House of Eratosthenes

New York’s new mayor, Bill de Blasio, in his inaugural speech, denounced people “on the far right” who “continue to preach the virtue of trickle-down economics.” According to Mayor de Blasio, “They believe that the way to move forward is to give more to the most fortunate, and that somehow the benefits will work their way down to everyone else.”
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Years ago, this column challenged anybody to quote any economist outside of an insane asylum who had ever advocated this “trickle-down” theory. Some readers said that somebody said that somebody else had advocated a “trickle-down” policy. But they could never name that somebody else and quote them.
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The “trickle-down” theory cannot be found in even the most voluminous scholarly studies of economic theories — including J.A. Schumpeter’s monumental “History of Economic Analysis,” more than a thousand pages long and printed in very small type.

It is not just in politics that the non-existent “trickle-down” theory is found. It has been attacked in the New York Times, in the Washington Post and by professors at prestigious American universities — and even as far away as India. Yet none of those who denounce a “trickle-down” theory can quote anybody who actually advocated it.

Sowell has already written previously about the ideas of those who have flown off the handle at this statement of his, that there’s no such thing as a prominent political advocate of “trickle-down”:

What I said that set off the crazies was that there is no such thing as “trickle-down” economics. Supposedly those who believe in trickle-down economics want to give benefits to the rich, on the assumption that these benefits will trickle down to the poor.

As someone who spent the first decade of his career researching, teaching and writing about the history of economic thought, I can say that no economist of the past two centuries had any such theory.

Some of those who denounced me for saying that there was no trickle-down theory cited an article by David Stockman years ago — as if David Stockman was the last word, and I should forget everything I learned in years of research because David Stockman said otherwise.

What is often confused with a trickle-down theory is supply-side economics, such as that advocated by Arthur Laffer. That theory is that tax cuts can generate more tax revenue for the government because it changes people’s behavior, causing more economic activity to take place, leading to more taxable income, as well as a faster growing economy.

It is not hard to find examples of when this happened — for example, during the Kennedy administration, among other times and places.

Then he got into something that’s been bugging me for awhile:

If education provides anything, it should be an ability to think — that is, to weigh one idea against an opposing idea, and to use evidence and logic to try to determine what is true and what is false. That is precisely what our schools and colleges are failing to teach today.

It is worse than that. Too many teachers, from the elementary schools to the graduate schools, see their role as indoctrinating students with what these teachers regard as the right beliefs and opinions. Usually that means the left’s beliefs and opinions.

The merits or demerits of those ideas is far less important than whether or not students learn to analyze and weigh those merits and demerits. Educators used to say, “We are here to teach you how to think, not what to think.”

Today, students can spend years in educational institutions, discussing all sorts of issues, without ever having heard a coherent statement of the other side of those issues that differ from what their politically correct teachers say.

…but…I suppose that’s a discussion for another time. Meanwhile…

Those who complain of “trickle-down” policies, and politics, and advocates, who don’t really exist — betray their own skewed understanding of how economics work. I’ve noticed, without fail, that such complaints rely on an underlying premise that a “tax cut” is some kind of a giveaway. That’s a wrong turn there. Once you mistake a nothing as a something, any progression from that point is bound to be wrong. Or let us say, the only shot it has at being correct is by random chance. You’re better off shaking a Magic-8 ball.

Have they lost sight of what used to be a given, that an economy relies on people actually producing things? Do they really think the only reason anybody has anything is because the government “gave” them money, by way of not-taxing them?

In many ways, I am saddened and distressed at this writhing, twisting, mutating societal notion of what is “mainstream” and what is extremist; this is one of the ways. So it’s extremist these days to think that people, by default, deserve to keep the money that they have made, is it. The “mainstream” thought is that all money comes from the government not taxing you. Is it really that bad? I’d like to think not. But these commonplace and popular statements about trickle-down make me worried.

Those who complain of “trickle-down” policies, and politics, and advocates, who don’t really exist

As if the nonexistence of something is any reason not to berate conservatives for subscribing to it! Or not coming out against it. Or failing to sufficiently praise it. Or….

