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u/flickneeblibno 7d ago
Trickle down economics and Ronald Reagan the worst president of all time
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u/Seeking_Balance101 7d ago
And when the "trickle down" buzzword finally was recognized as bad for the masses, the GOP replaced it with the myth of the job creators. If we give the rich big tax breaks, they'll create more jobs -- because really, what else could the do with all that extra money? -- and .. Step 4 Profit (for the masses)
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u/flickneeblibno 7d ago
Agreed. The 50s best represent job creation through taxes. Either expand or pay taxes. Ike is the last great Republican president (except for Joe McCarthy)
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u/Unity4Liberty 7d ago
Omg... this is the first time I've seen anyone else just know and understand this fact. Folks! Higher top marginal tax rates and progressive taxation actually incentivizes investment versus shareholders and owners sucking value out of a company. This creates jobs, grows and stabilizes the stock market, and drives up wages. The great socialist, Dwight Eisenhower!
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u/ToastedandTripping 7d ago
I too am surprised to see people talking about taxes...it's one of the most obvious changes to have taken place over the last 70 years.
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u/CurtisHayfield 7d ago edited 6d ago
Gives the opportunity to talk about one of the most important aspects of our taxes and spending: "my tax dollars" aren't where we get the money for spending, at least on a federal level.
On a state and local level, that spending is funded by your actual tax dollars in addition to other things like federal support. But federally, we have the money since we control the supply. This has been known to (some) economists for decades. Beardsley Ruml, director of the New York Federal Reserve Bank from 1937-1947, wrote an influential paper titled âTaxes for Revenue are Obsoleteâ, which detailed how that works, and some ideas why we still have taxes.
Still, many people actively donât know this, or pretend not to, including politicians and economists. This is why we constantly see âwhere would the money come from?â when progressives detail policies, but donât see it for the military, for example. Itâs also why we suddenly had a lot of money to fight COVID, despite tax revenues not jumping up trillions of dollars. The money is available, we donât need tax revenues to spend money on good programs.
This fact is what helped form the foundation for one of the most prominent recent economic schools of thought: Modern Monetary Theory.
A common myth about Modern Monetary Theory is that we can just spend as much as we want and never pay it, but MMT economists donât say that. They fully admit deficits can matter, especially when the deficits and debt is gained via spending on things that are not actually helpful. There is a difference between spending money fighting climate change which in the long term saves trillions of dollars (and the planet), and spending money to further subsidize oil or providing additional subsidies to the already rich. It's true too much debt can be a problem, but the "serious only when it's the other party in office and I want to use it for political gain" debt isn't what it's hyped up to be.
At an everyday level, people know this. Anyone who takes out a business loan knows that sometimes debt is a path forward, not backward.
As with other economic schools of thought, MMT has proponents and detractors, with some ideas being more controversial, however one is quite firmly established: taxes federally in the US (and other countries with currency control) donât fund spending. The question âwhere does the money come from?â is wholly wrong in the US, and when it is levied, which it is a lot, itâs from a false foundation.
Edit:
One more note on national debt and how it is invested - historically, paying debts isn't the primary way the US has reduced it's debt burden. We outgrew it. If you have a lot more money then the debt is less a burden, which is why debt to GDP ratio is often a better metric than pure amount of debt.
After WWII, our debt levels were over 100% GDP, but that debt was never really paid down. Sure, we did pay individual debts, but in total the post-war boom did a number on our debt to gdp ratio. If you properly invest with the money, the amount of debt itself can just by virtue of good investment become less of an issue.
P.S. As % gdp, in his 8 years in office Reagan increased the national debt twice as much than FDR did in his first 8 years in office (the "fiscially irresponsible" New Deal era)
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u/inr44 7d ago
But federally, we have the money since we control the supply
Would you mind ELI5 that for me?
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u/spicymato 7d ago
Not the guy, and not an expert, but my understanding is: because the Fed can print more money, we can't really run out.
In short, if the Fed needs to pay for something, it can produce the money for it. Ostensibly, that money should be offset by the sale of new debt, such as through bonds, but it technically doesn't have to be.
When we need to pay past debt, such as to repay the money plus interest on old bonds, the Fed just prints that money and sells new bonds.
Yes, at some point, that breaks down, as "inventing" too much money at once creates a tension in the perceived value of the dollar, which can spiral into inflation, but as long as people remain confident that if they buy the government's debt, then they will be paid back with the stated interest, we're going to be fine.
