Friday, December 15, 2017

Trickle Down Doesn't

As we face the likelihood that the GOP tax giveaway to the rich will pass, it's time to examine the truth.

No amount of money given to the rich and corporations will stimulate the economy.


You need not be an economist to figure this out.  Here is the obvious reality.

Company A receives a tax cut.  All things being equal that means they will have higher profits.So, they have "more money" which they can use as they see fit.  They can simply bank the money, pay it out as dividends, or...conceivably...invest more in the company.  They can also increase the pay of the CEO.

So...why would they invest more in the company?


Since you have a standing workforce, there is no reason to raise their pay.

So, raises make no sense.

You could hire more people, but to what end?  If you are currently selling all the widgets you make then things are good.  The important thing is that making more won't automatically mean you can sell more.  After all, unless people suddenly have more money they're not suddenly going to buy more, even if they want more.  A tax cut for the rich doesn't put more money in your customer's pockets.

So, if you increase production, either the product sits, or you have to lower prices to move it.  If you lower prices, you make less money.  That makes no sense.

But...there is one thing you could do...if you choose to invest.  You could lower the cost of making widgets by replacing expensive employees with robots.  A one-time investment would lower long-term costs in the long term.

So, the obvious answer is that tax cuts for corporations will NOT result in a stronger economy.  If it does anything...other than making the rich richer...it will likely be negative.  It will likely actually cost jobs.


This really isn't news.  We've seen this before.


If you still have questions, take a look at Kansas.  They followed the concept lead by Gov Brownback.  They did exactly what this bill does.  Now they have severe budget shortfalls, have made draconian cuts in the state budget, underfunded education, cut all kinds of services, and generally just slaughtered the entire function of state government.  After inflicting all that suffering has slowly forced even the most ardent conservatives that it just hasn't worked.

HINT:  It never has!

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