America: Land of shrinking opportunity

Wealth does not trickle down from the rich to the poor. Period.

That's not Senator Elizabeth Warren talking. That's the latest conclusion of new research from the International Monetary Fund.
In fact, researchers found that when the top earners in society make more money, it actually slows down economic growth. On the other hand, when poorer people earn more, society as a whole benefits.

The researchers calculated that when the richest 20% of society increase their income by one percentage point, the annual rate of growth shrinks by nearly 0.1% within five years.

This shows that "the benefits do not trickle down," the researchers wrote in their report, which analyzed over 150 countries.

By contrast, when the lowest 20% of earners see their income grow by one percentage point, the rate of growth increases by nearly 0.4% over the same period.

Related: Class war locks poor kids out of top U.K. jobs

The new report called widening inequality "the defining challenge of our time," echoing earlier comments from President Obama.

The authors explain that high levels of income inequality drag down growth because poor people struggle to pay for health care and education, which hurts society as a whole.
"For instance, it can lead to under-investment in education as poor children end up in lower-quality schools and are less able to go on to college," the report says. "As a result, labor productivity could be lower than it would have been in a more equitable world."

The report builds upon research from other international organizations and Joseph Stiglitz, the Nobel laureate who has been campaigning against rising inequality.

money.cnn.com/2015/06/15/news/economy/trickle-down-theory-wrong-imf/

The IMF another UN led initiative. Give your money to the poor, leftist ideology. But don't include our tax free salaries in that.

lee wrote on Feb 2^nd, 2016 at 10:34am:

The IMF another UN led initiative. Give your money to the poor, leftist ideology. But don't include our tax free salaries in that.

So Lee tell us all how trickle down effect is working.

Labor voter wrote on Feb 2^nd, 2016 at 10:40am:

So Lee tell us all how trickle down effect is working.

I didn't make any reference to "trickle down theory", I was merely pointing out the logical fallacy of people on tax-free salaries, saying what happens to poor workers, At least the top earners, apart from UN officials, pay some tax.

It's a misnomer. It should be called the trickle-up-effect.

I wonder what the IMF's game is in all of this. They've never given a ****ing poo about inequality before, but are wailing about it in the past year or so.

Their "Feminism" has been shown to be completely bunk (https://www.jacobinmag.com/2015/06/kristof-globalization-development-third-world/) so I'm assuming there is some game the IMF is playing here.

The IMF thrive on the misery of the third world.

Is that the same IMF that is doing such a sterling job in Europe with their austerity backed programmes.

The US is not a good example. The corporate tax rate over there is 40c in the dollar and the Neanderthals at the IMF can't see a problem with that. FMD, any wonder world economies are shot.

Kiron22 wrote on Feb 2^nd, 2016 at 11:30am:

I wonder what the IMF's game is in all of this. They've never given a ****ing poo about inequality before, but are wailing about it in the past year or so. Their "Feminism" has been shown to be completely bunk (https://www.jacobinmag.com/2015/06/kristof-globalization-development-third-world/) so I'm assuming there is some game the IMF is playing here. The IMF thrive on the misery of the third world.

They sure do. The same clowns that insisted on a 90c in the dollar tax on farm produce just after the loans supporting the Ethiopian meltdown. End result - nobody bothered farming.

The rich are renowned for their generosity.

double plus good wrote on Feb 2^nd, 2016 at 11:57am:

Some of the rich are renowned for their generosity.

Fixed it for you.

http://news.yahoo.com/ex-imf-chief-rodrigo-rato-stand-trial-misusing-153513594.html

Madrid (AFP) - Rodrigo Rato, a former chief of the International Monetary Fund (IMF), is to stand trial for misusing funds when he was head of a bailed-out Spanish bank, a court in Madrid said Monday.

One time Spanish finance minister Rato is one of 66 accused in a scandal that allegedly saw executives and board members at Caja Madrid and Bankia -- the group whose near-collapse sparked an EU bailout of Spain's financial sector -- spend around 12 million euros ($13 million) on themselves between 2003 and 2012, with some media reports putting the total figure above 15 million euros.

The court said the investigating magistrate found there was "sufficient merit" in pursuing a case against the group.

No date has been fixed for the trial of Rato and his co-defendants who allegedly benefited from undeclared credit cards for personal expenses between 1999 and 2012 at Caja Madrid, which merged with six other savings banks to create Bankia.



yeah right! >:(

Bam wrote on Feb 2^nd, 2016 at 12:30pm:

double plus good wrote on Feb 2nd, 2016 at 11:57am: Some of the rich are renowned for their generosity. Fixed it for you.

Nobody is asking for generosity, only that they spend their money.

To this point we have 2 posts on topic and 6 shooting the messenger with a couple of not relevant.

Trickle down economics is nothing but a dishonest trick to advantage the wealthy for no reason other than that is what you want to do politically.