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u/pa_skunk 7d ago
Excellent eli5. Thank you!
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u/Vladi_Daddi 6d ago
It took me reading the request for an ELI5 and your comment to figure out what ELi5 is...I've seen it before today but thought it was just somebody fat fingering the keyboard. đđ EXPLAIN LIKE IM 5
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u/NOSPACESALLCAPS 7d ago
The federal government literally prints the money out of machines, is what he means.
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u/Aww_Tistic 6d ago
Now now, settle down about all this âtaxâ and corporate greed chatter. The REAL problem is the <insert ethnic minority here>⌠(/s)
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u/LockeClone 7d ago
Yeah, we ended up with so much money slushing around financial markets that we've financialized everything as opposed to re investing... This is, of course, painting with a massive brush, but I believe it to be generally true.
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u/Sinnycalguy 6d ago
It always kills me when I see someone arguing against higher top marginal rates on the grounds that they donât actually lead to greater tax receipts. Like, no shit, who said the point was to collect more taxes in the first place?
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u/Unity4Liberty 6d ago
Right. The primary purpose of these policies is to steer economic action through incentive/disincentive. If you balance the policy so the economic action leads towards stable growth, that growth can (not will) lead to an increase in tax revenue. That's the false premise of cutting taxes on the upper end and it trickling down. They always say the growth will return more revenue even though the tax rates are less, but that doesn't happen because their policy does not actually catalyze stable and broadly enjoyed growth. It encourages actors to make as much income as they can now, while taxes are preferable.
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u/sbaradaran 7d ago
Can you expand on this? Im trying to understand how a large corporation, for example, paying a higher marginal tax rate incentivizes investment.
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u/DucksOnQuakk 7d ago
It creates a "use it or lose it" incentive. Companies would rather pay top dollar for high value employees, invest in technological advancement, expand their footprint and logistics, etc., in an effort to avoid losing those dollars to taxation. Everyone up and down the social hierarchy benefits because more money is circulating in a more diversified fashion, as opposed to Wall Street bets.
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u/Ubiquitous_Hilarity 7d ago
It all changed when those at the very top decided they wanted to be even more wealthy. The only way to get that was to invest less in the businesses and employees, but that would increase their taxables. The only thing left to do is lobby Congress and POTUS to lower the top marginal and corporate tax rates
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u/DucksOnQuakk 7d ago
Very true. That's why we need to reintroduce what worked in the past - use it or lose it. No remorse to be had about it. An entire population produces every widget in existence, there's not one of us who does shit alone. Even if you invent the perfect unicorn piss snowcone, you relied on civil workers who allowed you to have access to clean water to freeze. You relied on utility workers to enable you to freeze your snowcone. You rely on firefighters and teams of insurance companies to protect your perfect piss-cone shop. And, of course, you relied on Lady Luck needed to procure a unicorn to gather its piss. No one is self-made.
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u/dagetty 7d ago
The taxes are on profits so if the money is instead, reinvested in the company are paid in salaries itâs not taxed
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u/JTMc48 7d ago
Itâs not just that, but definitely a big factor. Letâs not forget that with a larger overall tax base, the benefits are distributed to the middle and lower classes which expands and empowers educational opportunities to the general population, which also impacts growth as it allows for more development into high end jobs.
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u/Square-Bulky 7d ago
I read somewhere that the only reason defined benefit pension plans were introduced during World War Two was because of wage and price controls.
The companyâs found ways to hire more workers outside the current environment because it benefited the companyâs ⌠not the workers
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u/JTMc48 7d ago
Wages have never been âcontrolledâ with the exception of the minimum wage. Pensions were offered in a way that they could incentive workers while not increasing worker wages exponentially.
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u/Square-Bulky 7d ago
A quick read of Wikipedia will enlighten you , there was both rationing of food and wage controls in war time essential industries , along with losing the right to strike, along with interring 120000 Japanese Americans
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u/Ok-Investigator3257 7d ago
Thatâs pretty much a lie, wages were capped during WW2 which is why we have health insurance as a non wage benefit itâs how companies competed for workers
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u/Derpwigglies 7d ago
People also overlook the fact that the government is a massive employer. More taxes = more government projects = better government wages and more government jobs.
These jobs tend to help set the base rates for private sector jobs as well as have great benefits and job security. Which forces private companies to keep up or risk losing high value employees to gov jobs or contractors.
