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June 18, 2018

Trickle-Down Economics

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Written for: Communicado Magazine
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I’ve wanted to write about trickle-down economics since the last general election, but, I was having trouble figuring out how to do so without incensing liberals and supporting conservatives.

Well, I’m a journalist, so, reporting the facts is the first requirement. But, I remembered something from my contracts class in law school… consideration. If I do A, you must do B. Without the assurance of B, there can be no A. Clear and simple. Republican lawmakers should understand this because many of them are lawyers…

So here’s what you need to know about trickle-down:

Trickle-down economics is defined as – A theory that advocates reducing taxes on businesses and the wealthy in society as a means to stimulate business investment in the short term and benefit society at large in the long term.

For those of you with a more intimate understanding of Economics, this is supply-side.

The criticism for trickle-down clearly comes from the benefits given to the wealthy. They get up-front benefits with no mandate to return some portion of the benefits back into the stream of commerce. While less critical, big business gets a similar deal, but, does have more stringent and defined tax implications.

The idea is that if they get some breaks, they will be able to pass on the savings. But without being forced, they often don’t pass on the savings. The explanation for which is usually, “The cost of doing business has increased and so must our products and services.”

This is where liberals and consumers have standing. The benefit of the doubt should confirm the value of trickle-down… It’s the return-on-investment that doesn’t get confirmed. If it did, trickle-down would absolutely work. But…

A perfect example of this dilemma is healthcare…

If the largest healthcare companies would agree to economizing rates and services, the government would give them more incentives. Subsidies. This is how Democrats rationalize the effort. But Republicans don’t want actual regulations or mandates on healthcare.

The GOP wants to have faith in the healthcare companies that if they are spared legal requirements, they will automatically decide – out of the goodness of their hearts – to reduce premiums and general costs…

Unfortunately, most companies are in business to make as much money as possible and likely will not part with much of it without being forced. This is not news. This is why we have a Department of Commerce and a Securities and Exchange Commission.

The truth is, as consumers, putting conditions on giving businesses breaks is the only way to keep them honest. Quid pro quo. Like the concept of consideration in contract law…

So the question that all lawmakers need to be asking when in the discussion of trickle-down theory is: What is the consideration? This should apply to the banks… this should apply to the car companies… this should apply to the healthcare companies.

This is a non-partisan question that should yield a non-partisan answer…

But this post is not going to end this dilemma. If it were this simple, it would be happening. But at least you know the facts…






 
 

 

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