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20 year study of global wealth demolishes the myth of ‘trickle-down’

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211–220 of 444 posts

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#211
I don't know what the original "trickle down" theory is but if it is all about money, then both the theory and its rebuttal are just circular reasoning.

The way I understand the "trickle down" idea is that the global economy is not a zero-sum game and when rich people build something, the poor indirectly take advantage of it, even if the wealth repartition curve doesn't change. For example, a rich person may use his wealth to make cheap computers, which sell well, so he becomes even richer, the poor don't become richer, but now they have computers, so in the end, even if wealth inequality didn't change, or maybe even became worse, the poor are better off, thanks to computers being cheaper. If we didn't let the rich entrepreneur get rich, there would be no cheap computers and while the poor may be wealthier on paper, they still won't have computers.

But if we only care about money, then yes, of course inequality causes inequality, and if the "trickle down" theory says otherwise, then it is simply illogical, just as its debunking is circular reasoning.

The study is not worthless, it is an interesting observational study, but I don't see how it disproves the more interesting non zero-sum version of "trickle down". For that it should also use indicators that are not money, like health, education, etc...

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#212

Earlier quoted context omitted.

While I want to agree with you , it so happens that your comment is just hyperbole/rhetoric and no substance. The substance of my comment is a simple model that explains why trickle-down doesn't work. If it helps, I'll add some references to support my argument: [1] TFA Thank you for the effort you put into providing your feedback.

No, parent was right, your comment lacks all substance. It supposes that 'the rich' simply hoard wealth like a mythical dragon in a cave, scrooge mcducking through it while the poor, tired masses starve to death. The truth is that they conserve their wealth by investing it, which means that money recirculates into the economy to provide for the continued prosperity of others. If they just sat on their money they'd ac…

>The truth is that they conserve their wealth by investing it, which means that money recirculates into the economy to provide for the continued prosperity of others.

I know asking to read the article is too much, but maybe read the title?

Also, is the word "offshore" not in your vocabulary?

Otherwise agreed. Bailouts, of course, are atrocious. Investment should be a risk.

Speaking of which, reminder: bankruptcy doesn't clear away student loans, making them an effectively risk-free investment for the banks. Yay.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#213
post #180
post #88

Earlier quoted context omitted.

Low quality post unworthy of HN.

When someone makes a bad-faith argument, should one go to great lengths to refute it? Perhaps sometimes. Other times, it is better to dismiss it as nonsense and get on with one's day. "Trickle-down economics" is an extremely bad-faith argument, essentially boiling down to "rich people pay slightly less rich people to tell poor people it's better for The Economy if they stay poor". That it was ever given credence in t…

Trickle down economics is a bad faith straw man argument against supply side economics.

I see plenty of HN posts argue that “putting more money in the hands of low income individuals is good”, but suddenly that’s wrong because… Reagan?

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#214
post #149
post #10

Ahh, the good old trickle-down, aka "piss in my eyes and tell me it's raining" (which is the only way trickle-down actually works). It was pure mythology from the start; there's never been any basis for it to begin with. It's a pity we even have to debunk it like that. Go figure, give a million hungry people $20 each, and see $20M return to the economy the next day as they spend it on food. Give a billionaire $20M, s…

> as the billionaire holds on to whatever financial product they bought forever as long as it appreciates faster than inflation. Another word for that is investment. Where do you think that money goes? You don’t earn returns on money that isn’t doing anything.

In addition to flooding offshore it mostly goes into rent extraction schemes. That in turn raises the cost of living for everyone else, generally to no benefit. I've heard it called the "slumlord economy."

A small percentage of it does get re-invested in actual production, but productive investments tend to be higher risk than rent extracting "investments." Conservative holders of wealth are not going to dump it into private space programs or Edit:

In my opinion entrepreneurs and investors in actual productive work should be against "trickle down" economics as it makes it much harder to build substantial new ventures. You can't build new products and services if there are no customers. Productive capitalism (as opposed to a rentier economy) requires a fully capitalized consumer base.

Personally if I were a VC I would be in favor of dropping money on the poor and middle class from helicopters, especially if my portfolio had many consumer or small business focused companies in it.

"Trickle down" economics primarily benefits the non-productive rich, the rentier class. It even hurts the productive rich.

I'm a huge fan of Georgism: https://en.wikipedia.org/wiki/Georgism

TL;DR: zero income tax, zero sales tax, zero capital gains tax on productive investments, high taxes on the "ownership" of land and other things human beings do not produce. A modern take would also include pollution taxes such as a fossil carbon fuel tax.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#215
post #10

Ahh, the good old trickle-down, aka "piss in my eyes and tell me it's raining" (which is the only way trickle-down actually works). It was pure mythology from the start; there's never been any basis for it to begin with. It's a pity we even have to debunk it like that. Go figure, give a million hungry people $20 each, and see $20M return to the economy the next day as they spend it on food. Give a billionaire $20M, s…

Can someone please explain which billionaire has been “given” $20b, and how it was “given”?

