts attribute to the proponents a desire to see higher income taxpayers have more after-tax income, so that their prosperity will somehow "trickle down" to others, which opponents of tax cuts deny will happen. One side is talking about behavioral changes that can change the total output of the economy, while the other side is talking about changing the direction of existing after-tax income flows among people of differing income levels at existing levels of output. These have been arguments about very different things, and the two arguments have largely gone past each other untouched.

https://www.hoover.org/sites/default/fi ... _FINAL.pdf

[Hermit]

If you want to assert supply-side is trickle-down, then you should address Sowell's argument directly.

Not really. I posted this picture a while ago.

You replied via Sowell that "Nobody is advocating the trickle-down theory that the Left attacks."

I quoted the man who designed Reaganomics as saying: "It’s kind of hard to sell ‘trickle down, so the supply-side formula was the only way to get a tax policy that was really ‘trickle down.’ Supply-side is ‘trickle-down’ theory." So much for Sowell's assertion that "Nobody is advocating the trickle-down theory that the Left attacks."

[Brian Peacock]

I'm actually not entirely sure on what the point of economics is. Before behavioural economics it didn't really have much connection with reality, I think. It's almost as if its reason for existence is to be used and abused for political purposes. I'm not sure how it contributes to anything other than that.

The multifarious branches or brands of economics are important because they act to legitimise political arguments and decision making.

* * *

Anyone remember the fuss Wilkinson and Pickett's The Spirit Level caused after the 2007/8 crash? Although the usual conservative blowhards who have opinions for money disputed the basic conclusion of the book -- that more equal societies are better for everyone in society -- the wealth of historical data the book drew on was hard to dispute and politicians on both sides of the aisle praised and referenced it, at least in the UK In 2009 the newly elected leader of the Conservative Party, David Cameron, acknowledged it in his maiden conference speech to the party that year - his so-called 'Big Society' speech...

...
Research by Richard Wilkson and Katie Pickett has shown that among the richest countries, it's the more unequal ones that do worse according to almost every quality of life indicator. In "The Spirit Level", they show that per capita GDP is much less significant for a country's life expectancy, crime levels, literacy and health than the size of the gap between the richest and poorest in the population. So the best indicator of a country's rank on these measures of general well-being is not the difference in wealth between them, but the difference in wealth within them.

Of course in a free society, some people will be richer than others. Of course if we make opportunity more equal, some will do better than others. But there's a massive difference between a system that allows fair reward for talent, effort and enterprise and a system that keeps millions of people at the bottom locked out of the success enjoyed by the mainstream.

We all know, in our hearts, that as long as there is deep poverty living systematically side by side with great riches, we all remain the poorer for it. That doesn't mean we should be fixated only on a mechanistic objective like reducing the Gini co-efficient, the traditional financial measure of inequality or on closing the gap between the top and the bottom.

Instead, we should focus on the causes of poverty as well as the symptoms because that is the best way to reduce it in the long term. And we should focus on closing the gap between the bottom and the middle, not because that is the easy thing to do, but because focusing on those who do not have the chance of a good life is the most important thing to do. ...

My bold.

This passage encapsulates conservative thinking: wealth is a 'fair reward for talent, effort and enterprise' and thus poverty is a consequence of an absence of those qualities. If we all started life from the same position conservatives might even have a point there.

What quickly became apparent when the Conservative Party were elected to power the following year was that the posterboy of 'The Austerity', chancellor George Osborne, had no intention of reducing the inequalities Cameron had acknowledged and appeared so concerned about by addressing the financial and economic mechanisms that formed the hardware and software of the economy. Nonetheless, as promised, the changes that were brought about -- a culling of business and employment regulations, a massive reduction in public spending, and significant reductions in business and personal taxes for high earners -- did actually close the gap between the middle and the bottom: by making the middle poorer while not raising the bottom, bringing down median income even as average income went up. By this measure the nation became more economically equal because more people were shuffled into the same leaky boat.

As I mentioned in my first post in the thread, "Economies are regulated systems of social relations and interaction." Modern Monetary Theory focuses on identifying and explaining the structural operation of economies, the mechanisms, and how they operate in the wild. These mechanisms aren't forces of nature or universal moral precepts but systems that humans have designed and implemented with particular outcomes in mind. The question is why do those who have already been, erm, 'fairly rewarded' by the systems they and people like them have designed continue to be seen as the best people to devise, implement and administrate those systems?

