Talk:Trickle-down economics

Graph of income in lead

Pre and post trickle down growth (32 years on left, 36 on right).

I have again removed a graph comparing income for different income groups over different Presidential eras. There was no reference in the graph showing that the Reagan era was the only trickle-down era, and it is only mentioned in the rest of the article in relation to a quote from David Stockwell. Not to mention the fact that the graph is extremely misleading, as it has FDR 1947-1979, Reagan 1979-2009 and Obama 2009-2015, which is clearly incorrect. Absolutelypuremilk (talk) 09:02, 18 September 2016 (UTC)

Replaced with a better one, that shows trickle down better. During this period (1979 to 2015) real income of the top 0.01% increased by 529% and by only 183% for the top 1%, for the top 5% by 55% and the bottom 20% by 0.9%. 2601:186:381:2A71:9DFE:AA27:2D2D:953C (talk) 05:04, 20 September 2016 (UTC)

I have again removed the graph, as you have not provided any reasoning as to why 1947-79 is an appropriate choice for "pre-trickle-down" and 1979-2015 is appropriate for "trickle-down". Not to mention the editorialising, claiming that "Trickle down economics lead to minimal growth" without any source. Absolutelypuremilk (talk) 08:12, 20 September 2016 (UTC)

Did you even look at the chart? Before trickle down we had a 91 to 70% upper income tax bracket and income was shared equally. After 1979 growth vanished, and all the income increase went to the rich and none of it trickled down. If you can find a better chart that shows this contrast, use it but you have no reason to leave nothing in the article. 2601:186:381:2A71:B1F2:D6CB:8659:2101 (talk) 04:27, 21 September 2016 (UTC)

You would not call a decrease from 108.1% increase in in 32 years to an 18.5% increase in 36 years a catastrophe, let alone "minimal growth"? Even the growth of the richest 5% declined from 106.3% to 54.7%. Those are the ones who should be screaming for an end to trickle down the most and a restoration of the 91% upper tax bracket. Why are you trying to hide the effects of trickle down from readers? But by all means feel free to write your own caption or find a chart that shows this better. 2601:186:381:2A71:B1F2:D6CB:8659:2101 (talk) 04:34, 21 September 2016 (UTC)

You have not provided any sources that show that trickle-down started in 1979, so there is no reason to assume that the change in growth is due to trickle-down. Absolutelypuremilk (talk) 09:01, 21 September 2016 (UTC)

It didn't. It started in 1982 when the upper income tax was reduced from 70% to 50% and in 1987 and 1988 when it was further reduced to 28%. But you can see the effect of trickle down by comparing years when it was not used with years that it was used. This chart even makes it look like it is trickling down. 2601:186:303:931:F8A1:E0CE:7C51:E9E4 (talk) 17:45, 21 September 2016 (UTC)

By the way it is redundant to say that "during periods of growth growth was distributed as shown". Added ref. 2601:186:303:931:5472:3EEF:C209:ADCB (talk) 02:15, 23 September 2016 (UTC)

Once again, you are asserting that trickle down started in 1982, but not providing a single source for that. You are then adding a graph which shows that after 1982, the income growth was more concentrated among the rich, and then saying that this was definitely down to trickle-down economics, not any other factor. Absolutelypuremilk (talk) 08:35, 23 September 2016 (UTC)

Really? Every article I read about trickle down associates it with taxes.[1][2][3][4] In 1982 the upper rate was lowered from 70% to 50%. Apparently that was enough to shift the majority of income growth going to the top 10% instead of to the bottom 90%, as was the case from 1975 to 1979. From 1979 to 1982 average income declined from $48,342 to $45,557 and thus is not included. This chart is smoother than the one by Tcherneva, even though it uses the same data, as it omits including 1987 to 1990, as average income declined those years, and including them caused a kink in the chart. Same for 1974 which also was a decline. I am not sure why you are missing that there is no income increase to share when income decreases. A separate chart though, could be made to show the share of income decrease during periods of income decreases. I am not sure it is worth making, as I can not see that it serves any purpose. I would suggest though that the chart above of pre and post trickle down growth distribution is the best one to use to summarize trickle down. 2601:186:303:931:F1A8:C3E3:5415:1657 (talk) 23:58, 23 September 2016 (UTC)

Actually trickle down started in 1964 when the upper income tax was reduced from 91% to 77%. This chart compares five different date ranges from 1947 to 2015. You can see the skew in growth beginning in 1964, although it did not affect the top 1% until the top rate was decreased to 50% in 1982. If you want to compare before and after 1981 you can use this chart. 2601:186:303:931:F1A8:C3E3:5415:1657 (talk) 05:04, 24 September 2016 (UTC)

I'm not sure how to explain this any more clearly. If you want to say in your caption that trickle-down started in 1982, then you will need a source which explicitly says that. Absolutelypuremilk (talk) 08:15, 6 October 2016 (UTC)

I am now going to remove the graph as you have not provided a source which says that trickle-down started in 1982. Absolutelypuremilk (talk) 10:11, 26 November 2016 (UTC)

Why was an op-ed used to support the false claim that the term isn't used by professional economists?

