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Originally posted by Renegade When I think about it in this way it makes sense. Is there any reason why "trickle-up" economics wouldn't work as successfully as "trickle-down" economics?

Well you have to understand the difference is bascially giving (back) to the rich or giving to the poor, and when considering who to give in an economic sense anyways, you have to understand why the rich are rich and the poor poor.

These are a few possible drawbacks I see with giving money (your not taking about tax breaks are you?.. poor don't pay taxes) to the poor;

1. the poor are fairly uneducated, I'm not exactly certain what effect this has on economic spending but I'm sure there is some.

2. the poor are more likely to spend on illegal or criminal goods; guns, drugs, etc... one reason why some poor are poor. Your not going to get your money back if it goes off to Columbian drug lords...

As you said the poor will spend on nessecities, food, tv, and so on (majority NOT made or grown in America). The USA is a service industry you want rich people spending on insurance, banking fees, lawyers, accountants... etc..

3. I believe, the poor are more likely to save then the rich.. but this is just speculation.

By giving to the middle class you face the chance of increased savings, something I don't think the rich or poor would do.

Well thats my thoughs (even not many are PC) on it, but I agee with you perhaps trickle up can work as effectively as trickle down. The only question then is how trusting are you with giving your money to the poor in this regard.. will they really spend it back, and on what?

The poor also don't pay as much in taxes, so there's not as much to 'give back' unless you start giving out free money or tax credits which is just the same as forcing a redistribution of wealth, which is wrong, IMO. Someone is not entitled to more than they contributed.

Yoepus kind of stole my argument. Tax cuts aren't "giving" money to the rich. They are demanding less money from those who pay taxes. Therefore if you want to "give" money to the poor, it's going to have to come from somewhere and that somewhere is increased taxes on those who pay taxes. Don't have much time to talk right now, but tax cuts accomplish several other things besides increased consumer spending. A wrong assumption to take is that money in the bank accomplishes nothing. That is not true. There is a fine balance to walk between the savings rate and personal consumption. The greater the savings rate, the more likely it is for interest rates to be lower, thus increasing the liklihood for businesses to invest in capital. By taxing more, you artificially change the natural savings/consumption rate and you basically push up consumption. This is fine and dandy, but what will happen is that interest rates will be artifically high which will hinder business growth. Crap ... damn work getting in the way of my TA productivity!

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Now that I think about it more ... isn't this just welfare?

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Originally posted by Renegade Those in higher income brackets, however, tend to invest a far larger proportion of their income in stocks, bonds, interest-building savings accounts and so forth. This is money, in many ways, that is taken out of the economy.

i dont know if i agree with that...
someone who is investing his money in stocks, is basicly helping a company grow, they are paying a little (or a lot) of their money so that this company can advance and make more money. this fuels the economy by allowing the companies to hire more jobs [ie more payrolls (ie more desposible income)]. hopefully the company is successful in growing and makes more money, thus the stock has grown and the original stock holder has more money too.

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Originally posted by Shakka The poor also don't pay as much in taxes, so there's not as much to 'give back' unless you start giving out free money or tax credits which is just the same as forcing a redistribution of wealth, which is wrong, IMO. Someone is not entitled to more than they contributed.

It’s not how much tax you pay that matters, it’s how much you pay in relation to how much you earn. In this case, it’s the poor who pay more in taxes and such.

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Originally posted by Spin Doctor It’s not how much tax you pay that matters, it’s how much you pay in relation to how much you earn. In this case, it’s the poor who pay more in taxes and such.

no thats not true, the poor don't pay taxes, so therefore they proportionally pay less then anyone who does pay taxes, say the rich or middle class.

http://www.allegromedia.com/sugi/taxes/

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damn I wish I had a tax burden of -2%

Sorry I just felt to comment on some of your arguments there Yoepus.

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Originally posted by Yoepus 1. the poor are fairly uneducated, I'm not exactly certain what effect this has on economic spending but I'm sure there is some.

Pure speculation. Maybe the level of education does matter, maybe it doesn't, I don't know and neither do you I assume.

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Originally posted by Yoepus 2. the poor are more likely to spend on illegal or criminal goods; guns, drugs, etc... one reason why some poor are poor. Your not going to get your money back if it goes off to Columbian drug lords...

Interesting. Any statistics to back this up? My own personal experience is that that the biggest consumers of drugs (or the biggest groups) are to be find in the middle class. Granted, this would be in Europe, particulary in Sweden.

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Originally posted by Yoepus As you said the poor will spend on nessecities, food, tv, and so on (majority NOT made or grown in America). The USA is a service industry you want rich people spending on insurance, banking fees, lawyers, accountants... etc..

Maybe manufactored/grown in other countries but mostly owned by U.S. companies. Plus, the goods are bought in U.S. stores which means the money is going back into the economy.

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Originally posted by Yoepus 3. I believe, the poor are more likely to save then the rich.. but this is just speculation. By giving to the middle class you face the chance of increased savings, something I don't think the rich or poor would do.

Here it sounds like you are arguing against your self. Is savings good or bad and who are most likely to save?

I would guess it depends on what level of poor we are talking. If you are "poor enough" you wouldn't have any chance of saving, Plus, in general, people who are used to having no money at all and suddenly get any sort of income increase tend to be very spending happy, buying all the trinkets they don't really need but couldn't afford before. Forgetting the whole concept of saving. I've witnessed this a couple of times myself...

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Originally posted by Yoepus Well thats my thoughs (even not many are PC) on it, but I agee with you perhaps trickle up can work as effectively as trickle down. The only question then is how trusting are you with giving your money to the poor in this regard.. will they really spend it back, and on what?

I haven't really seen any convincing evidence that trickle down really works, however my 20 univeristy points in business economics aren't really much to stand on (especially since it's been a few years since I studied it)..

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Ok, well here's my more elaborate opinion on "trickle up" economics. Essentially, I think it's not much different from government spending. Yes it will boost consumption and pump more liquidity into the market, however, it is only a short term benefit as the personal savings rate will decrease. A good tactic to pull out of recessionary periods, however a poor long term stimulus. Ostensibly, the money would eventually make its way up to producers and what not, however, the money would simply be sucked out again through the higher tax rate thus the government would still be "crowding out" private capital investments to some degree. Another factor is to consider what would be purchased. The cheapest products, which would likely be imported products, and products such as food or shelter of which is already in great abundance. Therefore it is doubtful that such a surge in consumption in those areas of the economy would spur job growth and capital investment. Trickle up economics looks to me like it is simply a redistribution of wealth plan which I am stringentely against both morally and in my belief that it would aid the the country economically. Improving the economy by taxing citizens and increasing welfare seems like some kind of socialist pipe dream to me

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