For my money, the most amusing thing about the left’s “understanding” of economics is that it’s a caricature of a caricature. They talk about “Big Business” as if Thomas Nast’s cartoons about robber barons were the real thing…and then they amp it up to 11. Ask any of ’em about unions, for instance, and you’ll get stuff that sounds hot off the presses from Haymarket Square. Theirs is a simplistic misunderstanding of Marx’s simplistic misunderstanding… and Das Kapital was published in 1867.
- Severian | 01/08/2014 @ 11:07
Thomas Sowell: What I said that set off the crazies was that there is no such thing as “trickle-down” economics.

It’s a derogatory name for supposed benefits of supply-side economics. Tax cuts for those with higher income is claimed to created economic growth that has trickle-down benefits for those with lower incomes.

http://www.investopedia.com/terms/t/trickledowntheory.asp
- Zachriel | 01/09/2014 @ 06:56
Gee, ya think Tom Sowell, with his PhD in economics, might be familiar with that?

Overcoming Asperger’s tip: context is important. Sowell said as much in his very next sentence. Literally the next sentence: “Supposedly those who believe in trickle-down economics want to give benefits to the rich, on the assumption that these benefits will trickle down to the poor.”

Developmentally normal humans very rarely make statements in isolation. Statements are embedded within the larger structure of the conversation. This is called “context” and it’s a cornerstone of communication among normal people.

This is why people laugh at you in public.

Seriously, y’all, I’m trying to help here. Try this exercise: Summarize the contents of each paragraph before y’all put on the ol’ crash helmet and pull up to the keyboard.
- Severian | 01/09/2014 @ 07:27
Severian: Gee, ya think Tom Sowell, with his PhD in economics, might be familiar with that?

You would think.

Severian: Literally the next sentence: “Supposedly those who believe in trickle-down economics want to give benefits to the rich, on the assumption that these benefits will trickle down to the poor.”

Sowell’s claim is that no one ever argued that giving benefits to the rich will tangentially benefit the lower classes. That’s simply not the case. The basic argument of supply side economics is that reducing taxes and other disincentives on the rich will spur economic growth providing tangential benefits to the lower classes, who themselves may become rich. Those who disagree with the policy call it trickle-down economics.
- Zachriel | 01/09/2014 @ 07:52
Sowell’s claim is that no one ever argued that giving benefits to the rich will tangentially benefit the lower classes.

See, kids, this is what I was talking about. Context. Sowell’s claim is the exact opposite of that. You have to read the entire excerpt, not just the first sentence.

This is why everyone you know makes fun of you behind your back.

But we can work on it. Here’s a helpful exercise. Summarize this excerpt in your own words:

What is often confused with a trickle-down theory is supply-side economics, such as that advocated by Arthur Laffer. That theory is that tax cuts can generate more tax revenue for the government because it changes people’s behavior, causing more economic activity to take place, leading to more taxable income, as well as a faster growing economy.

It is not hard to find examples of when this happened — for example, during the Kennedy administration, among other times and places.

The key to this exercise is to summarize all three sentences. Take your time.
- Severian | 01/09/2014 @ 08:17
Severian: You have to read the entire excerpt, not just the first sentence.

We did. Sowell is trying to avoid the term “trickle-down” as it applies to supply-side economics.
- Zachriel | 01/09/2014 @ 08:36
Thomas Sowell: What is often confused with a trickle-down theory is supply-side economics, such as that advocated by Arthur Laffer. That theory is that tax cuts can generate more tax revenue for the government because it changes people’s behavior, causing more economic activity to take place, leading to more taxable income, as well as a faster growing economy.

The idea that tax cuts pay for themselves is not the central idea of supply-side economics. That’s tangential, as you can lower marginal tax rates and reduce spending to maintain the government’s fiscal balance. Rather, high marginal tax rates and other disincentives reduce economic activity by discouraging investment and the inefficient use of resources. Conversely, lowering tax rates will encourage investment and efficiency, and produce economic activity.
- Zachriel | 01/09/2014 @ 08:47
the inefficient use of resource
- Zachriel | 01/09/2014 @ 08:48
Trying again.

Z: and the inefficient use of resources

discouraging … the efficient use of resources.

~~strike-out~~
- Zachriel | 01/09/2014 @ 08:49
A nice first try. Good effort.

But: where did you get “The idea that tax cuts pay for themselves is not the central idea of supply-side economics. That’s tangential, as you can lower marginal tax rates and reduce spending to maintain the government’s fiscal balance”?