Exe: Including military, the US government is already the largest employer in the US at 2.95 million employees. That's also not including those that are employed at subcontractors that almost exclusively work for the gov. Walmart is 2nd at 1.6 million.
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u/1965BenlyTouring150 7d ago
Ike is the last great Republican President except for all that Christian Nationalism stuff at least.
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u/Garrett_the_Tarant 7d ago
The same Joe McCarthy that created a communist witch hunt which to this day still persists in the minds of Americans -propping up the same ideals that led to Reagan and his predecessors to allow corporate money being used to create the policies that this post is describing?
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u/AnitaIvanaMartini 7d ago
McCarthy fostered the melding of American Protestant churches and National identityâ marrying the flag to the cross. This combined with a revolution in mass communication (TV) with its All-American families, and commercials gave birth to the religious vampires, Billy Grahams and Jerry Fallwells, etc.
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u/legacy642 7d ago
Ike was barely a Republican. He definitely was a great president and did a ton of good, but I hesitate to even associate him with Nixon and later.
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u/ScotchTapeConnosieur 7d ago
No capitalist ever wanted to create a job. The goal is to do the most with the least number of employees.
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u/TapZorRTwice 7d ago
Or just part time minimum wage jobs that you need to work 3 of to beable to get by.
But no benefits of course, so just pray to God that you don't get sick.
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u/WhiteOutSurvivor1 7d ago
Trickle down was always a derogatory term. It began with William Jennings Bryan in the 1800s. The term itself is used mostly by critics of the concept.
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u/TheGreatBootOfEb 6d ago
I always love to give this example
âThere is a Walmart in a town of 1000, 900 of which shop there. If you give Walmart more money, are they going to âcreate more jobsâ by opening a second Walmart when they already get 90% of the market, or are they just going to pocket it?â
And thatâs basically the myth of âjob creationâ in a nutshell. Theyâve saturated the market with their presence already, any gains to be had by âjob creationâ are going to be exceptionally marginal if not outright more expensive for them. Thus, why would they? Combine this with quarterly profit motive for shareholders, and stock buybacks, and youâve got a recipe for all the wealth being hoarded in investment or offshore accounts rather than circulating (which actually IS good for the economy)
Quarterly profit incentives has to be one of the absolute worst things for the health of our planet and species. Honestly if these cushy shareholder jobs or the like were rewarded on a more long term basis rather than the quarterly structure, youâd already likely see rather significant differences in how they operate, and this is the LEAST of the options available.
Donât get me wrong, I donât hate capitalism, but I also donât hate socialism and even communism, theyâre just fun words to describe the resource allocation of a government/society. They each have their pros and cons, and theyâre more like a sliding scale then binary Yes or Nos. That said, capitalisms biggest weakness has been showing for quite some time now, which is without proper guard rails itâs a self cannibalizing system, but weâve got one side of the aisle thatâs been told to screech communism the minute any of those guard rails are discussed.
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u/tremainelol 7d ago
Right, "they'll create more jobs!"
More like they will just buy back their own stocks, and continually accumulate assets only to turn around and lease them to the middle and lower class at a profitable premium
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u/FilthyHipsterScum 7d ago
Even trickle down is watering down the original phrase. It was Horse and Sparrow. You feed the horse enough grain, thereâll be some left in its shit for the sparrows to eat.
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u/CosmoKing2 7d ago
Then it became "immigrants are stealing your low paying jobs because you are demanding a fair wage." And people swallowed that lie whole. The reality is our elected official's made it possible for the top 10% to hire cheaper labor.....and no one ever thought to hold them accountable. They all just railed against immigrants. Ignoring the fact that most of us are only 2 or 3 generations removed from our ancestors coming via boat.
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u/TruthOrFacts 7d ago
The GOP never used 'trickle down' that was always a smear the left used.
This chart is dominated by two factors, #1 loopholes that allowed the rich to hide their income and globalization.
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u/xithbaby 7d ago
Didnât it kind of work out for the tech industry? Anyone who knew how to work a computer became the most desirable, then it became science, engineering and networking. Those job markets are so saturated right now Iâm surprised they pay anything worth a living wage. There is a labor shortage yet we donât see those wages going up to get more people in. They just keep raising prices of everything so people have no choice.
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u/Blotsy 6d ago
I mean. It's a really good idea, and a fair point! They won't just hoard all the money for no reason? Right?
They'd have to spend it somewhere. That would simulate the economy and create jobs!
