Wealth doesn't "trickle down" from the rich to the poor

The theory of “trickle down” economics says that if we invest enough in the wealthy, it will benefit the poor and middle class. “Investing” in the rich involves giving large tax breaks to those at the top and deregulating large corporations. I’m not here to argue what the definition of supply side economics is, I’m here to debate whether or not it works, so I’m just going to leave the definition at that because that is a widely accepted definition of Reaganomics. By the way, I use “trickle down” economics, Reaganomics, and supply side economics synonymously. Proponents of “trickle down” economics say that, because the wealthy will have so much money, they will inevitably spend that money in ways that benefit the economy. However, the facts show that this hasn’t happened. In fact, quite the opposite has happened. Those at the top have gotten richer while those at the bottom continue to fall further and further behind. This is because rich people don’t spend money just because they got more. Rich people already have a lot of money, so if they are given more money, they don’t think much of it other than the fact that they have more money. If you cut taxes on a rich person, he or she isn’t going to go out and spend it on something. He or she is just going to hold on to it. Why would he or she feel the need to go out and spend money? A rich person is typically happy with their current lifestyle. Proponents of Reaganomics also argue that they will create jobs with that money. But, if it isn’t being pumped back into the economy, how is it creating jobs? They are not going to use it to hire people just because they have extra money. In fact, one can be wealthy and not hire anybody. But, the “trickle down” theory goes for businesses too. That money won’t be invested back into the economy. It will just sit there. It won’t even be spent at a business that hires people to help increase demand. Let’s say that you are a restaurant owner who owns several restaurants and you were given a $5,000 tax break. Are you going to say “hey, I have an extra five thousand dollars, let me go spend it by hiring more employees?” I doubt it. You’re going to be happy you have that extra money, but you aren’t going to use it to create jobs. Depending on how much money you have (whether you are poor, middle class, or wealthy), you may invest it in another business that helps to create jobs. But, a lot of executives of large corporations won’t do that. Since Reaganomics was not aimed at small business owners, that money most likely will not be put back into the economy. Reaganomics really is based on a flawed argument. The theory says that throwing money at rich people helps the economy. But, it fails to explain what happens if the rich choose not to invest the money. Reality has explained that it is a disaster if the rich don’t use that money to help the economy. When Ronald Reagan enacted “trickle down” economics in the 1980s, it tripled the national debt, made income inequality levels skyrocket, and caused stagflation. When Reagan first took office, the national debt was approximately $800 billion. When Reagan left office, the debt was about $3 trillion. This was because of the lost revenue through the tax cuts and high defense spending. In the process, the rich got richer while those at the bottom suffered. Republicans will argue that the tax cuts have paid for themselves, but this is not the case. They will also argue that the tax cuts have led to economic growth, but in reality quite the opposite has happened. The more money that the rich have, the less the economy grows. Again, this is because the rich don’t invest that money. That extra money they have is just sitting there, not being put back into the economy. Unlike what the politicians have told us, these tax cuts don’t stimulate the economy. That extra money the wealthy received in tax breaks would’ve been spent if it was given to someone who needed it. Unlike wealthy people, poor and middle class people actually need that extra money and will spend it. The poor and middle class could always use some extra money. Even $1,000 to a middle class family is a big deal. That extra $1,000 could be used to go out to eat at a restaurant, buy more food, or whatever. But, the point is, that money will not just sit there. This is why economic growth happens from the bottom up. Those at the bottom will actually spend the money, so the activity of the economy will increase. Because they are spending that money, demand for products from businesses will increase, so businesses will have to hire more people to keep up with the increase in demand. But, business owners will not do this just because they were given money. You can give a business owner money, but that doesn’t mean that demand for his or her products will increase. If you give it to the consumers, they will spend it at the business, which will increase demand, thus requiring the business to hire more workers. In addition to the tax breaks for those at the top, eliminating regulations for large businesses and corporations is a part of the “trickle down” theory. Proponents will claim that the regulations get in the way of businesses doing their jobs. However, deregulating large corporations just allows them to get away with more things that help fuel their profits. When regulations are taken off of large corporations, they will look out for ways to make more in profits rather than look out for ways to create more jobs. A good example would be reducing regulations that protect the environment. Corporations that do activities that may cause harm to the environment will not care to help the environment on their own. They need regulations that require them to do so. They put short term profits ahead of the long term damage to the earth. Just because a business doesn’t have to put in as much effort in protecting the environment does not mean that that business will try to create more jobs. The business will just be happy with the regulation and have one less obstacle in making more profits. Although it’s important not to place too much regulation on businesses, not enough regulation can be a problem. This is not limited to environmental issues. This can also be applied to issues such as treatment of workers. If a business can get away with treating the workers like garbage, it will probably try to do so. Take a look at the Gilded Age. Wealth inequality was sky high. This was because there were almost no restrictions on business. The government took a lassiez-faire approach to the economy. Because of this, businesses weren’t required to provide their workers with safe working conditions. Republicans may argue that the free market will require them to do so, but if very few businesses are offering safe working conditions and they aren’t required to, the people are going to be out of luck. They can try to go on strike, but they tried that in the Gilded Age and it didn’t result in significant improves. It took government regulation to fix the problem. Theodore Roosevelt stepped in and placed regulations on business. This was a huge benefit to the workers and consumers (as businesses often took advantage of consumers at the time). Unfortunately, the Progressive era came to an end for the time being when Warren G. Harding was elected president and began to intentionally operate the “trickle down” theory. He stripped regulations and cut taxes on the rich. The presidents continued this until the Great Depression, when Franklin D. Roosevelt was elected and we went back to increasing the regulations. I could go on and on, but I’ll stop right here. I have two points I want to make. Slashing regulations on businesses does not help to create jobs, it just helps businesses and corporations get richer. There is no evidence that cutting regulations on businesses leads to job or GDP growth. The Republican Party is just the party of the rich. They are looking after the interests of the wealthy. That's why they continue these policies even though they have failed several times before. If Reaganomics isn’t fantasy, then when can we expect to see a trickle? Wealth inequality has skyrocketed, the national debt is through the roof, and we still don’t have enough jobs. Don’t try telling me that we had an economic boom when “trickle down” policies were enacted. This economic boon was fake prosperity and a lot of the economic benefits went to the really rich. Average Americans didn’t get a huge share in all the prosperity that went on during the 1920s and 1980s. These time periods were basically a return to the Gilded Age. The poor and middle class have done better when “trickle down” economics was not in place. Take a look at the records of state governors who have held on to this failed economic approach. Let’s use Bobby Jindal as an example. Before he was elected into office, Louisiana was running budget surpluses. However, when he was elected, he cut taxes on the rich and ran budget deficits because there wasn’t enough revenue to pay the bills. Now, the Republicans in the state legislature propose cutting services to people who need them while continuing to give the rich large tax breaks. Louisiana is basically bankrupt due to “trickle down” economics.Here are some sources:1. http://www.faireconomy.org...2. http://www.alternet.org...3. http://usatoday30.usatoday.com...4. http://www.americansfortaxfairness.org...I could go on more, but I am starting to run low on characters.