This op-ed by right-wind pundit Thomas Sowell is used to support the statement at the beginning of the introduction that trickle down, "is a populist political term used to characterize economic policies as favoring the wealthy or privileged. There is no 'trickle down' economics as defined by economists; the term is almost exclusively used by critics of policies with other established names."

On the contrary, these are from the first page of a Google Scholar search with 55,000 results: [5], [6], [7], [8], [9]. Because of this overwhelming evidence, I have edited the article accordingly. 174.16.126.149 (talk) 18:53, 25 November 2016 (UTC)

None of those papers use the term "trickle-down economics". They look instead at whether wealth created does in fact trickle down. They do not discuss "trickle-down economics" as if it is a theory in the sense that it is used here, that giving money to the rich through tax cuts will result in that money trickling down to the poor. Absolutelypuremilk (talk) 22:20, 25 November 2016 (UTC)

Okay, well then do a Google Scholar search on the literal string "trickle down economics" and there are over 6,000 hits. Do you think an op-ed by Sowell, a partisan pundit, is an authoritative or reliable source? 174.16.126.149 (talk) 01:16, 26 November 2016 (UTC)

Once again, none of those papers advocate trickle-down economics or reference any papers that do. Absolutelypuremilk (talk) 10:08, 26 November 2016 (UTC)

The very first one does. You looked through all 6,000 of them? 174.16.126.149 (talk) 16:14, 26 November 2016 (UTC)

As I said that paper looks at whether wealth trickles down or not. In fact its conclusion is "The main economic insight which comes out of our analysis in this paper is that, even though wealth does trickle-down from the rich to the poor and leads to a unique steady-state distribution of wealth under sufficiently high rates of capital accumulation, there is still room for wealth redistribution policies to improve the long-run efficiency of the economy. In other words, the trickle down mechanism is not sufficient to eventually reach an efficient distribution of resources, even in the best possible scenario. The reason why redistribution improves production efficiency is that with redistribution the poor need to borrow less to invest and therefore their incentives to maximize profits are distorted less. Thus, redistribution improves the efficiency of the economy because it brings about greater equality of opportunity and because it accelerates the trickle-down process." I looked through the first page - if you can find one that actually says that it is a good idea, then feel free to post it. Absolutelypuremilk (talk) 09:41, 27 November 2016 (UTC)

Two things going on here

I'm a bit confused about whether the article is about

1. the merits and flaws of an actual theory, i.e., "give more to the most fortunate, and somehow the benefits will work their way down to everyone else" or
2. the use of the term "trickle down" as a label for Supply side economics in general or the specific idea that cutting tax rates can sometimes increase tax revenue.

I'm also interested in helping our readers figure out which economists or politicians have advocated trickle down. At least we might start by listing claims (or complaints?) that various politicians have advocated trickle down.

Similar claims, perhaps a bit harder to pin down, might be found in criticisms (veiled or otherwise) that a certain politician's economic policy boiled down to (or smacked of) trickle down. We might say, for example, that

• President T. Rick Eldowne announced in 1953 that cutting tax rates would not just leave the rich with more money to spend or save. He predicted that they would invest this extra money in ways that would create jobs. But S. Narkey Guy called Eldowne's idea "trickle down economics", which won't help the poor because the increased disposable income from a tax cut does not filter into other sections of the economy.

Is anyone interested in helping me distinguish between (1) describing the theory and (2) describing usage of the term? --Uncle Ed (talk) 14:42, 5 December 2016 (UTC)

This is currently under discussion - Thomas Sowell has said that no economist has ever advocated trickle-down economics of the form of giving money to the rich through tax cuts so that they would spend it and the wealth would trickle down. However, many references talk about trickle-down economics (without advocating it themselves). See the discussion above. Absolutelypuremilk (talk) 17:33, 5 December 2016 (UTC)

It's going to be hard to describe the source of the term "trickle-down", although I added a reference to Will Rogers.

I would like to figure out whether (A) there is an actual theory here, or (B) people who oppose cutting certain tax rates are branding them as trickle-down. But we have to be careful not to take sides for against any viewpoint, or we will diverge from being neutral.

Investopedia says that people called Laffer's proposal trickle-down, but they didn't say he had such a theory:

• Laffer’s idea that tax cuts could boost growth and tax revenue was quickly labelled “trickle-down.” Between 1980 and 1988, the top marginal tax rate in the United States fell from 70 to 28%. Between 1981 and 1989, total federal receipts increased from $599 to $991 billion. This empirically supported one of the assumptions of the Laffer Curve. However, it neither shows nor proves correlation between a reduction in top tax rates and economic benefits to low- and medium-income earners. [10]

Are they a reliable enough source for inclusion in the article? --Uncle Ed (talk) 13:40, 8 December 2016 (UTC)

Quote Farm

Sorry for bifurcating this thread, but I have been looking at various descriptions of 'trickle down' and am wondering which (if any) are relevant to the article. Here is one:

... those who advocate for lower tax rates and less government interference as ways to grow the economy ... clearly do not make their case by seeking

1. a transfer of existing wealth to high-income earners and business owners (i.e. “give more to those who have the most”). Rather, they emphasize
2. the creation of additional wealth and jobs when entrepreneurs are not hampered by heavy regulation and discouraged by steep taxes [11]

I marked it up a little, to emphasize the distinction the author is trying to make. --Uncle Ed (talk) 13:58, 8 December 2016 (UTC)

Identity of its proponents

A New York Times article by Robert H. Frank refers repeatedly to "trickle-down theorists" without naming any.