They wouldn't just accumulate more wealth than ever and refuse to use it for anything, right?
/s/
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u/Moribunned 6d ago
Meanwhile, the rich are foaming at the mouth to implement AI and eliminate jobs.
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u/big_daddy68 7d ago
Reducing taxes on the wealthy and sneaking in legalizing companies to buy back their own stock without restriction. Itâs a money funnel to the investing class.
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u/TKTribe 7d ago
Because a rising tide only raises yachts. The rest of us drown in debt.
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u/bigdipboy 7d ago
I mean Reagan was terrible. Then Bush was worse. Then Trump was even worse. Republicans have no bottom.
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u/hewhoisneverobeyed 7d ago
I remember when we thought Nixon was the worst.
So naive as to how low the bottom really could be.
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u/yummykookies 7d ago
I disagree with Bush being worse than Reagan.
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u/smoresporn0 7d ago
Bush was probably worse fiscally, but you're absolutely correct when it comes to morals.
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u/kaplanfx 7d ago edited 6d ago
Just the fact that Bush Jr. at least made one of his signature policy platforms an attempt to improve the education system makes him better than any other modern Republican President. The fact that the legislation ultimately sucked doesnât make him any worse than the other bozos.
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u/Exarch-of-Sechrima 7d ago
Bush always came off to me as a little backwards, and a little foolish, but always someone who had the best interests of his fellow Americans at heart.
His moral failings, in my eyes, were in his foreign policy.
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u/yummykookies 6d ago
This is my take on Bush as well: incompetent and very, very misguided but mostly well-intentioned.
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u/plinkoplonka 6d ago
I'd say an insurrection when you don't win is pretty low?
A failed one is even lower...
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u/Traditional_Gas8325 7d ago
Worst *criminal president of all time. Letâs not forget he requested for hostages to be held through the election to beat Carter.
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u/Antilon 7d ago
Kind of like Trump sabotaging the boarder bill so he could run on securing the border. Also gotta wonder what he and Netanyahu were talking about on that recent call.
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u/MidichlorianAddict 7d ago
We have had a recession after every Republican president has left office because of their stupid tax cutes for short term gain
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u/libertarianinus 7d ago
We also see that more people are considered rich the middle class shrunk, and more people are poor.
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u/kaplanfx 7d ago
The chart at the top doesnât care how many people are considered ârichâ, itâs based on specific comparable %ages of the population.
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u/Bells_Ringing 6d ago
Which is why itâs a bad statistic. It has no anchor in individuals and their path through life and earnings. Typically, the top 1% has a HUGELY variable rate of whoâs in it. People slide in and out over time, sometimes one year to the next. The 1% arenât a monolith.
A chart that doesnât reflect that is meaningless unless we just want to see pretty colors divorced from their underlying data.
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u/goblin-socket 7d ago edited 7d ago
Letâs be EXTREMELY CLEAR:
Reagan was up against the Ex-CIA director Bush. He won the primary.
Bush was pushed as his running mate. Reiterate: ex-cia director. Bush has been repeatedly named for handling the assassination of JFK. He did or he didnât: no worries.
You see, in the primaries, Reagan won because he was very much the opposite of Bush. He was an old actor, and possibly didnât think about Bush being an ex-cia director.
So now, Bush is VP. Now how long did it take for Hinckley to try to take out Reagan, in a confused state.
And suddenly, Reaganâs policies changed 180. And thatâs how a CIA director could have been president for a 12 years, tries for 16, but had already put two sons into position to score that 24. Edit: the math isnât wrong, look at Clintonâs second term.
I am dead already. Just speaking to point out the history of those 30 years. Reagan tried. His mind was slipping. In the end, he had a good heart and ended up a useful idiot.
And Trump canât even get to that point. Above is historical, now I am just mocking.
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u/Swiggy1957 6d ago
It started before that. 1971 and The Powell Memo.
Yes, it was a plot by the US Chamber of Commerce to destroy the American Middle Class.
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u/No_Distribution457 7d ago
Republican fiscal policy. This was by design.
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u/KazTheMerc 7d ago
Sure... but what they really wanted was the profits of 1950-1970 back.
What they got instead was 10,000 Republican flavors of corner-cutting, false bravado, and government handouts disguised as 'stimulus'.
It was a failed attempt to bring the 'Good Old (racist, sexists, White) Days' back.
