Top Down vs. Bottom up economics

[Juddog]

No article to link here, simply a question for the financially and politically saavy folk amongst the AT crowd. Looking for an honest discussion here.

What are the pros and cons of each method as far as economy is concerned? Top down is otherwise known as Reaganomics or the trickle-down theory. The idea that tax cuts to the wealthiest of the nation has a trickle down effect where they buy more and hire more people. Bottom-up is bringing tax cuts to the lower income bracket, and increasing the tax on the wealthiest of Americans. Idea being that more middle class people having more money and more security allows them to purchase things on a mass scale which in turn drives the economy further.

Which method, in the end, would ultimately benefit the nation more as a whole rather than individually?

 

[ProfJohn]

Bottom up can't work.

You can't create and maintain a middle class by giving them hand outs forever. Look at the 'great society' we have had trillions of dollars in wealth transfers from the top to the bottom and yet the poverty line has barely moved in 30+ years.

The only way to help those at the bottom is to create more wealth for everyone. More wealth = more jobs which means more poor people working and supporting themselves as opposed to waiting for a government check each month.

 

[Tarrant64]

Either system on its own does not work. People will say "look at this country, it's a piece of crap now" or "look at this country for example, it works great, surplus on everything". One 'fundamental' thing I think people forget is that this is America. Just because some other country is utilizing Top Down or Bottom up economics doesn't mean it will work for us.

We're an entirely different culture of people, and government wise we are pretty much f*cked IMO.

We do have to look at our past, and not other countries, to see what has worked. And if something failed, WHY did it fail. We aren't taking an all around approach to solving these problems. Government spending is one of the biggest problems. There isn't a single person anywhere in the world that can come in and say that government spending wasn't one of the major causes of why any type of economics fails.

I'll finish this up. I do think that somebody out there has a mixed system that works, or an entirely new system overall. I personally believe small/medium/large businesses (with the exception of AIG and the like) could manage our country financially better than those appointed to do it in government.

About me: Some college education, black male, underpaid person working in the IT industry. I am neither dem or rep, however I have decided to vote for Obama (no particular reason, it's just the way I've been 'swayed').

 

[Atomic Playboy]

I think trying to use exclusively one or the other is a bad idea; it needs to be a combination of both. However, if I had to lean one way, I'd lean bottom up. My primary reason is selfish; I am not in the wealthy elite, nor employed in a profession where I am likely to ever make huge amounts of money, so it's in my economic best interest to keep my own taxes low. However, for a practical reason, I must say that poor people are much worse at saving money than the wealthy. Wealthy people invest (which is important in driving our economy forward) and save; they hoard money. I have noticed that the poorer people are, the worse they get with money, spending it on countless items they simply do not need. If they were better at hoarding money, they probably wouldn't be as poor, yes? Since customers purchasing items is important for our economy as well, I think we need to have money in the hands of low-income earners, who are so quick to spend that money and get it back in circulation in the economy.

 

[OrByte]

top down doesnt work.

the data shows that the wealthy get wealthier, the poorer get poorer and the middle class treads water.

the middle class won't be waiting for checks every month like some suggest. The middle class is simply looking to loosen up its own wallets (much like the banks are looking to loosen up its own credit lines) in order to spend.

There are no middle class "handouts."

 

[eleison]

Originally posted by: OrByte
top down doesnt work.

the data shows that the wealthy get wealthier, the poorer get poorer and the middle class treads water.

the middle class won't be waiting for checks every month like some suggest. The middle class is simply looking to loosen up its own wallets (much like the banks are looking to loosen up its own credit lines) in order to spend.

There are no middle class "handouts."

name a country where bottom UP works... I can name a country where top DOWN works -- the USA. Yea, we got problems, but compared to other country's with bottom up, the USA is paradise - most people forget that.

Would you rather live in a top down economy where the poor lives better than 80% of the world population or in a bottom up economy where the poor is only concern about the "next meal"? In the USA, even if you are "poor" you don't worry about starving to death.

 

[miketheidiot]

Originally posted by: ProfJohn
Bottom up can't work.

