6 thoughts on “Forget trickle-down: In a free market, the rich don’t gain at the poor’s expense”

  1. Posted 13/01/2015 at 13:37 | Permalink

    “Yet free marketeers don’t believe in low taxes because of their effect on spending. They believe in low taxes because they provide a strong incentive to earn more income in the first place.”

    Some might. But I submit that most do so because of their effect on spending: I think both that (1) micro-planned private expenditure is better allocated than macro-planned state spending, and that (2) those engaged in free exchanges are entitled to the surplus they realise, and state spending ought to be kept as low as it properly can be in the recognition that taxation is a necessary evil.

  2. Posted 13/01/2015 at 14:19 | Permalink

    In ‘The Theory of Moral Sentiments’ Adam Smith seems to come pretty close to a ‘trickle-down’ theory. On pp. 184/5 of the 1976 bi-centenary edition edited by Raphael and Macfie he writes: “[The rich] are led by an invisible hand to make nearly the same distribution of the necessaries of life, which would have been made, had the earth been divided into equal portions among all its inhabitants, and thus without intending it, without knowing it, advance the interest of the society, and afford means to the multiplication of the species.” This is, of course, a different implication of the ‘invisible hand’ from that discussed in his later book ‘The Wealth of Nations’. Am I wrong to interpret the above passage from TMS as being close to a trickle-down’ theory?

  3. Posted 14/01/2015 at 13:29 | Permalink

    One of the problems is that Ryan may be right that those who believe in free markets don’t advocate the theory of trickle down, but many exceptionally wealthy and powerful people do, as evidenced by Perreti’s film. So it’s not simple a case of arguing against ‘lefties’, it’s also deciding which self-avowed ‘free marketeers’ are let inside your tent and which are called out.

  4. Posted 15/01/2015 at 03:32 | Permalink

    In a civilised society, you only pay for the burden you place on the community. Earning income, and buying capital benefits everyone. Unlike income and capital, Land, by definition, is unreproducible. Exclusive occupation of productive Land is therefore the only real burden we place upon the community*. It is the permission to exclude others that is the benefit we should be paying for. Measured by the market, as the rental value of Land. These Capitalist principals of fair compensation, should be how we pay for shared services, yet we tax income and capital. The top1% of households in the UK own 3 times more land by value than they currently pay in taxes. This is the ratio of economic parasitism. Its how wealth and welfare trickles up and not down, and why we see such large disparities in wealth. How is the Duke of Westminster’s billions ever going to be competed away after all?
    * other burdens, or negative externalities, include State granted monopoly rights, and pollution.

  5. Posted 18/01/2015 at 20:41 | Permalink

    There has been a massive transfer of wealth and income from working people into the pockets of the rich and powerful since the Thatcher/Reagan debacle.

    Is that what is meant by trickle-u?

  6. Posted 18/01/2015 at 21:57 | Permalink

    Why do all these ‘trickle-up’ zealots fail to mention the fact that the economy is still operating as result of taxpayer bailouts?

    Why is neoliberalism such an embarassing, miserable failure?

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