Thursday, November 1, 2012

chapter three | treacle pudding.

or, an essay on trickle down economics.

I would like to begin this chapter by saying, "I would like to keep this as non-partisan as is humanly possible." Granted, trickle down economics is a cornerstone of a certain political party, and the cause of widespread eye-rolling and indignation throughout another, but I want to make clear that I am not attacking any one group of people, or promoting another... although I realize that even with this preface, it may very well come across that way. At any rate, I only want to say that that is not my intention; my intention is merely to break down, simplify, and explain.

And now, for the essay.

Trickle down economics (or Treacle Pudding, as I will call it throughout the rest of this chapter, because why not? it has just about the same consistency) makes, quite simply put, no sense. It is, at the end of the day, as much a denial of the reality of Capitalism as certain schools of hippie-dippy thought are a denial of the reality of Reality. I have heard so many people of late saying things along the lines of, "Please explain to me how the economy grows from the middle outward????" (with that many question marks) as if nobody can explain it, and as if it isn't an incredibly easy thing to both explain and understand. As if it is simply a belief in magic.

The truth is, the idea behind Treacle Pudding is magical thinking. (Now, I believe in magic and I think magically, but that is neither here nor there, and not at all to what I am referring.) The idea is that if you help the extremely and exorbitantly wealthy stay extremely and exorbitantly wealthy, they will patronize American businesses, and grow their own corporations to in turn create more jobs, and this will improve the lives of those in the middle-on-down, who are now receiving more business and finding more jobs. This theory boggles my mind for three simple reasons.

One: the extremely and exorbitantly wealthy do not need any help staying extremely and exorbitantly wealthy. They will remain extremely and exorbitantly wealthy even paying all their taxes. Not to mention, they have the resources to keep much of their money in trusts, or overseas, et cetera, and therefore evade taxes on a great portion of their income as it is. I find nothing wrong with that -- that is, unless these people are going to criticize other, less fortunate people for not paying their taxes (you know who you are, ahem) --  because, well, it's legal. Loopholes are legal. So why the need for any greater tax breaks for those who already have the resources to create loopholes and will continue to do so? 

Two: the extremely wealthy do not patronize the vast bulk of American businesses. The extremely and exorbitantly wealthy will not be found purchasing furniture from your local furniture store, for example. Unless your business is a part of the luxury market, you will never see a dime from those with the money to, well, purchase luxury products. (Why would you? I know that if I could afford to fill a swimming pool with Creme de la Mer, I would. Who wouldn't? It's human nature.) Do you know who will be patronizing your business? The middle class, and perhaps the upper middle class as well. That's who.

Three: alright, now let's discuss corporations. The idea, unless I'm greatly mistaken, is that if large corporations are given tax breaks, they will in turn have more resources to create more jobs, which will in turn provide greater employment rates throughout the US. But, let us pause and ask ourselves, where did so many of our jobs go in the first place? Did they all disappear into thin air? No. Many of them moved far across the oceans to foreign lands a long ways away. Why? Because labor is cheaper overseas. So are we really meant to believe that tax breaks for large corporations will inspire these large corporations to move more of their jobs back to the US, or simply to fabricate new jobs in the US? Um... if that is not a denial of the nature of Capitalism, then I don't know what is.

One of the major ideas behind Capitalism -- and this is not a criticism of it -- is that we have no obligation to not make as much money as possible. It is a well-known and much-studied fact that the most successful businessmen and women in this country became that way by thinking with their left brains and not their hearts. And again, this isn't a criticism; Capitalism is a valid way of doing things, and as many elements of it as there are to criticize, there are elements of it that are very freeing, and probably much more freeing than many people realize. But back to the point at hand and the greatest misconception and the biggest load of pixie dust behind the theory treacle pudding: tax breaks will not lead to large corporations moving jobs back to the US. Why would they? Why would these corporations opt out of saving and thereby making even more money? Corporations are not charities, nor should they (necessarily, anyway) behave like them. If corporations all behaved like charities, they would all have gone under long ago.

So... that's really it. That is what I have to say. Granted, this essay is simplifying things, but I truly believe that when you water something down to the primary ingredients, that is when you see it for what it is. That is when you can tell whether a confection will be palatable or poisonous. After all, a pudding baked with arsenic will look the same as a pudding baked without.


  1. I really enjoyed reading your post. It is refreshing to hear someone speak so openly about all of the things that I have been thinking and have been too scared in my little Upstate NY shell to say. You have voiced my exact frustrations with the party-that-shall-not-be-named. Just an additional comment... even if corporations were compelled for some reason to bring jobs back to the US or to create new positions- there is no demand at the moment for their products. (At least not in the US) In the midst of this recession there is no demand to justify all of those new jobs.


  2. Thank you so much sweetheart!! That means a lot. Thank you for reading!! :) xxoxoxoxo

  3. Well put. As a close confidant said, "Kind of hard for money to trickle down from a Swiss bank account."

    To your argument I will add my own against the related popular notion that a successful business person is better qualified to run the country than is a non-business person (say, a lawyer, or doctor, or journalist, or chemist).

    Countries are not corporations. A corporation is operated from the sole dictate that it make money for its shareholders (usually not the the secretaries or the cleaning crew). A democratic country, however, is equally responsible to all citizens, regardless of income, demography, or social standing.

    The goal of OUR country, if I remember my Schoolhouse Rock correctly, is not to make money, but to "establish justice, secure domestic tranquility, provide for the common defense, promote the GENERAL welfare, and secure the blessings of liberty." Nowhere does it say, "and the more wealthy/smart/devout/male/handsome/Christian/heterosexual you are, the more of these goodies you get."

    Oh, and you really don't need a business degree to balance a budget and live within your means. I do it quite well, in fact, and I was a philosophy major.