You can't create and maintain a middle class by giving them hand outs forever. Look at the 'great society' we have had trillions of dollars in wealth transfers from the top to the bottom and yet the poverty line has barely moved in 30+ years.

The only way to help those at the bottom is to create more wealth for everyone. More wealth = more jobs which means more poor people working and supporting themselves as opposed to waiting for a government check each month.

forwarding this to the bank of sweden so you can win that much deserved nobel prize for the deep, rational and empirically proven statement you just made.








mockery aside, bottom up for the most part.

 

[Xavier434]

Reaganomics has been proven to not work as intended ever at any point in history even during the times when it was shining the most. The best it has ever done is reduce unemployment but at heavy costs to our national deficit. Plus, the reduction in unemployment proved to not reduce poverty and it did not lessen the major differences between the rich and middle class. Even under aggressive progressive democratic tax policies the rich have been proven to always continue to get richer.

Open this PDF file and go to page 9 and read the section for Point #8. It provides a solid argument stemming from a great variety of solid sources including numerous public records explaining why it will not work.

http://prime.knowmccain.com/

I can further extend that argument by bringing up issues concerning outsourcing manufacturing and the simple fact that our global economy is not nearly as isolated as it used to be.

 

[miketheidiot]

Originally posted by: eleison

Originally posted by: OrByte
top down doesnt work.

the data shows that the wealthy get wealthier, the poorer get poorer and the middle class treads water.

the middle class won't be waiting for checks every month like some suggest. The middle class is simply looking to loosen up its own wallets (much like the banks are looking to loosen up its own credit lines) in order to spend.

There are no middle class "handouts."

name a country where bottom UP works... I can name a country where top DOWN works -- the USA. Yea, we got problems, but compared to other country's with bottom up, the USA is paradise - most people forget that.

Would you rather live in a top down economy where the poor lives better than 80% of the world population or in a bottom up economy where the poor is only concern about the "next meal"? In the USA, even if you are "poor" you don't worry about starving to death.

most western democracies generally favor a bottom up approach, as did the united states until roughly when Reagan came into office.

 

[Tarrant64]

Originally posted by: Atomic Playboy
I think trying to use exclusively one or the other is a bad idea; it needs to be a combination of both. However, if I had to lean one way, I'd lean bottom up. My primary reason is selfish; I am not in the wealthy elite, nor employed in a profession where I am likely to ever make huge amounts of money, so it's in my economic best interest to keep my own taxes low. However, for a practical reason, I must say that poor people are much worse at saving money than the wealthy. Wealthy people invest (which is important in driving our economy forward) and save; they hoard money. I have noticed that the poorer people are, the worse they get with money, spending it on countless items they simply do not need. If they were better at hoarding money, they probably wouldn't be as poor, yes? Since customers purchasing items is important for our economy as well, I think we need to have money in the hands of low-income earners, who are so quick to spend that money and get it back in circulation in the economy.

We agree about not exclusively using either economic strategy, however I largely disagree with the statements on poor people.

Poor people have no money. Often times it may be because they spend it on things they don't need. However I think most of the time it's because they are underpaid, have no work, or at some point ran into a life crisis that put them out of home and onto the street.

I also believe that poor people just don't have the money to invest. They are too busy trying to stay afloat in this sh!t world that we leave in. People, typically with money, are always saying poor people don't put any money away. I say WTF.

 

[eleison]

Originally posted by: miketheidiot

Originally posted by: eleison

Originally posted by: OrByte
top down doesnt work.

the data shows that the wealthy get wealthier, the poorer get poorer and the middle class treads water.

the middle class won't be waiting for checks every month like some suggest. The middle class is simply looking to loosen up its own wallets (much like the banks are looking to loosen up its own credit lines) in order to spend.

There are no middle class "handouts."

name a country where bottom UP works... I can name a country where top DOWN works -- the USA. Yea, we got problems, but compared to other country's with bottom up, the USA is paradise - most people forget that.

Would you rather live in a top down economy where the poor lives better than 80% of the world population or in a bottom up economy where the poor is only concern about the "next meal"? In the USA, even if you are "poor" you don't worry about starving to death.

most western democracies generally favor a bottom up approach, as did the united states until roughly when Reagan came into office.