1. Does this simply mean that the author was using trickle-down as a synonym for Supply-side economics? Or,
2. Did he literally mean that there is such a thing as trickle-down theory and that it has adherents?

Thomas Sowell denies the latter, leaving us with the quote from Stockwell. --Uncle Ed (talk) 17:23, 30 December 2016 (UTC)

The article is seriously in error

Trickle-down economics is from people that have money to people that do not. It certainly is much wider then what this article which appears to be a criticism of Reaganomics.

It is used to describe major cash flows in many countries such as Jordan, Lebanon and Moldova which have large cashflows from outside from citizens working in foreign countries.

Hi BernardZ, I haven't seen any sources which describe this cashflow as "trickle-down economics" - could you provide some? Absolutelypuremilk (talk) 16:39, 9 January 2017 (UTC)

I did in the stuff you deleted

BernardZ (talk)

Removal of content

Volunteer Marek, you removed some content about Thomas Sowell arguing that no-one had ever advocated trickle-down economics, saying "the same thing is being repeated three damn times". Could you explain a bit more about why you removed this? The content is not duplicated elsewhere in the article that I can see. Absolutelypuremilk (talk) 16:36, 9 January 2017 (UTC)

Sowell is just mentioned all over the place in this article, so that before my removal, something like half the text was about him. Now, he's notable so it's fine if his views are in here, but they need to be given due weight.Volunteer Marek (talk) 15:20, 10 January 2017 (UTC)

I have restored the content with a fair bit of trimming of unnecessary words, I think is more like its due weight. Absolutelypuremilk (talk) 18:26, 10 January 2017 (UTC)

Removal of Sowell content

CFCF, you removed the paragraphs about Sowell saying "UNDUE section, the following section carries critique" - could you explain what exactly you meant here? Absolutelypuremilk (talk) 09:54, 13 March 2017 (UTC)

Right, it isn't WP:DUE. Carl Fredrik 💌 📧 10:00, 13 March 2017 (UTC)

.... and why do you think that? There are several different sources saying that no economist has ever proposed trickle-down economics, why shouldn't that be given a fairly big prominence in the article? Absolutelypuremilk (talk) 11:38, 13 March 2017 (UTC)

If you remove a statement from a reliable source, we will be left with only the other side. There is considerable debate over what "trickle-down economics" is, so anything bearing on whether (1) it is a real proposal or (2) it is a nickname to a (slightly?) different proposal for the purpose of blurring any distinctions would be important, not to say crucial.

We are not supposed to resolve controversies, but to present both sides. Supporters of capitalism say that "free market principles" benefit the poor, even if only in an indirect way. Critics of capitalism disagree, arguing that such principles only benefit the rich, and that any benefit to the poor could come only from a (discredited and impossible) trickle-down effect. Maybe this dichotomy of viewpoints needs to be clarified a bit more. --Uncle Ed (talk) 14:05, 13 March 2017 (UTC)

To clarify, it sometimes looks to me like the term trickle-down economics is being used to assert (3) that arguments favoring Capitalism - on the grounds that free market principles increase the standard of living of the poor - amount to nothing more than the notion that helping the rich should result in benefits (somehow) trickling down to the poor and (4) that the trickle-down effect never has happened and can never happen.

Sowell, on the other hand, seems to be arguing (a) that he agrees with #4 (!) but (b) that neither he nor anyone else has actually proposed #3.

[It's kind of like the tussle over The Bell Curve, with Stephen Jay Gould complaining that Charles Murray makes 4 easily falsifiable "assumptions" while Murray denies having made those assumptions. In fact, some contributors recently argued that Murray's denial is not relevant because he's not a secondary source.] --Uncle Ed (talk) 14:16, 13 March 2017 (UTC)

Yeah, it's a view from a single professor writing in what amounts to some of the most biased sources available. Show that the position is prevalent in the mainstream discourse and not only from one or two professors and you have a case for inclusions. This is a top-level article, that section amounts to minority viewpoints and nitpicky commentary. Carl Fredrik 💌 📧 18:27, 15 March 2017 (UTC)

There are three separate economists cited here (Jeram, Horwitz and Sowell). Please try and get consensus on the talk page for your changes as per WP:BRD, rather than just removing the content. Alternatively, feel free to open a WP:RFC. Absolutelypuremilk (talk) 18:35, 16 March 2017 (UTC)

Yes, do so before reintroducing your statement. There is no indication that anything near-consensus exists to include it. You are giving fringe positions far more weight than the far more authoritative WMF, that is just a textbook example of a WP:DUE-violation. Neither is it especially logical nor does it makes sense to give such weight to semantical opposition of a widely used term. Carl Fredrik 💌 📧 21:33, 16 March 2017 (UTC)

How am I giving it more weight? Maybe you could suggest adding content from the IMF that you think is missing, or rearranging to improve the article? Absolutelypuremilk (talk) 21:45, 16 March 2017 (UTC)

@Volunteer Marek: you might be interested in this discussion. Absolutelypuremilk (talk) 15:26, 17 March 2017 (UTC)

