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Friday, November 29, 2013

Trickle Down Economics - Proof it Doesn't Work

Finally a pin was put to busting President Ronald Reagan's fantasy balloon about trickle down economics. 
Pope Francis debunked the "trickle down" myth.  
He said there's no proof it works.

Pope Francis Slams ‘Trickle Down’ Economics and Greed at the Top

In fact, Pope Francis surprised the world with his comments on homosexuality, abortion and birth control. Now, Pope Francis has taken on “trickle down” economics.

Pope Francis took issue with so-called “trickle down” economic theories, which in the U.S. are closely associated with President Ronald Reagan’s economic policies. (Trickle Down Economics has never been challenged by such a high profile person as Pope Francis.)

Francis said trickle down policies have not been proven to work and they reflect a “naïve trust in the goodness of those wielding economic power.”

“In this context, some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world,” Pope Francis wrote.

“This opinion, which has never been confirmed by the facts, expresses a crude and naïve trust in the goodness of those wielding economic power and in the...workings of the prevailing economic system,” the 76-year-old pontiff added.

Thank you, Dear Pope Francis. Your opinion directly addresses a hot political debate raging in the U.S. about whether or not governments should cut taxes for businesses and the wealthy. The theory is that the economic benefits will “trickle down” the economic ladder to the poor and middle class.

And Francis didn’t stop there. He also denounced tax evasion and economic inequality, and he exhorted governments to ponder a saying that “not to share one’s wealth with the poor is to steal from them and to take away their livelihood.”

Indeed, if trickle down policies really worked, the income growth between the rich and poor couldn't be widening. But it is.

The gap in employment rates between America's highest- and lowest-income families has stretched to its widest levels since officials began tracking the data a decade ago, according to an analysis of government data conducted for The Associated Press.

Rates of unemployment for the lowest-income families—those earning less than $20,000—have topped 21 percent, nearly matching the rate for all workers during the 1930s Great Depression.

U.S. households with income of more than $150,000 a year have an unemployment rate of 3.2 percent, a level traditionally defined as full employment. At the same time, middle-income workers are increasingly pushed into lower-wage jobs. Many of them in turn are displacing lower-skilled, low-income workers, who become unemployed or are forced to work fewer hours, the analysis shows.

On the other hand, Americans have proof of how wealth sharing improved our nation's economic condition. Income sustaining programs like minimum wage laws, unemployment benefits, income assistance with Medicaid and pension benefits through Social Security have all been operational during the past 70 years during a time of enormous US economic growth.

Although I'm not an economist, it's clear to me that American standard of living has improved as a result of wealth sharing.

I've lived in the Philippines for 3 years. I know the difference between living in a nation where the government shares the wealth, in the US, rather than puts its money in Swiss bank accounts. Although the Philippine government claims it's recovering 500 million dollars of Swiss bank account money stashed away by President Marcos, I submit that amount of return is chump change. Americans gave the Marcos government billions and practically none of the money was shared except with his friends.

Obviously, I've no idea just how much money really landed in the Philippines as a result of American support for President Marcos. This is what I do know, because I've seen it. At any given time, I saw five American aircraft carriers in Subic Bay at one time. There are a minimum of five thousand people on each aircraft carrier. All of those people, on those aircraft carriers, eventually found themselves spending American dollars in Philippine towns and cities. In spite of this enormous amount of money spent in one small country over a period of at least 10 years, there were no advances in public plumbing, paved roads or paved streets.  

Five hundred million returned from Swiss banks to the Philippines? Ha! Chump change. What happened to trickle down economics in the Philippines? It trickled up. The US money, stashed in Swiss banks, sustains many status concious and elete Filipinos living a very high standard of living in gated communities.  Meanwhile, the standard of living for most oher Filipinoes hasn't advanced very much. Big slums remain in Manila.

Although Republicans like Sarah Palin and David Brooks are skeptical about the opinion Pope Francis shared about the wrong mindedness of trickle down economics, the proof is in the outcome. 

Where's proof that trickle down economics works? David Brooks told Public Broadcasting "News Hour" that capitalism has improved the lives of Asians.  Well, Mr. Brooks, when did you live in Asia?

There's no proof in support of trickle down economics and Pope Francis is saintly to have finally put a pin to this ridiculous myth. 

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