Minnesota’s Economic News — W/E 10/15/21
State and local taxes and spending KSTP: State of Minnesota considering ways to cover unemployment fund debt Hometown Focus: Minnesota counties receive $36.3 million in PILT revenue Labor market KAAL…
Very often, when you make an argument for lower tax rates, someone will quickly respond by attacking ‘Trickle down economics’. But ‘Trickle down economics’ doesn’t exist. I don’t mean it doesn’t exist because it is false. The labor theory of value is false and that exists. So, no more plausibly, does flat earth theory. What I mean is that ‘Trickle down economics’ isn’t something anyone has ever believed.
Nobody has ever argued for ‘Trickle down economics’
There is nobody better on the subject of ‘Trickle down economics’ than the economist Thomas Sowell. As he points out, it is not a theory that anyone actually believes.
Some years ago, in my syndicated column, I challenged anyone to name any economist, of any school of thought, who had actually advocated a “trickle down” theory. No one quoted any economist, politician or person in any other walk of life who had ever advocated such a theory, even though many readers named someone who claimed that someone else had advocated it, without being able to quote anything actually said by that someone else.
‘Trickle down economics’ was invented by its opponents
The earliest reference to ‘Trickle down’ theory in economics doesn’t come from an economist. It doesn’t even come from a free marketer. It comes from FDR’s speechwriter, Samuel Rosenman, who referred to
the philosophy that had prevailed in Washington since 1921, that the object of government was to provide prosperity for those who lived and worked at the top of the economic pyramid, in the belief that prosperity would trickle down to the bottom of the heap and benefit all.
Stop trying to make ‘Trickle down economics’ happen
I’ll have more to say about the Roaring Twenties tomorrow. Suffice it to say for now, as presented by Samuel Rosenman or former President Barack Obama, it is a silly theory. And that is why nobody believes it. What it is is a lazy straw man which is easy to argue against.
John Phelan is an economist at Center of the American Experiment.