User:Volunteer Marek, User:Ed Poor and myself are all happy for the content to be included. You are the only editor who wants to remove the content. Absolutelypuremilk (talk) 19:37, 17 March 2017 (UTC)

There's an article in FEE by Steven Horwitz, a Professor of Economics at St. Lawrence University, that touches on the issue of whether there is such a thing as "trickle-down economics". [12] --Uncle Ed (talk) 14:44, 19 March 2017 (UTC)

Thanks, but this is already included in the article (ref 23). Absolutelypuremilk (talk) 16:42, 19 March 2017 (UTC)

strawman argument

"trickle-down economics" is widely used by left leaning critics as a strawman argument. whenever an argument is made that lower taxes would reduce burden on small and medium sized businesses and encourage economic growth, the strawman argument will usually come back with "we already tried trickle down economics, giving money to the rich doesn't work". nobody made the argument that giving money to the rich would grow the economy, but that's what a partisan perceives it as. i think it's very biased to refer to this term like it has any actual credence, especially when this term is used synonymous with supply side economics. which is defined as "macroeconomic theory that argues economic growth can be most effectively created by investing in capital and by lowering barriers on the production of goods and services", and not "economic policies as favoring the wealthy or privileged". A77B (talk) 08:47, 6 May 2017 (UTC)

We work on what reliable sources say - while I agree with you, reliable sources describe trickle-down as it is in the article, so that is how we describe it. There are some other sources (in the "opponents of the term" section) which agree with your view, but if you could add some more then that would be helpful. Absolutelypuremilk (talk) 07:41, 8 May 2017 (UTC)

A77B, you might be interested in this: http://www.kansascity.com/opinion/editorials/article186974513.html DOR (HK) (talk) 18:01, 29 November 2017 (UTC)

OR and UNDUE and BLUDGEONING

Perseverence does not excuse you from meeting arguments about putting extreme right-wing commentators on par with the IMF, especially so when their positions are provably false. This edit is extremely problematic: [13], refrain from reinstating such extreme non-NPOV content. Carl Fredrik ^talk 07:58, 9 May 2017 (UTC)

CFCF, you might have missed the discussion above in the section "Removal of Sowell content". I suggest you try to change the consensus there, which currently is for including the content which has three separate sources to back it up. Absolutelypuremilk (talk) 08:02, 9 May 2017 (UTC)

Yeah, noone is saying that it isn't true: that he said those things.

What however is at issue here is: why it matters that he said those things.

Sowell wrote a post for an extreme right-wing think-tank. This just isn't worth anything compared to the IMF quotes. The above discussions make it very clear that this is undue, and most of your recent editing here has been undue. Carl Fredrik ^talk 08:05, 9 May 2017 (UTC)

• See Talk:Trickle-down_economics#Why was an op-ed used to support the false claim that the term isn't used by professional economists?

As I said in the "Why was an op-ed used to support the false claim that the term isn't used by professional economists?", there is no source which argues that trickle-down economics works. In the "Removal of Sowell content" discussion I showed that there was a consensus for inclusion: myself, Uncle Ed and User:Volunteer Marek have all supported inclusion. Sowell has been quoted in several sources, and has also written similar content for the Spectator. Could you provide evidence that the sources Sowell is quoted in are "extreme right-wing"? I am not saying that the arguments of Sowell, Horwitz and Jeram should be on a par with the IMF, merely that they should not be excluded from the article. Absolutelypuremilk (talk) 08:36, 9 May 2017 (UTC)

The only portion of the entire section that I can agree has any value is the following:

Some supply-side economists consider the term "trickle down" as a political pejorative which does not denote any specific economic theory.

But even that could be sourced much better. There is no need for an entire subsection with two paragraphs of text here, neither does quoting Sowell do anything positive for the article. Carl Fredrik ^talk 08:43, 9 May 2017 (UTC)

References

I still don't understand what your problem is with Sowell, or the sources he is quoted in? Absolutelypuremilk (talk) 09:02, 9 May 2017 (UTC)

FEE is a libertarian think-tank, it is WP:FRINGE, and anything that is decidedly far off to one side of the debate has to be balanced according to WP:DUE. There is nothing wrong with quoting Sowell apart from the WP:DUE-consideration. His positions are very far off to one side, and to give him 3x more space than established groups like the IMF is not appropriate. His critique is already present in other parts of the article. Carl Fredrik ^talk 09:10, 9 May 2017 (UTC)

Why is an article by Steven Horwitz, who seems fairly distinguished, fringe just because it is a column for a libertarian think-tank? And Sowell is only mentioned once in the article, when he is quoting a criticism of trickle-down economics by a presidential speech writer. Here is another article by Conservative MEP Daniel Hannan saying a similar thing to Sowell and the others.Absolutelypuremilk (talk) 11:54, 9 May 2017 (UTC)

The IMF is also only mentioned once. This is about WP:BALANCE and WP:DUE WEIGHT, not about whether he actually has taken the positions. Why are his positions so remarkable? Carl Fredrik ^talk 07:34, 10 May 2017 (UTC)

I have removed the first mention of Sowell - he is quoting someone else anyway so his name doesn't add anything. Are you now happy to reinstate the content? If there is something that the IMF has said that you think is missing from the article, feel free to suggest it. Absolutelypuremilk (talk) 08:05, 10 May 2017 (UTC)

Image in the lead

In the United States prior to the Presidency of Ronald Reagan the majority of average income growth during economic expansions went to the bottom 90% (blue); after 1980, income growth during expansions shifted the top 10% (red). Reaganomics is sometimes used as an example of trickle-down economics.