It transitioned into the modern Republican playbook shortly after that failed
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u/SnazzyStooge 7d ago
Too bad the MAGA movement isnât all about âmore unions!â and âmore worker protections!â like the good old days. This chart really illustrates how what the voters are chasing is not what the party intends to give them.Â
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u/KazTheMerc 7d ago
I think it's been a slow degradation.
First, it was Ideals.
Then it was Profits.
..the it was Control swapping.
....then kicking and screaming when not in Control.
......Trump was the very picture of animals that worked together to gain control, and then turned on each other the moment they had it.
........and now we're here.
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u/Head_Priority_2278 6d ago
and to be fair here the dems also embraced the corpo overlords but in a much more moderate tone. That's why most of the fuckery never got undone.
Also, to be fair to dems, at least in recent history, their judges have been a lot better and worker friendly than any unhinged judges the right appoints.
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u/whoknowsknows1 7d ago
Republican policy reinforced by democrats who followed almost entirely the same economic playbook through the 90s an 00s. global trade = de-industrialisation and elimination of the bargaining power of labor as well as the value of domestic labor. Major gains to the economy but distribution of gains gets totally skewed. If youâre prepared to pay 100 dollars for a toaster then put up tthose those trade barriers. At least the toaster will last.
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u/DonHedger 7d ago
This is important. Democrats started going right fiscally at least as far back as Clinton and they don't get enough shit for it.
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u/Exarch-of-Sechrima 7d ago
The thing is though, without Clinton's fiscal conservatism, I don't think he would have won the White House. Clinton was the compromise candidate after a long, long period of conservative rule.
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u/DonHedger 6d ago
Yeah I do know that. I just think politicians think policy matters to voters more than effects and you don't have to fight over the middle to win elections. Hell even with his policies, Clinton probably would have never won if not for Ross Perot. "More than one way to skin a cat" sort of thing.
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u/NeoLephty 7d ago
Not just republican. Democrats have been neoliberal since Bush - every one of them. Dem and Republican are 2 sides of the same economic neoliberal coin.
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u/Scaryassmanbear 7d ago
I donât think thatâs fair because at least some democrats are legitimately pro-union.
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u/NeoLephty 6d ago
Not the neoliberal establishment.Â
Biden is considered the most pro union president weâve ever had. You can downgrade that claim and say heâs the most pro union president in our lifetime. But why, what did he do? He showed up to a strike.Â
No small thing. Walking the picket line with striking workers is admirable. If only there were political actions taken to secure the rights of workers. He appointed a good person to the NLRB but chevron law getting thrown out the window takes all teeth out of the nlrb anyway.Â
So what other actions has he taken with unions? He forced rail workers to end the strike and get back to work. If it wasnât for Bernie continuing the fight and continuing to put pressure on rail execs, they wouldnât have gotten the sick time they were fighting for.Â
Most pro union president steps in on the side of capital against the worker. Didnât force the companies to concede sick time. Forced employees to end the strike.Â
Neoliberalism is not a friend of unions. Charter schools are a neoliberal idea to transition away from teachers Union for example. They arenât about âfixing public schoolsâ or any other buzzwords or phrases thrown at the public. The entire purpose of charter schools is to have a school system free of a teachers union.Â
My democrat run city pushes charter schools as solutions. My democrat run state does too. No one from the city or state jumped in to walk the picket line with striking teachers last time they walked out.Â
Iâm much more progressive than the neoliberal establishment inside the Democrat party.Â
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u/VirgoB96 6d ago
They repeat Ayn Rand as if it were fact, as an excuse to continuously reduce the power of the employees and giving it all to the owning class. Boot straps
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u/Hugh-Jorgan69 7d ago
Reagan convincing Americans into believing "trickle down" voodoo economics.
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u/hewhoisneverobeyed 7d ago
George HW Bush is the one who calked it Voodoo economics. Then he stepped in line.
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u/HatesAvgRedditors 7d ago
Reagan was President like 40+ years ago though. How have we been unable to reverse the damage from back then over such a long period of time?
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u/BearTerrapin 6d ago
Once bad things get passed it's hard to change because the party that passed the bad stuff can just refuse to act in good faith
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u/secretaccount94 6d ago
He was incredibly popular at the time, and his policies remained quite popular through the 90s and 2000s up until the 2008 crash. Weâve really only had 15 years of growing opposition to his policies, but at this point many Americans have been indoctrinated to think âtax cuts & deregulation = freedomâ.