Sadly it is trickling down.....large percentage of wealth to the well off, and scraps go to the less well off. 

stunspore wrote on Feb 2^nd, 2016 at 3:14pm:

Sadly it is trickling down.....large percentage of wealth to the well off, and scraps go to the less well off.

Scraps? Gee you're feeling generous today. With the growing wealth divide, houses becoming unaffordable for anyone who can't borrow $1 million and the shrinking of the middle class due to a reduction in secure employment, I would say there's nothing for anyone below the top 20%.

Neoconservatism at work.

Watch our debt figure climb.

Lads , youre all operating in "scarcity" mode.

You are aware of the law of "state transference". you will attract what your own psychology .

successful people are all in "abundance"

Heres how you should start your day.
You should all commit to 10 minutes of mediatation every morning and 10 minutes of "gratitude affirmations".
If you live in australia and you cant develop an abundant and grateful mindset.
You have
Messed Up
You dont need to change countries.
Please watch...this is my contribution to you (from my abundant mindset)


https://www.youtube.com/watch?v=Xb02qGHngb0

Well, Trickle down Economics is only an "illusory effect", for Public consumption.

The Reality of Economic Growth, is Really a matter of Global Basic's, when it comes to the major Economic Drivers, which have been mostly the following, during the modern era -
1) Demographics - Steady, But good Growth in Total Population, which underpins Demand!
2) Energy - The capacity to match increasing Economic Demand, with increasing Energy Supply, at low Prices.
3) Technology - An increasing capacity, to deliver lower Costs, via increasing levels of Technology.
4) Climate - A continuing "Goldilocks Climate", over the modern Economic era, enabling a Growing Population to be Fed & Watered, at Cost levels which remain under control!

The above 4 major factors have consistently enabled Global Economic Growth, for quite some time and thus the illusion/s of the trickle down theory have been made "more acceptable".

However, at least 3 of these major Economic Drivers have been slowing for a while now & they are about to go negative, which will highlight that the "trickle down theory has indeed been purely an illusion".

Cheers!

The rich and powerful in Australia run everything now, both Labor and Liberal fatcats. . They make the decisions. They have  cheapened everything that was beautiful like the music industry. Most of what comes through the media is supermodels, actresses and other assorted rubbish they are interested in. In the 60's and 70's there was a sniff at how life and society could be but that's gone. They've smashed that down and brought us back to the 1950's. As long as we shut up and go along with their plan they are happy. It's starting to suck for us though.

Quote:

trickle down theory does not work

Really? Who pays for the vast majority of the Poor's welfare handouts?   :-?

That's not 'trickle down - that's forced flow - and without it the peasants and the economy would both starve to death....

Labor voter wrote on Feb 2^nd, 2016 at 10:16am:

America: Land of shrinking opportunity Wealth does not trickle down from the rich to the poor. Period. That's not Senator Elizabeth Warren talking. That's the latest conclusion of new research from the International Monetary Fund. In fact, researchers found that when the top earners in society make more money, it actually slows down economic growth. On the other hand, when poorer people earn more, society as a whole benefits. The researchers calculated that when the richest 20% of society increase their income by one percentage point, the annual rate of growth shrinks by nearly 0.1% within five years. This shows that "the benefits do not trickle down," the researchers wrote in their report, which analyzed over 150 countries. By contrast, when the lowest 20% of earners see their income grow by one percentage point, the rate of growth increases by nearly 0.4% over the same period. Related: Class war locks poor kids out of top U.K. jobs The new report called widening inequality "the defining challenge of our time," echoing earlier comments from President Obama. The authors explain that high levels of income inequality drag down growth because poor people struggle to pay for health care and education, which hurts society as a whole. "For instance, it can lead to under-investment in education as poor children end up in lower-quality schools and are less able to go on to college," the report says. "As a result, labor productivity could be lower than it would have been in a more equitable world." The report builds upon research from other international organizations and Joseph Stiglitz, the Nobel laureate who has been campaigning against rising inequality. money.cnn.com/2015/06/15/news/economy/trickle-down-theory-wrong-imf/

Pretty logical actually and easy to work out - one poor household buys one microwave - one rich household generously buys two -  there are 5,000,000 households, 2% of which are 'rich' - ergo - 2% of 500k = 25,000 microwaves x 2 (they buy two) = 50,000 microwaves - leaving 450,000 microwaves bought by poor households.

Small business prospers and the economy  operates at a level of sustenance.... WHEN the poor households can afford to buy microwaves.

Therefore poor households contribute nine times more economic activity and prosperity to retail small business than rich households do, even with the proviso that rich households purchase twice as many products.

Pretty simple really.  Kinda makes you re-think Joe's 'poor people don't use the roads'.... doesn't it?