Not sure about the other stuff, but I don't think the image in the lead is appropriate. The reference is an opinion from a bias source, but when you go to the actual source of the graph, it doesn't seem they make that argument. It looks like WP:SYN - correlation does not imply causation. There were many factors for the economic changes and the trend continues to 2012, probably continues after that. Morphh ^(talk) 00:08, 10 May 2017 (UTC)

I'm fine about moving that image somewhere else, but it is an oft-cited image when it comes to showing Reagonomics. Of course there are disagreements on the whether trickle-down/supply-side caused it. Carl Fredrik ^talk 07:30, 10 May 2017 (UTC)

I will move that image down to the "Criticisms" section as a starting point if that is ok with you guys. I have several problems with the graph - it doesn't make sense to show the "share of income gains" when the income gain can be negative. For example if the bottom 90% had a 0.01% decrease in wages, but the top 10% had a 1% increase, then the overall increase is 0.9%, so the graph would show that the top 10% would have 110% of the income gains which doesn't make sense. It is much clearer to show the absolute percentage increase in income. I am also concerned by the fact that it shows only the periods of expansion - looking at the data then the top 10% lost more during the recessions than the poor so it is unfair to exclude this part. For example, if I include the periods of recession as well as expansion then I get the following graph, which paints a very different picture. (I can't get the x-axis for some reason, but 1980 is the blue line. Absolutelypuremilk (talk) 08:48, 10 May 2017 (UTC)

I just don't get what it's suppose to show about Reagonomics even if you did assume causation. The trend continues with Bush 1, Clinton, Bush 2, and Obama, with Obama being the most dramatic shift. The caption makes two true statements which seem to imply without attribution the second statement was the cause of the first. The caption or graph doesn't tie the change to Reagan's tax policy though. It actually shows the opposite, that tax policy had little effect on the trend. If people are oft-citing it for Reagonomics, it's not a great example of whatever they're trying to show. Morphh ^(talk) 11:12, 10 May 2017 (UTC)

It should be noted that Reagan walked into a recession with double digit inflation. Also, the "income inequality" charts never factor in the 30-40% benefits that employees gain out of employer's pockets. This is why most of these "income inequality" charts will deceptively only compare wages and income. A77B (talk) 05:04, 20 May 2017 (UTC)

Distribution of growth between the top 10% (left) and bottom 90% (right) in the US between 1917-2010

I'm not sure about the one we have currently, but I think we should have a lead image. How about a cartoon, or Reagan talking about Reagonomics, and cutting taxes increasing growth? LK (talk) 07:50, 16 May 2017 (UTC)

What about this image of Reagan talking about tax reduction? (I've changed the caption from Ronald Reagan article) Absolutelypuremilk (talk) 13:35, 16 May 2017 (UTC)

That image and caption look fine to me, though I may clarify that it was pejoratively characterized as trickle-down. But.. wasn't this article on track to be merged with Reagonomics or Supply-side economics? Seems trickle-down is just a term used by opponents of supply-side for populist messaging. Morphh ^(talk) 13:45, 16 May 2017 (UTC)

Ronald Reagan's economic policies, which were dubbed Reaganomics, included large tax cuts and were characterized as trickle-down economics. In this picture, he is outlining his plan for Tax Reduction Legislation from the Oval Office in a televised address, July 1981

References

My two cents

caveat: I'm an economist.

The trickle-down economic theory, like most economic ideas that get brutalized by politicians, isn’t one that says “just cut taxes and the resulting growth will pay for itself.” Prof. Arthur Laffer himself said it only works when taxes are so high that investment is discouraged. And no, he didn’t specify what that tax rate might be (quite wisely, too: it will vary enormously depending on the conditions).

In the US in the 1980s, trickle-down seemed to work, but only because (a) interest rates were soaring to combat inflation; (b) unemployment soared due to high interest rates choking off demand; and (c) federal spending shot through the roof, generating unprecedented (post-war) deficits and debt.

Throw money at an economy and it will grow. Triple the federal debt between 1981 and 1989 and it can be argued that … whatever happened, worked.

1971-80: debt fell by 1.5 percentage points of GDP.

