Does trickle down economics/austrian economics/conservatives

Post Reply New Topic

This idea that restoring marginal tax rates to what they were in a more balanced time with better economic performance in general will damage small and medium sized business is not backed up by any facts. They always claim that any tax on the well off will soak small and medium sized business, that's the ace up their sleeve that they always use but it's a lie.

The three shouldn't be lumped together too quickly.

"Trickle-down" economics, which is probably better termed supply side economics, basically says that by removing taxes and regulations jobs will be created. The rationale is that certain tax cuts favor capital investment, which is necessary for businesses to grow and require more labor. Also, reducing regulations decreases the cost of doing business which will thus cause greater growth in businesses which will increase the demand for labor.

Austrian economics doesn't really believe in "creating jobs" as a policy initiative, but rather they think the concept is rather confused. Austrian economists see the existence of jobs simply to be instances where the exchange of money for labor is in the best interest of both sides, and in general, they tend to favor free markets so as to allow these exchanges to be found and used with efficiency. Their general belief is that the best policy for governing society is laissez faire.

"Conservatives" is a political category. It's difficult to extrapolate much from other than that conservatives identify with businesses, and they identify with a market economy, and they will try to act on those identifications, even though there will be some conflicts.

Uttter and complete nonsense.

Canada had comparable interest rates to the United States, but we didn't experience bank collapses. Germany had comparable interest rates to the United States--but they didn't experience bank collapses.

The simple fact of the matter is that US and British banking and securities regulation were so woeful that lenders could write mortgages for anyone; could write mortgages beyond the value of the security interest; and could slice-and-dice the mortgages into derivative securities that they could sell on to others, so that the the loan issuer was no longer the entity that carried the risk.

The housing bubble was created by easy credit--not low interest. The financial crisis was triggered when the security interest in those easy credit loans disappeared and banks could no longer obtain cash on the liquidity market--because no one knew what was on anyone's balance sheet anymore.

And that's all down to regulation (or, more importantly, the lack of it).

The Housing Bubble was created entirely by the Federal Reserve when they shoveled billions of dollars into the pockets of their Wall Street Banking friends an an effort to help save the wealthy and influential from the effects of making bad decisions during the Dot Com Bubble. They were trying to keep the bubble from completely deflating and ruining those friends.

CDO's had an enormous effect on the bubble, but they had no part in creating the bubble.