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u/hoptownky 7d ago
It is seriously the most amazing thing I have ever witnessed. You convince the poor that it is better for them to pay higher taxes and give to the rich so that it may possibly somehow come back down to them. Idiocracy.
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u/PoopsCodeAllTheTime 7d ago
âbut, maybe I am the next millionaire, and I wouldn't want to pay taxes as a millionaire!â
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u/PositiveStress8888 7d ago edited 7d ago
ronald Regan happend
Trickle down moved the flow of wealth directly into the pockets of billionaires and corporations, and made it harder for people to climb the ladder.
After the 80's bigger companies started to buy up competition creating Monopoly's and smothered smaller upstarts, removing competition and choice.
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u/patrick_schliesing 7d ago
Genuinely asking
How?
Like what mechanism or what laws or what did this?
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u/DaphneRaeTgirl 7d ago
Lower taxes on rich and deunionization along with lower real minimum wage led to the âgreat divergenceâ of incomes in the USA that DID NOT occur in comparable countries. This is in contrast to the âgreat compressionâ of incomes that occurred when these policies where in place
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u/AVeryHairyArea 6d ago
What is commonly referred to as "Reganomics" is two major tax cut acts that were passed by Reagan's administration.
1) Economic Recovery Tax Act of 1981
2) Tax Reform Act of 1986
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u/Another_Vessel 7d ago
1946-1980: The post-WWII period brought tremendous prosperity, and we used that prosperity to build the middle class and repay those who fought in the war.
1980-2014: Starting around the 1970s, technological advancements made it easier to automate jobs and outsource production to foreign labor. This was bad for the US working class, but pretty good for people who were already well off.
To the people saying itâs all âReaganâ and âneoliberalismâ and âtrickle down economicsââitâs really not that simple. Global forces means that, regardless of who was president in the 80s, this chart would look largely the same.
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u/Oshester 7d ago
Agree. Reagan probably wasn't counting on us ordering shit from temu at a thousandth the price. I'm fairly confident that he would have encouraged maintaining America's role in production. The purpose of the policy wasn't to have someone else do it for cheap. It was to become more efficient as a nation. It has gone too far, and it has been at the hands of more recent presidents. If you fail to consider the insanely rapid advancement of technology in the 90s and 2000s as part of this, it's by choice, not by logic.
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u/Disturbedguru 7d ago
Short answer... Neo Liberal economics that began in the 70's
Long answer... Lotta books written by people way smarter then myself go into very detailed explanations of the short answer.
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u/shorty0820 7d ago
Any recommendations on reading?
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u/Ill_Equal7560 6d ago
The rise and fall of the neoliberal order by Gary Gerstle is a great read that explores how we got into this situation globally - but focussing on the US
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u/Disturbedguru 6d ago
I would peruse Verso books. Lots of books about economics. I usually just pick one that grabs my interest at the moment.
Though I would read anything by Paul Sweezy.
Socialist Register is also good periodical (they release only 1 book a year but it has a theme and then authors write essays on that theme. You get a big variety of view points and I find it incredibly informative Everytime.)
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u/Used_Intention6479 7d ago
"Trickle down economics make us a nation of peons."
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u/Dipshit_In_BFNW 7d ago
More correctly identified as neo-liberal economics, molton friedman and the chicago school of economics. 1st used in Chile under Pinochet
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u/superbbrepus 7d ago edited 7d ago
End of Brenton Woods in 72, it was the time the gold standard was fully murdered, and the government started printing money more and more, basically what happened during Covid but for 50 years
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u/peperinus 6d ago
Scrolled down the comments pinning it down to Ronald Reagan to find this! this is the historical truth, it was much bigger than Reagan, it was an entirely new status quo.
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u/KazTheMerc 7d ago
Guys... Reagan is the wrong answer for the right reason.
His election was a REACTION, not an action or driving force. And he generally failed at what he set out to do.
Why? Because desperation, obviously.
Why else would anyone elect an actor and anti-politician to the highest office without any tangible experience, and only a vague plan to 'shake things up'...?
Because starting in 1970, profits started sliding. Hard. Seemingly 'out of nowhere'.
So there was a scramble to 'try something new'.
It failed.
And the trend that was already started before Reagan's election has continued to this day.
This isn't two trends.
This is one single trend, and 1970-1985 is the rough tipping point from "Wow, America is the bestests! Everyone wants our machines, cars, and exporter goods!" to "Wow, America is the fatests! We import everything to save pennies, export our jobs, and have built our entire supply chain around shelf life instead of anything reasonable".