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#216

Earlier quoted context omitted.

> I haven't ever heard trickle down proponents suggest we give the money to the working class. Because that would require taking from some people and giving to others through government, which is a very inefficient way to do it.

Also the trickle down proponents, however middle-class, think of themselves as wealthy and have the misconception that it’d be their money being reallocated.

Isn't wealth distributed in basically a normal distribution with destitute-poor in the middle and omega-rich on the edges?

If it is, they'd be right.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#217

Speaking from a historical perspective. The East India company/ies pretty much won much of the world for Britain & Europe. Europe was neither wealthy nor technologically more advanced than India. But the Church with its christianising mission and doctrine of christian discovery allowed the pooling of resources. Concentration of wealth is important and the wealth did trickle down to other countries of Europe. A modern…

You're basically saying - In a country of 100 people, concentration of wealth is great. Concentration like for every 100$, 5 people taking 95$ and the rest 95 taking the 5$ is fine. Your rationale seems to be the fact that the 95 people have more than 5$/95 than before. Now, you keep accelerating this and you'd notice a 99-to-1 ratio eventually. It's interesting that you call this dignity and well being. You're basic…

The value of time spent by the people is called productivity.

We should be more concerned with the productivity. This is especially true with developing countries where people are mostly employed in backbreaking manual labor. Sometimes it is due to lack of skills and many a times due to lack of industry or ecosystem.

Inequality is a great talking point for socialist but isn't an important metric. Inequality is inevitable in a highly competitive and fast growing economy. Just productivity improvement is a great measure of how well the economy is doing.

For developed countries productivity improvements is difficult because it only comes about from innovation. For developing countries it can be had from just adoption of existing technologies.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#218
post #149
post #10

Ahh, the good old trickle-down, aka "piss in my eyes and tell me it's raining" (which is the only way trickle-down actually works). It was pure mythology from the start; there's never been any basis for it to begin with. It's a pity we even have to debunk it like that. Go figure, give a million hungry people $20 each, and see $20M return to the economy the next day as they spend it on food. Give a billionaire $20M, s…

> as the billionaire holds on to whatever financial product they bought forever as long as it appreciates faster than inflation. Another word for that is investment. Where do you think that money goes? You don’t earn returns on money that isn’t doing anything.

Those investments only benefit very few people though, who already have well paying jobs.

Private investors prefer to take long bets in technology corporations (like FAANG, etc). That benefits to a small extent the few people working there because the high stock price convinces the CEO that he can afford another position here or there. It does nothing for the people in the lower income percentiles, because the additional money earned by the people in the higher percentile is not spent on consumables. It's mostly just spent on financial assets (that is housing, equity and bonds). Unsurprisingly the people in the lower percentiles have very few financial assets and mainly live off of their labor. Of course it won't benefit them.

Instead the government needs to invest in projects that create jobs for everyone. But since the biggest voting base consists of older people with lots of savings they don't want the government to spend more, which could cause inflation and increase their tax rate. QE by the Fed on the other hand increases their portfolio value. So it's ultimately a political decision.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#219

Earlier quoted context omitted.

No, parent was right, your comment lacks all substance. It supposes that 'the rich' simply hoard wealth like a mythical dragon in a cave, scrooge mcducking through it while the poor, tired masses starve to death. The truth is that they conserve their wealth by investing it, which means that money recirculates into the economy to provide for the continued prosperity of others. If they just sat on their money they'd ac…

> If, however, someone puts their finger on the scale and effectively ensures that the stupid-rich (literally) can't lose then the rich get richer and the poor get poorer. Solution: Stop doing that. When we get to the point money is easily converted in political power, you can see not only the finger tipping the scale, but a whole foot firmly planted there. Good luck convincing the rich, who actually convinced themse…

> When we get to the point money is easily converted in political power

If only we demanded mechanisms which might disincentivise this. Alas, we are but plebes.

Re: 20 year study of global wealth demolishes the myth of ‘trickle-down’

#220
The lie is almost 40 years old.

It's done a lot of damage in that time.

It's time to stop wasting time pretending the other side are open to discussion, compromise or persuasion.

Even pointing out the falsehoods in these lies actually makes people more likely to believe them. You saw this with the "350m pounds a week for the nhs" lie in the Brexit campaign. Even after it was revealed and admitted to be untrue, the more it was mentioned the more people believed it.

So stop acting shocked and talk about how we need a trickle up program.

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