Atheist Goes Political, vol. 2: Trickle-Down Economics

Video:
http://www.youtube.com/watch?v=lKWRoOtj8Jk

            One subject my investigation has lead me into is economics.  Politics can sometimes be considered without economics, but economics usually cannot be considered without politics, so the one offers a great deal of insight into the other.  Conservatives are very fond of pedaling trickle-down, supply-side economics, which is the idea that, if the very wealthy are granted tax cuts, they will, of course, use their new-found savings to expand their businesses, adding jobs.  After all, the extremely wealthy are practically chomping at the bit to add jobs, but they can’t because they don’t have enough money...right?
            But the people in question already have money up the wazoo which they are not using to create jobs.  Why not?  To understand the answer, you have to think of both opportunity and motive.  Any time you want a certain group of people to take a certain course of action, you have to make certain they have both.  Otherwise, forget it.
            The people in question, being so wealthy, already have the opportunity, but they’re not creating jobs because they don’t have the motive.  A business owner’s focus is on maximizing profits.  The only reason he or she has any motive to take any course of action, whatever it may be, is to that end.  The only time these people ever hire more people—ever create jobs—is when they believe they stand to profit from doing so.
            So when does that happen?  Business owners have reason to believe that they stand to profit from creating more jobs and hiring more people when they have reason to believe that they stand to profit from the act of increasing the supply of the goods and services their business provides.  To increase one’s supply, one must expand one’s apparatus, and to do that, one must hire more people.
            So when does one stand to profit from increasing the supply of the goods and services one’s business provides?  This happens when one has plenty of competition for those goods and services and the demand for those goods and services is on the rise.  Under these circumstances, one understands that, if one does not meet this increase in demand with an increase in supply, one’s competitors will, which will lead to a loss of customers, business and profit.  So if we want to foster an increase in hiring, we have to stimulate an increase in demand.
            So how do we do that?  By concentrating the tax cuts among the people who provide most of the demand in this country.  That’s the middle class and the working class, not the well-to-do.  When the people in these tax brackets find themselves spending less on taxes, we are going to spend more on goods and services, thus driving up the demand for them; an increase in demand that suppliers are going to be compelled to meet with an increase in supply, and to do that, they will have to hire more people from these very tax brackets, which yields even more money flowing into these demographics, leading these demographics to do more spending, leading to an increase in demand, leading to an increase in supply, leading to more jobs, leading to more people hired from the middle class and the working class, leading to more money going to the middle class and the working class, and here we find ourselves in a self-feeding cycle.
            Now the biggest drawback to this is that, eventually, if enough jobs are added and the unemployment rate drops low enough, it’s bound to lead to a labor shortage, but so what?  Sure, such can be inconvenient and annoying.  It can be kind of a drag going shopping over and over again and never finding anyone available to help you, but compare that to the situation we have now.  Which is preferable?  At least, during a labor shortage, we are not wondering how we are going to keep our bills paid.
            This is one form of what economists usually refer to as “fiscal policy,” but which Robert Reich more descriptively dubs “bubble-up economics.”  Economic prosperity does not trickle down.  It bubbles up.  The well-to-do usually understand enough about financial matters that we can expect them to prosper pretty much no matter what.  This same guarantee cannot be expected with the middle class and the working class.  Thus, we have to concentrate on ensuring that they are taken care of.  A society which concentrates on directly benefitting these demographics indirectly benefits everyone.
            It’s funny.  The case for trickle-down economics is all-too-often packaged with the argument for capitalism in general which purports to harness the profit self-interest as a force for good.  But in asking the middle class and the working class to accept tax cuts for someone else instead of themselves, they ask them to abandon that very motive.  Can it be trusted or not?
            “The self-interested profit motive can be trusted, unless it is yours.”
            So tell you what.  Everyone watching who sincerely believes in trickle-down economics, try this little experiment.  Try mounting a campaign to persuade all the people and organizations in the world to take all the money they have and give it all to me.  After all, such will benefit them... somehow... some day... and if it doesn’t, it means that I still don’t have enough.