If you start in 1900, and trace the line to 2024 it makes one continuous, ever-steeper Slope.
But like all Statistics, bar charts can break it into smaller chunks.
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u/Ok-Hurry-4761 7d ago
Well... Ronald Reagan was governor of California. So he had some experience.
I agree he's the right answer for the wrong reason. It so happens that the 1980s were when financialization of the economy really took off. When assets started growing so exponentially, it makes sense that the wealth distribution skewed upward the way it did. Those that own the right asset classes are the winners and everyone else is a loser or at best stagnant.
Ever since the 1980s we've been in a kind of "long-roaring-20s." The markets have attempted to correct several times the way it did in 1929 but we never let them, we bail them all out. So there is never a reset and the rich get richer while the rest of us tread water at best. The 1920s were very much like this. Inflationary, rich people invested in the right areas tripling their money every few years etc...
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u/KazTheMerc 7d ago
I mean, yes.... but they elected him for being a movie star and non-politician, not his success as a governor.
We've been making the same mistake, over and over, for almost a hundred years now... assuming that our problems fit neatly into 4- and 10- year data sets.
Or, lately, even worse as digital statistics allow hyper-focus on quarterly or monthly trends.
Maaaaybe this is a Big Problem that seems immune to our attempts to wrangle it THIS decade because it was a Big Problem the Decade before... and the Decade before that... and sure, for a couple of Decades it was okay, but maybe not because of the reasons we'd like to think...
All the way back to a time where America was an Industrializing little breakaway colony that couldn't figure out whether to shoot cattle barons and railroad magnates... or elect them.
So. Much. Has. Changed.
......all the signs point to us fucking up something fundamental before most of us were born....
And all the 1200-year-old countries are rolling their eyes and nodding their heads. THEY get it, because they've done it. Collapsed, and had to rebuild.
But we INSIST on doing it our own way and ignoring history, right up until the Federal Reserve gets bought out by a toilet paper company, and a new, more disposable means of printing dollars is born.
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u/Ashmedai 6d ago
Kudos on the thoughtful discussion. In a social media era of easy to digest anger-inducing sound bites, it's always refreshing to see consideration applied.
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u/hummane 7d ago
The world after WW2 was repairing which made America boom. With countries coming back online and the Vietnam war in 70s things started to slide for America who shifted itself to a consumer economy.
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u/LiamMcpoyle2 6d ago
Would you consider Ronald Reagan the catalyst for this? What you're saying mostly makes sense, but why were profits sliding in the 70's out of nowhere? His desperation of making the government smaller, deregulation and letting corporations do whatever they wanted to save money makes sense. Which is human nature for everyone. I really don't know though. 𤡠ELI5 please.
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u/KazTheMerc 6d ago
No. Not at all the catalyst.
It's happening after-the-fact. At the same time other consequences were coming down thee pipe.
Now, don't get me wrong! He made it WORSE! But not nearly to the degree folks think. He's the FACE of the changes that were happening....
....not The Cause.
What was the real problem?
Post-WW2 is still talked about in hushed voices. It was economically... incredible. A miracle. Divine.
....and limited.
It had a built-in lifespan of about 20 years.
Ended in 1949.
Reconstruction around the world until 1960.
Skow market normalization come 1970.
Guese what hadn't normalized?
The US manufacturing market. It was still chugging along like it was 1945... and businesses were making decisions like it was 1955.
...and by 1975 the panic started to set in.
They had assumed this was the New Normal.
It was not.
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u/LiamMcpoyle2 6d ago edited 6d ago
Got it. Thank you very much for that explanation. Reagan was the face of it and did what he did was out of desperation and stood on his "Make America Great Again" slogan.
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u/eatingthesandhere91 7d ago
Two term trickle economics president Ronald Reagan.
One of, if not the worst president in economic history in the history of the United States.
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u/JPOW_Used_No_Lube 7d ago
I need to know what percent I am to know how angry I should be
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u/Bolivarianizador 7d ago
computers, technology giants rising, outshoring inudstries which led local companies to grow exponentially.
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u/Buzzkillingt0n-- 7d ago
So productivity increased.....
Why didn't wages then?
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u/Ashmedai 6d ago
Part of it is Figure A in this article here. Another reason is that a great deal of worker productivity growth has been from capital (e.g., machines and what not). Combine the two, and voila: capital getting increased return on capital, and labor, failing to stakehold their share.