How so? Did the government not encourage working hard to get to the next "rung" in the ladder? When I hear "bottom up", I image the government giving incentives for people to "stay at a level where everyone should be at". No incentive to move up a ladder because moving up the ladder is penalized either through taxes or other regulations.

 

[Throckmorton]

Originally posted by: ProfJohn
Bottom up can't work.

You can't create and maintain a middle class by giving them hand outs forever. Look at the 'great society' we have had trillions of dollars in wealth transfers from the top to the bottom and yet the poverty line has barely moved in 30+ years.

The only way to help those at the bottom is to create more wealth for everyone. More wealth = more jobs which means more poor people working and supporting themselves as opposed to waiting for a government check each month.

You are assuming a relationship between two unrelated things- working and being able to support yourself. The minimum wage in this country is not a living wage.

 

[Excelsior]

Bottom up has little to do with 'hand outs'.

 

[Tarrant64]

Originally posted by: Excelsior
Bottom up has little to do with 'hand outs'.

Agreed.

 

[ProfJohn]

Originally posted by: OrByte
top down doesnt work.

the data shows that the wealthy get wealthier, the poorer get poorer and the middle class treads water.

the middle class won't be waiting for checks every month like some suggest. The middle class is simply looking to loosen up its own wallets (much like the banks are looking to loosen up its own credit lines) in order to spend.

There are no middle class "handouts."

Have any evidence to suggest that poor get poorer?

Don't the 'poor' today have cell phones, big screen TVs, multiple cars, many of them own homes etc etc.

If the poor were getting poorer we would not be seeing that. We would be seeing people living in card board shacks across our country.

The only way you can say they are getting poorer is to compare them to the wealthy, and that is not a fair comparison.

Compare to Bill Gates I am poor as hell. Despite this I live a very nice lifestyle and have lots of nice things.

 

[Throckmorton]

Originally posted by: eleison

Originally posted by: miketheidiot

Originally posted by: eleison

Originally posted by: OrByte
top down doesnt work.

the data shows that the wealthy get wealthier, the poorer get poorer and the middle class treads water.

the middle class won't be waiting for checks every month like some suggest. The middle class is simply looking to loosen up its own wallets (much like the banks are looking to loosen up its own credit lines) in order to spend.

There are no middle class "handouts."

name a country where bottom UP works... I can name a country where top DOWN works -- the USA. Yea, we got problems, but compared to other country's with bottom up, the USA is paradise - most people forget that.

Would you rather live in a top down economy where the poor lives better than 80% of the world population or in a bottom up economy where the poor is only concern about the "next meal"? In the USA, even if you are "poor" you don't worry about starving to death.

most western democracies generally favor a bottom up approach, as did the united states until roughly when Reagan came into office.

How so? Did the government not encourage working hard to get to the next "rung" in the ladder? When I hear "bottom up", I image the government giving incentives for people to "stay at a level where everyone should be at". No incentive to move up a ladder because moving up the ladder is penalized either through taxes or other regulations.

Why can't you understand that everyone can't move up the ladder? It's physically impossible for everyone to be middle class, much less rich. If you accept a large portion of the country living in misery, because they have the "opportunity" to move up, you're only justifying selfishness. You know damn well you need someone to take $6 an hour to serve you your burger and fries, but use moral loopholes to oppose helping them live decently.

 

[Xavier434]

Originally posted by: eleison



How so? Did the government not encourage working hard to get to the next "rung" in the ladder? When I hear "bottom up", I image the government giving incentives for people to "stay at a level where everyone should be at". No incentive to move up a ladder because moving up the ladder is penalized either through taxes or other regulations.

That is not true at all. Look at the PDF I linked above. Everyone who works hard and intelligently at moving up the ladder even during the most progressive tax policies has always gotten richer. They are not penalties because you started off in a position where the government took it easy on you so that you can move up to the point where wealth is much easier to grow (ie rich). You still get richer no matter what if you work hard and that is proven in public records.

