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Can we combine Keynesianism with Trickle Down economics?

Discussion in 'General Discussion' started by ronki23, Aug 23, 2019.

  1. ronki23

    ronki23 Well-Known Member

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    Keynesianism is the theory that the government has a role in the economy and the economy can be stimulated via spending. Franklin Roosevelt is an example

    Trickle down theory says if we cut taxes for the 'rich' then they money they save by not being taxed can be spent; when a person or business receives that money they too will spend it and so on. Ronald Reagan is an example.

    Why don't we use low taxes (thus trickle down) during booms and then when a recession kicks in you stimulate the economy via spending? I don't mean zero taxes but surely enough to be saved for a rainy day by the government. Isn't that exactly what Clinton and Obama did?

    #1
     
  2. Woberts

    Woberts The Perfumed Seneschal

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    Trickle down economics are utter hogwash. Rich get rich, poor get poorer.
     
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  3. metis

    metis aged ecumenical anthropologist

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    For best economic growth, ya want most of the money in the hands of the lower and middle income families because they are more apt to spend a higher percentage of it and also more likely to spend it locally, where ya want them to spend it. 79% of Trump's tax cuts, otoh, went to the very wealthy.
     
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  4. Labourwave

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    Every capitalist country in North America and Europe have used Keynesianism to manage their economies during crisis.

    New Deal saved America from communist revolution after the great depression.

    Keynesian management and white supremacy worked hand in hand in order to try to save the German economy after ww1.

    In Canada it was used to prevent the growth of the labour movement at various points.

    To generalize, typically countries focus on neoliberal and trickle down economic policy when they can get away with it, and swap to new deal when they either need to (such as in the case of a recession,) or when they need to appease labour movements with policies like guaranteed employment.
     
  5. PureX

    PureX Veteran Member

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    Cutting taxes on the rich does not encourage spending, because the rich aren't going to spend any more than they already are. They don't need more food, more clothes, more homes, cars, planes, hookers, or whatever. They already have what they want in terms of material purchasing. So what they will use their extra money for is to gain even more money for themselves. The dollars that used to be taxed away from them and spent on the many necessary products and services on behalf of everyone, now become loans and investments intended to capture as much profit for the already wealthy investor, as possible. And the insatiable self-perpetuating cycle of greed begins. The more money the wealthy get, the more they can use it to get more, still. Meanwhile, everyone else is left with the bill for all those necessary products and services that modern complex societies must have to remain functional.
     
  6. ronki23

    ronki23 Well-Known Member

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    I say 'rich' in quotations because here in the UK the tax rate back in 2001-2009 was 20% for those earning under £35,000 ($50,000) and then 40% for those earning £35,000-£75,000 ($110,000 ) and then 50% thereafter.

    Ever since 2010 the 50% tax has been reduced to 45%.

    I'd like to know what it is in USA/Canada/China/India

    My family is not 'rich' by any means and our higher level of income means we don't qualify for aid.

    Also by trickle down I mean tax cuts for EVERYONE.
     
    #6 ronki23, Aug 23, 2019
    Last edited: Aug 23, 2019
  7. ronki23

    ronki23 Well-Known Member

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    By Keynesianism I refer to market interventionist approach. I don't see why you can't intervene when necessary but cut taxes during boom periods
     
  8. metis

    metis aged ecumenical anthropologist

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    But the problem then is how do we pay for it?
     
  9. ronki23

    ronki23 Well-Known Member

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    Low tax doesn't mean no tax. And during booms we limit government spending
     
  10. columbus

    columbus Conservative Catholic from Hell

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    It didn't used to be that way.

    50 years ago, a tax cut on the investing class benefited the whole country. Because they invested here in the USA. It didn't really matter what. An auto plant in Detroit, an aqueduct in California, an oil rig in Mississippi, they all worked. They were built and operated by US workers. Those workers bought American made products and services from other American workers. The U.S. economy benefited.

    In the new global economy, things are dramatically different. Now the investing class send the capital to other countries, or automate, or otherwise invest in stuff more profitable than stimulating the USA economy.
    That's why the Bush administration tax cuts caused a recession, followed by a "jobless recovery". The super rich beneficiaries of the cuts were doing very well with their foreign investments. Middle class/blue collar Americans were not.

    I see that as the investing class looting our country. YMMV.
    Tom
     
  11. ronki23

    ronki23 Well-Known Member

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    I don't know how the American system works- if Federal and State taxes differ do you have to pay both?

    All I know about Reagan is he was tax less and spend more during his tenure.

    Bill Clinton spent less despite being a Democrat; how about Clinton and Obama's tax plans ?

    Here in Britain we raised taxes and cut spending during the 2008-2013 Recession and the Public Sector suffered. I'm not happy the Labour Party taxed and spent a lot but austerity is not the answer to big deficits.

    Any Europeans on this forum? How do France/Germany do it?
     
    #11 ronki23, Aug 29, 2019
    Last edited: Aug 29, 2019
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