Let us not forget the Grappler parable of the Indian rice paddy farmer and champion cobra wrestler under  the regime of the West casting millions if not billions of aid at India to upgrade education - since the funding will go the the middle classes and upper classes and not the uneducated poorer classes - and this will serve to generate prosperity for the middle and upper classes who have no genuine need compared to the poorer classes - the only 'trickle down' the Champion Cobra Wrestler will get is when he dies and is burned and slipped into the waters of the sacred Ganges to begin his journey to Paradise......

Truly, Sahib, when a Hindu is dying, it is often that the priests place on his lips a few drops of the sacred Ganges.... (probably to hasten things along a little)....

Swagman wrote on Feb 2^nd, 2016 at 6:02pm:

Quote: trickle down theory does not work Really? Who pays for the vast majority of the Poor's welfare handouts?   :-?

Certainly not the dodgy people using tax loopholes and deductions.  From the looks of it, not libs either.  (Being generous not including libs in the dodgy section...)

I too, can make simple crap as well.

I've studied this on a number of levels - trickle down does not work on any metric.

Ayn Rand was a fraud who claimed welfare in the end.

It's time to spread the wealth - middle out economics, a living wage and helping those who need it.

I'm in the top 25% of tax payers and don't mind paying taxes.

21st Century Dialup Network wrote on Feb 2^nd, 2016 at 9:16pm:

I've studied this on a number of levels - trickle down does not work on any metric. Ayn Rand was a fraud who claimed welfare in the end. It's time to spread the wealth - middle out economics, a living wage and helping those who need it. I'm in the top 25% of tax payers and don't mind paying taxes.

May I ask where you may have studied this theory. So far, I am yet to find a single, reputable economics textbook that even gives it a mention. As far as I know it is simply a political term of phrase coined by the Democrats during Reagan's presidency. Just curious.

Sir Grappler Truth Teller OAM wrote on Feb 2^nd, 2016 at 6:15pm:

Labor voter wrote on Feb 2nd, 2016 at 10:16am: America: Land of shrinking opportunity Wealth does not trickle down from the rich to the poor. Period. That's not Senator Elizabeth Warren talking. That's the latest conclusion of new research from the International Monetary Fund. In fact, researchers found that when the top earners in society make more money, it actually slows down economic growth. On the other hand, when poorer people earn more, society as a whole benefits. The researchers calculated that when the richest 20% of society increase their income by one percentage point, the annual rate of growth shrinks by nearly 0.1% within five years. This shows that "the benefits do not trickle down," the researchers wrote in their report, which analyzed over 150 countries. By contrast, when the lowest 20% of earners see their income grow by one percentage point, the rate of growth increases by nearly 0.4% over the same period. Related: Class war locks poor kids out of top U.K. jobs The new report called widening inequality "the defining challenge of our time," echoing earlier comments from President Obama. The authors explain that high levels of income inequality drag down growth because poor people struggle to pay for health care and education, which hurts society as a whole. "For instance, it can lead to under-investment in education as poor children end up in lower-quality schools and are less able to go on to college," the report says. "As a result, labor productivity could be lower than it would have been in a more equitable world." The report builds upon research from other international organizations and Joseph Stiglitz, the Nobel laureate who has been campaigning against rising inequality. money.cnn.com/2015/06/15/news/economy/trickle-down-theory-wrong-imf/ Pretty logical actually and easy to work out - one poor household buys one microwave - one rich household generously buys two -  there are 5,000,000 households, 2% of which are 'rich' - ergo - 2% of 500k = 25,000 microwaves x 2 (they buy two) = 50,000 microwaves - leaving 450,000 microwaves bought by poor households. Small business prospers and the economy  operates at a level of sustenance.... WHEN the poor households can afford to buy microwaves. Therefore poor households contribute nine times more economic activity and prosperity to retail small business than rich households do, even with the proviso that rich households purchase twice as many products. Pretty simple really.  Kinda makes you re-think Joe's 'poor people don't use the roads'.... doesn't it? Let us not forget the Grappler parable of the Indian rice paddy farmer and champion cobra wrestler under  the regime of the West casting millions if not billions of aid at India to upgrade education - since the funding will go the the middle classes and upper classes and not the uneducated poorer classes - and this will serve to generate prosperity for the middle and upper classes who have no genuine need compared to the poorer classes - the only 'trickle down' the Champion Cobra Wrestler will get is when he dies and is burned and slipped into the waters of the sacred Ganges to begin his journey to Paradise...... Truly, Sahib, when a Hindu is dying, it is often that the priests place on his lips a few drops of the sacred Ganges.... (probably to hasten things along a little)....

It's not even logical. The total, economy wide disposable income doesn't change therefore neither does the spending. Your theory might work if the only household purchase were microwaves.

The article uses US data where the corporate tax rate is a punishing 40c in the dollar. The effect on both labour and capital productivity would be a disaster. That would be the primary driver of poor wages growth and widening inequality.