On our podcast this week, self-described zillionaire Nick Hanauer made it clear that trickle down economics is a concept used by the super-wealthy to convince themselves as well as all of us mere mortals that giving tax cuts to rich people will create more jobs and wealth for everyone. Unfortunately for them, as Hanauer says, “it just happens to not be true.”
Trickle down economics is what George H.W. Bush famously called “Voodoo Economics”. It is also referred to horse-and-sparrow economics because it’s analogous to saying that if you feed a horse more grain, it will shit out more seed for the sparrows to eat. The evidence that it does not work is steeped in history. Gov. Sam Brownback’s “Kansas Experiment” is probably the most recent tragic example.
But we don’t need to run an experiment to know that. Let’s just look at the data. This graph shows corporate profits as a percentage of GDP (the blue line) overlayed with the “growth” of real wages (the red line) and overall employment (the green line.)
What’s clear is that corporate profits have never been higher. However, during the period of the highest growth in corporate profits, real wages and the employment rate have stayed stagnant.
In other words, corporate profits don’t drive job creation or wages. If they did, that red line would curve up, the green line would be a horizontal line at 100%, and we’d all be drowning in all of that sweet, sweet trickle.
The reason horse-and-sparrow economics doesn’t work is obvious and it’s a point that Hanauer makes repeatedly: Corporations don’t hire more people unless there is more consumer demand and if wages and/or employment don’t increase, consumer demand won’t increase. So giving corporations and wealthy individuals more money in the form of tax giveaways just means they get richer. The horse, it appears, is constipated.
But the wealthy elite in this country don’t want you to think about that. They continue to trot out this trope because, despite ALL the evidence to the contrary, they have convinced many people it’s true. And nobody believes it (or at least pretends to believe it) more than Republicans in Congress. And they damn well BETTER believe it or act like they do because if they don’t, their political donations from the top 1% of Americans will dry up. And that’s why we’re staring down the barrel of the Trump Tax Scam today.
If you care about this country and making sure it doesn’t make the full conversion to a corporatocracy, you MUST take action. No matter what state you’re in, there’s something for you to do. There are a number of useful websites to help you take effective action:
RESOURCES TO FIGHT THE TRUMP TAX SCAM
Do NOT wait. Take action TODAY because the U.S. Senate is poised to vote on this hideous legislation as early as tomorrow. This cannot wait. We’re in a fight for our country and YOU are the warriors.