RE: GBP cratering HZM value increasing26 Sep 2022 11:02
Economics
The economist John Kenneth Galbraith noted that "trickle-down economics" had been tried before in the United States in the 1890s under the name "horse-and-sparrow theory", writing:
Mr. David Stockman has said that supply-side economics was merely a cover for the trickle-down approach to economic policy—what an older and less elegant generation called the horse-and-sparrow theory: "If you feed the horse enough oats, some will pass through to the road for the sparrows."
Galbraith claimed that the horse-and-sparrow theory was partly to blame for the Panic of 1896.[29]
While running against Ronald Reagan for the Presidential nomination in 1980, George H. W. Bush had derided the trickle-down approach as "voodoo economics".[30] In the 1992 presidential election, independent candidate Ross Perot also referred to trickle-down economics as "political voodoo".[31] In the same election during a presidential town hall debate, Bill Clinton said:
What I want you to understand is the national debt is not the only cause of [declining economic conditions in America]. It is because America has not invested in its people. It is because we have not grown. It is because we've had 12 years of trickle-down economics. We've gone from first to twelfth in the world in wages. We've had four years where we’ve produced no private-sector jobs. Most people are working harder for less money than they were making 10 years ago.[32]
Overall, there is ample empirical support for and against tax cuts as means of spurring economic growth. In a 2012 study in the National Tax Journal, Canadian economist Bev Dahlby & Ergete Ferede found that "a higher provincial statutory corporate income tax rate is associated with lower private investment and slower economic growth. Our empirical estimates suggest that a 1 percentage point cut in the corporate tax rate is related to a 0.1–0.2 percentage point increase in the annual growth rate."[33]
Analysis published in 2012 by the Congressional Research Service found that reductions in top tax rates were not correlated with economic growth but were associated with income inequality. The CRS later withdrew the analysis after Senate Republicans objected to its findings and wording.[34][35]
A 2012 study by the Tax Justice Network indicates that wealth of the super-rich does not trickle down to improve the economy, but it instead tends to be amassed and sheltered in tax havens with a negative effect on the tax bases of the home economy.[36]
A 2015 paper by researchers for the International Monetary Fund argues that there is no trickle-down effect as the rich get richer:
[I]f the income share of the top 20 percent (the rich) increases, then GDP growth actually declines over the medium term, suggesting that the benefits do not trickle down. In contrast, an increase in the income share of the bottom 20 percent (the poor) is associated with higher GDP growth.[11]
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