Barry Bluestone, Reagan’s Labor Secretary, Admits ‘Trickle-Down’ Failed

Destroying the basic tenets of top-down trickle-down Reaganomics, he said, “The wealthiest people spend maybe 30% of their income. Poor people spend 100%, working people spend 98%, so as we move money away from working families towards very wealthy families, we take more and more consumption out of the economy, means slower and slower growth, means higher and higher an extended unemployment.”

http://www.occupydemocrats.com/the-one-where-reagans-labor-secretary-admitted-trickle-down-led-to-inequality/

Yeah, the gigantic assumption on their side was always that if rich people kept more of their money, they'd reinvest more of it into the economy, creating jobs. At least that's what they said they believed -- it's an interesting question as to whether the top policy makers really believed it.

IT'S EXACTLY like the real world economists and Union bosses have been pointing out since the mid-1980s ==> The classic weakness with the "trickle down" theory so beloved of the Reagonomics/Thatcherisms years is that when given the choice, the über-wealthy prefer to spend extra money on bigger yachts, more race horses and another mansion ~ rather than investing it into factories and farms, as the "economic rationalists" and their corrupt 'lap dog' politicians had so blithely promised.

AND SO it came to pass, as evidence from the many stagnating economies of the 1990s showed - that the much vaunted "trickle down" hopes of the 1980s ultra-conservative twinks had never dribbled down far enough from the upper echelons of the wealthy "classes" more than about 30% or so into the economy..

EVEN TODAY, we still see evidence of the Murdoch/Bush/Reinhart/Koch propaganda machine pushing more "economic rationalist" lies through the popular press ~ in their latest efforts they are attempting to portray the housing/building and transport sectors of a country's economy as "economic powerhouses"..

WHERE anybody who has actually studied "classical" economics would know the such areas as building/new housing levels, retail sales (esp. fashion) and transport figures were always considered to be 'INDICATORS' of economic health ~ rather than actual "powerhouse" economic drivers (which in truth are such productive 'primary' sectors as farming, mining, forestry and fishing, and the 'secondary' manufacturing industries..).      

Ben_Reilly wrote:Yeah, the gigantic assumption on their side was always that if rich people kept more of their money, they'd reinvest more of it into the economy, creating jobs. At least that's what they said they believed -- it's an interesting question as to whether the top policy makers really believed it.

Yes, I think you hit the mark Ben, while Bluestone misses it.  Spending was never the issue; investment was.  The supply-side theory always maintained that giving to the rich was beneficial to the economy precisely because they were not living a 'hand-to-mouth' life.  They had the excess wealth to invest, therefore we should nurture excess in the form of tax breaks.

The error in the assumption was always that the rich would invest at home.  In a global economy, the wealthy can be expected to widen the scope of investment.  Remember the rule is: maximize profits.  Of course they ae going to take that money and export it to more favorable markets.

It was never about spending; it was always about investing. Always think of what the term 'supply-side' means. It's not 'demand' or 'consumer' focus for a reason.

Original Quill wrote:

Ben_Reilly wrote:Yeah, the gigantic assumption on their side was always that if rich people kept more of their money, they'd reinvest more of it into the economy, creating jobs. At least that's what they said they believed -- it's an interesting question as to whether the top policy makers really believed it.

Yes, I think you hit the mark Ben, while Bluestone misses it.  Spending was never the issue; investment was.  The supply-side theory always maintained that giving to the rich was beneficial to the economy precisely because they were not living a 'hand-to-mouth' life.  They had the excess wealth to invest, therefore we should nurture excess in the form of tax breaks.

The error in the assumption was always that the rich would invest at home.  In a global economy, the wealthy can be expected to widen the scope of investment.  Remember the rule is: maximize profits.  Of course they ae going to take that money and export it to more favorable markets.

It was never about spending; it was always about investing.  Always think of what the term 'supply-side' means.  It's not 'demand' or 'consumer' focus for a reason.

Absolutely, and as seen from that economic research I posted elsewhere, U.S. companies try to hire more exploitable H1s when they can't offshore.

It seems more and more that right-wing philosophy hides a pro-wealthy-class agenda. Otherwise, in the case of this idea, we're to think that these Reagan upper-level staffers, who are probably not from lower-class or even middle-class backgrounds, were somehow unfamiliar with the fact that the wealthy spend about 30 percent of their money.

Conservatives are masters at manipulation and false equivalencies -- they've managed to convince many that upper income-vs.-lower income is really "hard-working vs. lazy," in this context. It's really a stroke of diabolical genius to convince people to support a flawed philosophy because of the hidden benefits to oneself.

Right-wing, or conservative philosophy is built upon Smithsonian economic theory.  Smith was strongly influenced by the social theories of John Locke and the political atomism of Thomas Hobbes.  Hobbes' view of raw human nature was as negative as it could be: “…the life of man, solitary, poor, nasty, brutish, and short.”  Leviathan (1651) pt.1, ch.13 s. Hobbes' whole point was that government imposed order on an otherwise uncontrollable being: "The condition of man... is a condition of war of everyone against everyone."

Given this nature, man is naturally individualistic (atomism) and selfish.  It’s no wonder that conservatives would eventually distill down to the party of the wealthy, and only the wealthy.  If you believe that economic individualism is the way of the world, wouldn’t you evolve a philosophy that champions the successful…or, that is to say, the wealthy?

What is missing in the theory of economic individualism is any recognition of man’s social existence.  To them, there are no cities, counties or states, and everyone lives in a cave. Lol.