That does make some sense then. So let me ask a follow up question then. People criticize the whole argument of "The Trickle Down Effect" because they say that those with the money to trickle down just hoard it. Are they actually hoarding it, or are they reinvesting it in themselves and therefore somehow still stimulating the economy?
An easy one! (not) The argument for "trickle-down economics" is that the wealthy will spend it, and that spending is a stimulus that helps everyone. The argument against is not that the wealthy will hoard it, it's that they'll spend it on things that are a lot less impactful on other taxpayers. One Gulfstream G650 is $65 million. Say you have a stimulus that lets ten more billionaires buy G650s. That's $650 million into the economy of Savannah, GA, Long Beach, CA, dozens of other places where subcontractors work, etc. Those ten jets are a real economic stimulus for maybe 20,000, maybe 30,000 people. But maybe eight of them don't buy Gulfstreams. Maybe eight of them buy bigger mansions. That already exist. That happen to be in Monaco, Bermuda, St. Tropez, Kingston, etc. So that's maybe 500 of your $650 million that didn't give anyone a job. A lot of it stone-cold left the country. Now instead of a $650 million gulfstream stimulus, you decide to rebuild some roads. Best guess? $4k per mile, you're rebuilding 162,000 miles of highway. Center for American Progress estimates that's 120,000 jobs created. And it's really tough to off-shore that shit. Besides which, now everybody can use that road, not just ten billionaires. Liz Warren has said a thing or two about infrastructure and the leverage effect it has. She's a clever lady. I'll bet she's anti-G650. it's a different argument than "quantitative easing increases wealth economy." The argument against "trickle down" is it why would you want a trickle when you can have a flood?
It was apparently tried in the 1890's - didn't work then, either. It was called "horse-and-sparrow" theory - 'If you feed the horse enough oats, some will pass through to the road for the sparrows.'
Indeed - Keynesian economics is sometimes called "trickle-up". As I understand it, Keynesian economics is more about stimulating a sluggish economy, by lowering interest rates, public-works spending, etc; whatever works; but I'm no expert on it.
I think that's where people misunderstand Keynes. I'm no expert either, but Keynes was for stimulating the economy by government spending and other tools in economic downturns, but also for raising taxes and cutting spending during good times. We always only hear about the downturn half, but the problem is the downturn half doesn't work so well when you're always cutting taxes and encouraging spending independent of what the economy is doing. For example, during the boom between the dot com bubble and the housing bubble, what did we (the US) do? Cut taxes, spent a trillion dollars on a war, and encouraged people who couldn't afford it to borrow as much money as they possibly could, all while keeping interest rates low enough that those poor people could afford it (kind of...in the immediate term...yay interest only loans!). Leave it to W to fuck up a boom.As I understand it, Keynesian economics is more about stimulating a sluggish economy...
Was confused, until the google convinced me that you meant "Ben" not "Mark"
Yeah. That douchecamel. Ryan Holiday recommended the book at one point, without mentioning that it's a VC bragging about how rough it is being a VC because you need to lay people off without pissing off the people who stay. Cue some bullshit DMX quote.
Hmm. That's actually a pretty compelling argument, and one I can get behind. Thanks for taking your time to share a thing or two tonight.It's a different argument than "quantitative easing increases wealth economy." The argument against "trickle down" is it why would you want a trickle when you can have a flood?
Crazy thing just happened. I actually like something kleinbl00 has to say. I wish I could tell him how much I appreciate his explanations on this as it is something I have been eager to learn about and he seems to be very knowledgeable in this category. Alas I can't so maybe this will find its way to him.
If you can't send him a PM (due to blocking), you can send it to me and I'll forward it to him, if you like.
It's no big deal. He doesn't particularly like me. If you want to send it to him cool, if not it's w/e. I just don't like not being able to coexist and I enjoy the different view points. So when I appreciate what one such as he says I feel the need to put it out there in an attempt to build a bridge of understanding.
I have no particular desire to be a messenger boy - if you can send him a PM, then feel free to do so (as per the wish you expressed).