1981-90: debt rose up by 15.5 points

Here are some interesting sources:

https://www.thebalance.com/trickle-down-economics-theory-effect-does-it-work-3305572

https://www.hks.harvard.edu/news-events/publications/impact-newsletter/archives/autumn-2009/trickle-down-economics-revisited

and, “The IMF Confirms That 'Trickle-Down' Economics Is, Indeed, a Joke”

https://psmag.com/economics/trickle-down-economics-is-indeed-a-joke

One questions seems to be whether anyone ever actually proposed trickle-down as a serious economic policy. If we understand that it is a journalist’s term for supply side economics, then the answer is obviously ‘yes.’ Herbert Stein ( under Nixon), Robert Mundell (Reagan) and Glenn Hubbard (GW Bush) come immediately to mind.DOR (HK) (talk) 12:35, 9 May 2017 (UTC)

Good points. Frankly, I'm tempted to merge this article to Supply-side economics. What are your thoughts on that DOR (HK)? Carl Fredrik ^talk 07:31, 10 May 2017 (UTC)

Agreed. That's really where it belongs, with a redirect for those who don't know the proper name.DOR (HK) (talk) 17:17, 10 May 2017 (UTC)

Just as wage slavery exists alongside the article wage labor, this article also should exist, to document the use of the term, and the arguments it is used in. LK (talk) 06:51, 16 May 2017 (UTC)

I agree with LK; the term "trickle-down theory" has a longer history than the term "supply-side economics", and is not a mere adjunct of that term. The OED shows the first use of "supply side" (but only as a noun) was in 1873; the first use of the term as an adjective to describe a sector of the economy (but not a policy) was in 1957. The earliest use of the term to describe "economic, esp. fiscal, policies designed to promote the supply of goods and services; (also) advocating policies and ideas of this kind, esp. the lowering of taxes and reduction of regulation as a means of increasing revenue and generating growth" was in 1976 when the WSJ used the phrase "Supply-side fiscalism". In 1980 the NYT used the phrase "supply-side policies", and the earliest citation for "supply-side economics" is 1982. On the other hand, Harry Truman said in 1949 "We have abandoned the "trickle-down" concept of national prosperity". Ewulp (talk) 03:55, 17 May 2017 (UTC)

How can that not just be treated in a paragraph "terminology" in a single article? Carl Fredrik ^talk 20:01, 16 June 2017 (UTC)

Addition to lead

The following content is in the lead:

"Multiple studies have found a correlation between trickle-down economics and reduced growth, and that higher taxes on the wealthy are linked to economic growth.[4][5][6][7] Trickle-down economics has been widely criticised particularly by left-wing and moderate politicians and economists, but also some right-wing politicians."

This is sourced to one study from the IMF, one collection of graphs showing the income share of the top and bottom parts of the income distribution (which is very misleading, as growth can be negative, as in the above discussion), one column in the New York Times and one article about tax havens that doesn't really mention trickle-down economics. To have a statement like this in the lead, it should really be sourced by several secondary sources (I'm not including columns in that!) Absolutelypuremilk (talk) 20:42, 16 May 2017 (UTC)

This is really just supply side economics

The problem with the article is that as you add references to it, you're really just still talking about supply-side economics; so any reference and text here should be added there as well and vice versa.

But that's a problem. Really the topic is the same; we've duplicated the article.

This is why you're not really supposed to have articles on terms very much, "Wikipedia is not a dictionary" and all that. Perhaps we should merge and add this terminology to the main article?GliderMaven (talk) 22:18, 17 May 2017 (UTC)

Merge discussion

I propose that Trickle-down economics be merged into supply side economics. I think that the content in the Trickle-down economics article can easily be explained in the context of supply side economics, and the supply side economics article is of a reasonable size that the merging of Trickle-down economics will not cause any problems as far as article size or undue weight is concerned. GliderMaven (talk) 02:29, 17 June 2017 (UTC)

Agreed.DOR (HK) (talk) 15:30, 18 June 2017 (UTC)

IMHO, though I think they could be merged, there is a distinction that is important (although it depends on which source you look at for definitions). See this article or this book.

Although some sources do, in fact, define them the same, many sources draw a sharp distinction defining trickle-down as a type of supply-side economics. Supply-side theory generally states that by lowering taxes overall there is more money in circulation thus encouraging growth overall. Trickle-down more specifically states that by lowering taxes on businesses and the wealthy you encourage the growth of industry which ultimately benefits everybody. The former idea has some mixed support among scholars (not very strong support) whereas the latter is virtually discredited by every serious scholar. I tend to think that distinction is important enough to merit two articles.

-- MC 141.131.2.3 (talk) 15:30, 12 October 2017 (UTC)

P.S. As a point of reference, note that trickle-down theory can be said to be nearly equivalent to the theory of the palace economy whereas supply-side theory covers a much broader idea than the palace theory. --MC 141.131.2.3 (talk) 15:47, 12 October 2017 (UTC)

Trickle-down is the common name. Supply side means something different and is not a widely used name. — Preceding unsigned comment added by 99.127.226.225 (talk • contribs)

• Support Merge - Trickle-down is often used as a pejorative term for support supply side policies. This is mentioned in this article, the supply side article and in Reaganomics. I think it makes sense to have the topic in one place and not break the criticism into its own article - this might be considered a WP:POVFORK. Morphh ^(talk) 03:43, 31 October 2017 (UTC)