 

[eleison]

Originally posted by: Tarrant64

Originally posted by: Atomic Playboy
I think trying to use exclusively one or the other is a bad idea; it needs to be a combination of both. However, if I had to lean one way, I'd lean bottom up. My primary reason is selfish; I am not in the wealthy elite, nor employed in a profession where I am likely to ever make huge amounts of money, so it's in my economic best interest to keep my own taxes low. However, for a practical reason, I must say that poor people are much worse at saving money than the wealthy. Wealthy people invest (which is important in driving our economy forward) and save; they hoard money. I have noticed that the poorer people are, the worse they get with money, spending it on countless items they simply do not need. If they were better at hoarding money, they probably wouldn't be as poor, yes? Since customers purchasing items is important for our economy as well, I think we need to have money in the hands of low-income earners, who are so quick to spend that money and get it back in circulation in the economy.

We agree about not exclusively using either economic strategy, however I largely disagree with the statements on poor people.

Poor people have no money. Often times it may be because they spend it on things they don't need. However I think most of the time it's because they are underpaid, have no work, or at some point ran into a life crisis that put them out of home and onto the street.

I also believe that poor people just don't have the money to invest. They are too busy trying to stay afloat in this sh!t world that we leave in. People, typically with money, are always saying poor people don't put any money away. I say WTF.

Go to a third world -- thats poor.. Here the poor have ipods, flat screen tv's, cars and enough food to have obesity as one of the bane of being poor.

I visited a 3rd world a couple of years ago -- its truly sad and it really made me pissed off. I sometimes wish I could ship all the "poor" people from the USA who complain so bitterly about their standard of living off and bring the really "poor" people here.

 

[fskimospy]

Originally posted by: miketheidiot

Originally posted by: eleison

Originally posted by: OrByte
top down doesnt work.

the data shows that the wealthy get wealthier, the poorer get poorer and the middle class treads water.

the middle class won't be waiting for checks every month like some suggest. The middle class is simply looking to loosen up its own wallets (much like the banks are looking to loosen up its own credit lines) in order to spend.

There are no middle class "handouts."

name a country where bottom UP works... I can name a country where top DOWN works -- the USA. Yea, we got problems, but compared to other country's with bottom up, the USA is paradise - most people forget that.

Would you rather live in a top down economy where the poor lives better than 80% of the world population or in a bottom up economy where the poor is only concern about the "next meal"? In the USA, even if you are "poor" you don't worry about starving to death.

most western democracies generally favor a bottom up approach, as did the united states until roughly when Reagan came into office.

Actually all western democracies still practice bottom up. Any country with progressive taxation is still fundamentally practicing 'bottom up'.

So yeah, it works.

 

[Throckmorton]

Originally posted by: ProfJohn

Originally posted by: OrByte
top down doesnt work.

the data shows that the wealthy get wealthier, the poorer get poorer and the middle class treads water.

the middle class won't be waiting for checks every month like some suggest. The middle class is simply looking to loosen up its own wallets (much like the banks are looking to loosen up its own credit lines) in order to spend.

There are no middle class "handouts."

Have any evidence to suggest that poor get poorer?

Don't the 'poor' today have cell phones, big screen TVs, multiple cars, many of them own homes etc etc.

If the poor were getting poorer we would not be seeing that. We would be seeing people living in card board shacks across our country.

The only way you can say they are getting poorer is to compare them to the wealthy, and that is not a fair comparison.

Compare to Bill Gates I am poor as hell. Despite this I live a very nice lifestyle and have lots of nice things.

I think your idea of how poor people live is based on watching MTV... talk about out of touch with reality. Most poor people probably have negative wealth- they're in debt. And the few who actually have "big screen tvs and multiple cars" are in even greater debt. That's not well off, it's an illusion of being well off that is even more harmful to our society.

 

[Xavier434]

Originally posted by: eleison
Go to a third world -- thats poor.. Here the poor have ipods, flat screen tv's, cars and enough food to have obesity as one of the bane of being poor.

The only reasons why really poor people have those kinds of things is either because they took a really long time to save up for it, they were being given credit that banks should never have given them, or they are stealing and selling drugs. None of the above has anything to do with this topic.