[Sean Hayden]

If you want to assert supply-side is trickle-down, then you should address Sowell's argument directly.

Not really. I posted this picture a while ago.

You replied via Sowell that "Nobody is advocating the trickle-down theory that the Left attacks."

I quoted the man who designed Reaganomics as saying: "It’s kind of hard to sell ‘trickle down, so the supply-side formula was the only way to get a tax policy that was really ‘trickle down.’ Supply-side is ‘trickle-down’ theory." So much for Sowell's assertion that "Nobody is advocating the trickle-down theory that the Left attacks."

Actually, I replied via Sowell with two pieces. You've taken the tagline from the first. Here is what he actually says in that piece:

Years ago, this column challenged anybody to quote any economist outside of an insane asylum who had ever advocated this “trickle-down” theory.

He discusses at length in the longer piece I posted about how politicians have used trickle-down as a replacement for supply-side. So you finding one that does the same is not very useful then to the question of whether or not supply-side is trickle-down. Showing his conception of supply-side to be wrong would be though. But that requires actually addressing his argument.

[Sean Hayden]

[Brian Peacock]

[laklak]

What's he on about, then?

[Brian Peacock]

Greaber is an anthropologist. He starts off by talking about bureaucracy; how banks and financial institutions bribe politicians (they call it campaign donations) to get the kind of regulations they want, and then when people complain that their fees and charges are too high, that borrowing rates far exceed their deposit rates, that the bank had foreclosed after one missed payment, etc, the financial sector just throws up its hands and blames the government they put in power and the regulations they wrote - as if they have nothing to do with either. He also notes how an oft-cited criticism of Soviet Socialism, and the reason that it failed, was that Soviet society was overburdened by bureaucracy and rules which were based on certain assumptions about how people behaved - and when people didn't behave in that way the Kommisars never looked at the system or the rules but simply blamed the people for not behaving as expected - and how this is now exactly what capitalists say when economic systems break or fall down or when people are unfairly treated or squeezed out. Then he talks generally about the influence of money on democracy, citing as an example the Occupy Wall Street movement who tried for eight months to legally set up a public space in NY, and each time they succeeded the state simply changed the law to protect the image and sensibilities of the financial sector - and presumably to protect the politicians donation stream. Then he moves on to how money is talked about in different ways by different people at different times - like when the politician says they're going to spend more on schools, until they're elected when they say that spending money on schools is unrealistic because the state owes X million dollars. No politician is prepared to publicly acknowledge that money is created out of debt and so they continue to talk about money as a limited resource - there's only so much to go around. The implication here is that money, the idea of money, is simply a promise, and the system the banks and financial institutions have created encourages people like employers, businesses and politicians to break those kind of promises, seemingly without consequence - the wealthy hoard and hide their money off-shore, corporations don't pay tax or simply negotiate with the government to pay as little as possible regardless of the law, politicians cut taxes and public spending but always vote for their own annual pay rises, employers increase workloads, cut jobs and wages, don't pay their suppliers etc. He disputes the arguments that any flaws in the system are merely technical problems that need a technical, or technological, solution, most of which seemed to be focused on telling people who the systems aren't working for (the 99% if you will) to just shut the fuck up. In conclusion he says that a fairer economy is not just possible but the norm in human society, but only possible by securing democratic processes and institutions so that the systems represents the interests of the majority rather than simply benefiting the few.

The video is only 20mins long. Give it a go.

[JimC]

Why watch it when we've got your excellent summary?

[Scot Dutchy]

Just call it corruption.

[JimC]

Just call it corruption.

Perhaps it is in essence, but unlike the usual forms of corruption, which (if discovered) can incur legal penalties, the issues Brian described are systemic, and simply allow those with a lot of wealth to preserve and extend their wealth and power, in most cases without risking penalties...

[Scot Dutchy]

Just call it corruption.

Perhaps it is in essence, but unlike the usual forms of corruption, which (if discovered) can incur legal penalties, the issues Brian described are systemic, and simply allow those with a lot of wealth to preserve and extend their wealth and power, in most cases without risking penalties...

Jim please I understand and the last BBC Panorama really made it obvious. When the Amazon git can 68% more money during the crisis something is very wrong in the world.
One bright point is the Mafia is being bankrupted by the crisis. Fundamental to Mafia practices is moving stuff; drugs, goods and people. With all the lockdowns and restrictions they are finding it very difficult. The Bulgarian Mafia has so much coke it cant sell it. Pickpockets are running out of pockets to pick.