• Do Not Merge - Supply-side economics is the broader concept that ties to other concepts like underconsumption, overproduction, and, of course, its counterpart demand-side economics. To address an above comment, supply-side is used in scholarly and practical discussion, supply and demand are too fundamental to economics as concepts to ignore fundamental schools of thought surrounding them. I believe that the mechanics of the Trickle-down effect, which seems to be much of what is discussed both here and within the Trickle-down economics article, absolutely fit within the scope of supply-side economics and would make sense to merge that article instead into this one. Trickle-down economics, however, has an important role as a political concept historically, much of which is discussed in the Reaganomics article, but is not fully within the realm of economics. For instance, important historical criticisms and satire such as William Jennings Bryan's mention in his Cross of Gold speech as well as modern usage and satire of the term, such as the usage of the term pejoratively in the 2016 United States Presidential Debates by Hillary Clinton, deserve an article that observes the topic strictly within politics with the provision of the economic theory given only as context. The term will quite likely prompt more satire in at least the near future that does not hold a place within the topic of supply-side economics. I would, however suggest to consider merging Trickle-down effect into this article, as is indicated in the about hatnote in the first line of the article. I agree with the suggestion that Trickle-down economics appears to be a POV fork, though, and perhaps it is better off being moved into an article about the use of the term and its related phrases historically in politics, with the economic discussion currently in the article reduced only to an amount that provides context for the use of the satirical term. Adequately distinguishing the currently trickle-down economics page as purely a discussion of its usage as a term in political critique or satire would resolve the matter of the POV fork, and the economic theory discussions therein could be migrated to this page or the trickle-down effect page. This mostly seems to occur at the beginning of the article and towards the end with its use of a research paper about the validity of trickle-down as an economic theory, which would be more adequately suited to the economic theory article. In short, too much of the content of the Trickle-down economics page is political and not within the scope of economic discussion or documentation, so the articles should remain separate. Consider merging in Trickle-down effect instead. Penitence (talk) 08:29, 28 November 2017 (UTC)

"higher taxes on the wealthy are linked to economic growth"

This phrase in the lead, with four references after it. I can't however see where the sources say this? Absolutelypuremilk (talk) 13:50, 20 November 2017 (UTC)

It's a pretty broad and highly questionable statement as currently phrased. Let's make taxes on the "wealthy" 100% then and be booming and deficit free. I don't doubt there is context, examples, and situations where it's a true statement, but as described here, it's pretty broad and likely unsupportable. We need to be careful of WP:SYN. If the references don't make that broad specific claim, then we should remove it. Morphh ^(talk) 14:48, 20 November 2017 (UTC)

The wording "have found" in that sentence is also a problem for WP:CLAIM. It's a loaded term that indicates "truth", instead of saying the studies said, wrote, or argue their viewpoint. Morphh ^(talk) 14:55, 20 November 2017 (UTC)

Describing a finding as a finding is not an example of a WP:CLAIM, as using plain language is always preferable. The existence of this correlation is not contested, only its implications towards causation. The widely-supported, extensively studied existence of a correlation shouldn't be ignored or downplayed without a reliable source explaining the issue. As a summary in the lede, this seems like an appropriate level of detail. Grayfell (talk) 01:01, 21 November 2017 (UTC)

Note that Joecite has also argued for removal, saying "these sources are not direct studies that observe the correlation between Trickle-Down economics, and growth rates. Rather they observe correlations between income inequality and growth." Absolutelypuremilk (talk) 08:42, 21 November 2017 (UTC)

The suggested implication is that there is causation, otherwise it wouldn't be included. Statistical correlation can be used to prove and disprove the point, depending on what measures / timeframes are used. The debated point is over the causation and if other social or economic effects, not the tax policy, were the cause of said statistical correlations. I think to state a truth of correlation (which could also be seen as a viewpoint) without the argument of causation would be misleading to the reader. Morphh ^(talk) 20:14, 21 November 2017 (UTC)

Grayfell, I think we should be much more careful, especially in the lead, about what claim we are making here. The studies use "trickle-down economics" in very different contexts. One (the IMF) says that "increasing the income share of the poor and the middle class actually increases growth while a rising income share of the top 20 percent results in lower growth", one (Levy Institute) says that most income gains are going to the wealthiest people, the NYT says that high inequality inhibits growth, while the Guardian finds that lots of money is going offshore. These all mention trickle-down economics, but very different parts of it. I don't think we can make such a broad claim in the lead. Absolutelypuremilk (talk) 08:49, 21 November 2017 (UTC)

That is an astonishingly poor argument. The IMF study alone has enough clout to merit inclusion in the lede. That other arguments exist as well only strengthens the argument. The IMF study is very authoritative and conclusively states that only increased income in the bottom and middle sections of the economy creates growth. Distrait cognizance (talk) 09:58, 28 November 2017 (UTC)

What you're quoting is not what the sentence stated. It's a WP:SYN argument: A + B = C. High economic inequality is linked to slower growth + taxes on wealthy reduces economic inequality = taxes on wealthy increases growth. That's a logical fallacy, does not consider D,E,F, applies under the context of X,Y,Z, with the conditions of a bell curve. Unless the source specifically makes that assertion, the sentence is WP:OR and should not be included. Morphh ^(talk) 15:15, 28 November 2017 (UTC)

I agree with Morphh. Economics isn't just about pure theories that lead to ideal outcomes under perfect conditions. It is mainly about how politicians twist their thin understanding of economics into populist phrases that have little to do with reality, and then use their election victories to reward their friends and punish their enemies. Along the way, economics gets the blame.DOR (HK) (talk) 18:08, 29 November 2017 (UTC)

Incredible BIAS in article

There is no SUPPORT whatsoever in this article for trickle down economics. It is simply a labour left wing propaganda article bashing low taxes 101.183.21.131 (talk) 12:41, 6 July 2018 (UTC)