 

[quest55720]

Originally posted by: Excelsior
Bottom up has little to do with 'hand outs'.

Bottom up is all about hand outs and spreading the wealth. I want taxes low for everyone and a small government. This government takes in more than enough washington has a spending problem.

 

[OrByte]

Originally posted by: eleison

Originally posted by: miketheidiot

Originally posted by: eleison

Originally posted by: OrByte
top down doesnt work.

the data shows that the wealthy get wealthier, the poorer get poorer and the middle class treads water.

the middle class won't be waiting for checks every month like some suggest. The middle class is simply looking to loosen up its own wallets (much like the banks are looking to loosen up its own credit lines) in order to spend.

There are no middle class "handouts."

name a country where bottom UP works... I can name a country where top DOWN works -- the USA. Yea, we got problems, but compared to other country's with bottom up, the USA is paradise - most people forget that.

Would you rather live in a top down economy where the poor lives better than 80% of the world population or in a bottom up economy where the poor is only concern about the "next meal"? In the USA, even if you are "poor" you don't worry about starving to death.

most western democracies generally favor a bottom up approach, as did the united states until roughly when Reagan came into office.

How so? Did the government not encourage working hard to get to the next "rung" in the ladder? When I hear "bottom up", I image the government giving incentives for people to "stay at a level where everyone should be at". No incentive to move up a ladder because moving up the ladder is penalized either through taxes or other regulations.

I think your scale of observation needs adjusting. The "bottom" that is usually referred to when speaking about "bottom up" are tax payers up from the low-middle class wage earners to the wealthy.

We aren't talking about the poor and those hooked on government assistance.

At least that is how I understand "bottom up" I could be wrong.

And I know someone's quote around here is applicable to this discussion. And the quote goes something like "I've never met a homeless person that wanted to remain poor because of the great tax benefits..."

or something like that

Taxes or regulations do not add up to the monetary level of prohibiting people from making that next jump to the next earning level. Taxes do not prevent people from climbing that ladder.

 

[miketheidiot]

Originally posted by: eleison

Originally posted by: miketheidiot

Originally posted by: eleison

Originally posted by: OrByte
top down doesnt work.

the data shows that the wealthy get wealthier, the poorer get poorer and the middle class treads water.

the middle class won't be waiting for checks every month like some suggest. The middle class is simply looking to loosen up its own wallets (much like the banks are looking to loosen up its own credit lines) in order to spend.

There are no middle class "handouts."

name a country where bottom UP works... I can name a country where top DOWN works -- the USA. Yea, we got problems, but compared to other country's with bottom up, the USA is paradise - most people forget that.

Would you rather live in a top down economy where the poor lives better than 80% of the world population or in a bottom up economy where the poor is only concern about the "next meal"? In the USA, even if you are "poor" you don't worry about starving to death.

most western democracies generally favor a bottom up approach, as did the united states until roughly when Reagan came into office.

How so? Did the government not encourage working hard to get to the next "rung" in the ladder? When I hear "bottom up", I image the government giving incentives for people to "stay at a level where everyone should be at". No incentive to move up a ladder because moving up the ladder is penalized either through taxes or other regulations.

I think you are confused. 'Bottom up' focused economics bacicaly focuses on improving the lot of the working and middle class, by providing education, health care, and consumption. Top down economics is basically about making capital very cheap and giving benefits to the rich so they invest in order to provide investment.

 

[Tarrant64]

Originally posted by: Xavier434

Originally posted by: eleison
Go to a third world -- thats poor.. Here the poor have ipods, flat screen tv's, cars and enough food to have obesity as one of the bane of being poor.

The only reasons why really poor people have those kinds of things is either because they took a really long time to save up for it, they were being given credit that banks should never have given them, or they are stealing and selling drugs. None of the above has anything to do with this topic.

eleison, I think your view of who is "poor" is a bit warped and condescending. I don't think that describes what I mean but it'll do.

xavier makes a really good point here. As I've mentioned before, you can't make the comparisons to other countries. Thinking that way IMO does not work.