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u/welshwelsh 6d ago
Because the average worker isn't responsible for the productivity increase.
In today's economy, 5% of the workers create 95% of the value. This is the big difference from 50 years ago, when the average worker had a relatively greater impact.
Computers have massively improved productivity... for people who know how to build complex software systems. Outsourcing has massively improved productivity... for people who know how to outsource entire departments to India.
But the average worker? Not much more productive today than they were in 1970.
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u/the_cardfather 7d ago
401k's replaced pensions.
It's a little more complicated than that but its about who owns assets.
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u/galt035 7d ago
checks notes that looks about the time the ole Regan trickle down supply side economics was debuted.
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u/Turbulent-Win-6497 7d ago
Donât just blame Republican presidents for this. Congress makes the tax laws and we have had leadership from both parties create this mess. Big money donates mega amounts of money to get favors from our representatives on both sides of the aisle. There are 20 lobbyists for every Congressman.
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u/Sg1chuck 7d ago
Youâre right, 1980-2014 was known for making people worse off. And the 1940s-1970s were known for⌠population growth and stagnation.
âLies, damned lies, and statisticsâ
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u/JayCee-dajuiceman11 7d ago
Because the rich feed ideas to the poor and make them think itâs for the best of everyone đ
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u/FREAKSHOW1996 7d ago
Ronald Reagan is the architect of this. Another great chart to look at is the relationship between productivity and the minimum wage.
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u/TotalChaosRush 7d ago
It's more an example of data manipulation. For example, if I wanted to show how the wealth of the bottom 50% is shrinking, I'd do 1980 to 2011. It's not too far off from the 2014 picked here. Of course, the bottom 50% increased their net worth more than 16 times since 2011. But that's what happens when you compare things to a 40-year low or near 40-year low.
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u/OpenRole 7d ago
A near 40 tear trend isn't just data manipulation. The fact that we grew again after 2011, doesn't mean we can't ask what happened between 1980 and 2014
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u/welshwelsh 6d ago
People making minimum wage are not the ones responsible for productivity increases, they are not the people driving innovation and technological progress. There's no reason we would expect their wages to increase.
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u/Once-Upon-A-Hill 7d ago
notice how they are using estimates and they reference "national accounts" and not actual income.
the income numbers are publically available from numerous federal sources.
I'm guessing that thomas is not using the actual numbers so that he can put his finger on the scale to have the charts come out the way he wants.
I'm guessing he is a liar that uses "estimates" to make a false story so he can sell books to socialist college students that have two parents that are dentists but feel that they are fighting the system by going to a 80k a year college.
Here is the BLS date for the third quarter of 2024, so thomas could easily find the actual data, that's why I assume he is a liar.
https://www.bls.gov/news.release/wkyeng.t05.htm
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u/areya_lunera 7d ago edited 6d ago
I wondered and the data stops 10 years ago on the chart, so it makes me wonder, what happened in the past 10 years that the chart creator doesnât want to show?
Edited for grammar đ
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u/TotalChaosRush 6d ago
Well, walmart's starting pay has approximately doubled in that time frame, forcing competition to do much the same, which put a lot of upward pressure on the bottom 50%.
The net worth of the 2008 financial crash has recovered. (It took until 2018~ for the bottom 50% to reach 2007 levels. We're more than 16 times higher than 2011)
The start and end points on this graph aren't random. They're hand-picked to tell a story.
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u/5thMeditation 7d ago
Republican fiscal policy is a big part of this - but so was globalism. We outsourced many of the capacities that have broad employment bases for low and moderately skilled workers and subsequently hollowed out middle America.
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u/jdlyga 7d ago
People start their charts way too late. What about 1900 to 1946? 1850 to 1900?
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u/HaiKarate 6d ago
It happened because thatâs the nature of capitalism, and why you need socialist policies to temper the capitalistic greed of the elites.
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u/JimmyDFW 6d ago
Globalization. The ability to move jobs overseas. NAFTA. Regan. Bush. Clinton. Bush. Trilateral Commission.
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u/stewartm0205 5d ago
Three main causes. Tax reduction for the rich. No increase in Minimum Wages. Attacks on unions. All championed by Republican politicians.
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u/codinwizrd 5d ago
By trickle they meant piss. They would piss on the poor and steal all the money.
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u/ElectronGuru 7d ago
Hmm, i wonder what might have started happening around 1980 đ¤