Welcome to Widipedia! It might surprise you to learn that we don't advocate one way or the other; that's for politicians. DOR (HK) (talk) 15:15, 6 July 2018 (UTC)

Entire article is a tour-de-force of Bad Economics

There is no such thing as "trickle-down theory". There is no such theory. As the article states it was entirely invented by a humorist. This article should be deleted and I'm surprised it even exists. Ergzay (talk) 05:07, 17 September 2018 (UTC)

At Wikipedia that's an irrelevant argument. The only question to be asked is if the subject is notable, as documented in RS. Is it? Obviously. The phrased is very well-known, and, unfortunately, many people actually think it makes sense, even though it doesn't work. Our job is to document the phrase in all its...umm...dubious..."glory".

I suspect you're being facetious. If not, then WP:CIR comes into play. -- BullRangifer (talk) PingMe 05:53, 17 September 2018 (UTC)

This argument has been discussed before on this talk page a few times. There is no record of any economist or politician advocating trickle-down economics (in terms of "if you cut taxes for the rich, they will spend more and that wealth will trickle down"). However, it has been widely covered in media and therefore (unfortunately) is notable. Absolutelypuremilk (talk) 07:42, 17 September 2018 (UTC)

Well, here's an article written by a senior fellow at the Adam Smith Institute that argues that "trickle-down economics does work, will work, and always has done so .... the argument isn’t that trickle-down economics doesn’t work — even when we use the definition designed as an insult — it’s 'how well does it work?' because we all agree it does." And here's an interview with 2017-2018 White House chief economic advisor Gary Cohn: "When you take a corporate tax rate at 35 percent and move it to 20 percent ... We create wage inflation, which means the workers get paid more; the workers have more disposable income, the workers spend more. And we see the whole trickle-down through the economy, and that's good for the economy." Ewulp (talk) 10:00, 17 September 2018 (UTC)

Ok, so I should have written "if you cut taxes for the rich, they will spend more and that wealth will trickle down, which is better than (say) cutting taxes for the poor or cutting the deficit" - the second part is the disputed one. Cohn is (I think) talking about stimulating investment by those companies, rather than just having spare money sitting around and therefore giving it out to workers. Anyway, this is getting slightly off topic, as we both agree that the topic is notable. Absolutelypuremilk (talk) 10:21, 17 September 2018 (UTC)

Both parts are disputed. If the wealthy invested that extra money in higher wages, starting with the lowest paid (see John Rawls), the increased buying power of the enlarged customer base would help the economy (and business owners), as well as reducing the number who must use welfare benefits to survive. That's classic Social Democracy, and it works great. Experience shows that the wealthy don't usually use that money in that way. -- BullRangifer (talk) PingMe 19:14, 17 September 2018 (UTC)

You think that if taxes are cut, then the rich won't increase their spending *at all*? Absolutelypuremilk (talk) 14:45, 19 September 2018 (UTC)

Every study done shows that a tax savings or rebate to a wealthy person goes mainly to new personal investments; whereas the same money to a poor person goes to spending, and then some. So, the answer is, yes. If the point or goal is demand stimulation, don't give it to the rich.DOR (HK) (talk) 21:19, 19 September 2018 (UTC)

So if it *mainly* goes to investments, what does the rest go to? I agree that giving money to the poor is far more effective at inducing spending, but you were arguing that there would be no new spending generated at all. Absolutelypuremilk (talk) 10:24, 20 September 2018 (UTC)

ConsumptionDOR (HK) (talk) 16:11, 13 October 2018 (UTC)

There is quite a logical jump from "the wealthy don't usually use that money in that way" to "the rich won't increase their spending *at all*". To be even more concise, you turned "usually not" into "not at all". Those are different. You cheated. --Hob Gadling (talk) 11:14, 20 September 2018 (UTC)

Investment allocates capital just as spending does, but in any case this whole discussion is off track. The question here is what is trickle-down economics. It's clear that it is simply a pejorative term for Reagonomics or supply side economics, both of which already have pages. Since it has been used in popular media it could have a page, but it should not be referred to as an "economic theory" - it is not and has never been a theory, but rather a label given to certain economic actions or to oversimplify certain economic theories. The page should reflect this much, referring to it as a term. Highest Standards (talk) 16:58, 9 October 2018 (UTC)

It should be clearly noted that there's no such economic theory called "Trickle-down economics"

While the article itself mentions that this concept was the creation of some humorist, not an economist, the article stills makes it unclear that this is not an actual economic theory that could be found in any economy text book, framework or theory as such. The article heavily relies on political expressions to articulate what "Trickle-down economics" is while making insignificant and superficial references to actual economic theories . It should be noted that this is a political device, not some articulated economic theory or principle. Mentions alone of "Trickle-down economics" elsewhere from reliable sources won't change this fact. The claims made by supply-side economics, an actual theory created by economists, have nothing to do whatsoever with the claims made by the humorist who invented "Trickle-down economics". If Wikipedia incorrectly decides that these two notions are the same, then there's no point in having two separate articles, this should redirected to the supply-side economics article. Alsamuef (talk) 18:51, 30 November 2018 (UTC)