I know that’s what y’all probably think “supply side” means, but we’re not there yet. Concentrate on what Sowell actually said, and try again.
- Severian | 01/09/2014 @ 09:04
Severian: Concentrate on what Sowell actually said, and try again.

As he uses the term “Supply-side economics”, it’s important to understand the term.

Severian: But: where did you get “The idea that tax cuts pay for themselves is not the central idea of supply-side economics.

You can find it defined in any of a number of resources, including this encyclopedia of economics.

“Supply-side economists believe that high marginal tax rates strongly discourage income, output, and the efficiency of resource use.”
http://www.econlib.org/library/Enc/SupplySideEconomics.html
- Zachriel | 01/09/2014 @ 13:07
That’s all fine and good, but it’s not the point of the exercise.* We’re working on our context clues here, y’all. So: What is Sowell saying in this sentence?

What is often confused with a trickle-down theory is supply-side economics, such as that advocated by Arthur Laffer.

Summarize in your own words.

*I suspect y’all are writing one of those scripts in your heads again. Y’all have something you want to say about supply-side economics and have this movie playing in your heads where you get to swoop in and triumphantly say it. Y’all really have to quit doing that — not only is it counterproductive, but it’s one of the reasons people laugh at you as a Walter Mitty type behind your backs.
- Severian | 01/09/2014 @ 13:28
Severian: We’re working on our context clues here</i.

We're discussing Sowell's claims per the original post.

Severian: What is often confused with a trickle-down theory is supply-side economics, such as that advocated by Arthur Laffer.

Trickle-down is any policy which rewards the upper classes with the expectation that the lower classes will benefit. Supply side is a trickle-down theory of economics. The expectation is that removing disincentives on the rich, such as high marginal tax rates, will spur economic investment so that the lower classes will also benefit.
- Zachriel | 01/09/2014 @ 13:58
In order to discuss Sowell’s claims, we must first understand them. I’m trying to help y’all with that.

Are y’all really claiming that

What is often confused with a trickle-down theory is supply-side economics, such as that advocated by Arthur Laffer.

is accurately summarized by

Trickle-down is any policy which rewards the upper classes with the expectation that the lower classes will benefit. Supply side is a trickle-down theory of economics. The expectation is that removing disincentives on the rich, such as high marginal tax rates, will spur economic investment so that the lower classes will also benefit.

??
- Severian | 01/09/2014 @ 14:27
Severian: What is often confused with a trickle-down theory is supply-side economics, such as that advocated by Arthur Laffer.

Please define supply-side economics.
Please define trickle-down economics.
- Zachriel | 01/09/2014 @ 14:37
First we need to make sure y’all understand the claims Sowell made. The sentence

What is often confused with a trickle-down theory is supply-side economics, such as that advocated by Arthur Laffer.

is an essential part of those claims. Please demonstrate your understanding of that sentence by restating it in your own words. Then we can move on to the next stage of the discussion.
- Severian | 01/09/2014 @ 14:52
Severian: First we need to make sure y’all understand the claims Sowell made.

As Sowell made claims about supply-side and trickle-down economics, we asked you what they meant.
- Zachriel | 01/09/2014 @ 15:21
Right. And I’m happy to discuss it, as soon as y’all indicate y’all understand what Sowell is saying.
- Severian | 01/09/2014 @ 15:40
Severian: Right. And I’m happy to discuss it, as soon as y’all indicate y’all understand what Sowell is saying.

We explained our position, our understanding of the terms, and provided an authoritative citation. We answered your questions. Now, in order to advance the discussion, please define supply-side economics, please define trickle-down economics.
- Zachriel | 01/09/2014 @ 15:46
Show me where you’ve restated “What is often confused with a trickle-down theory is supply-side economics, such as that advocated by Arthur Laffer” in your own words.
- Severian | 01/09/2014 @ 15:49
Severian: “What is often confused with a trickle-down theory is supply-side economics, such as that advocated by Arthur Laffer”

What is often confused with a

“policy which rewards the upper classes with the expectation that the lower classes will benefit”

is

“The expectation is that removing disincentives on the rich, such as high marginal tax rates, will spur economic investment so that the lower classes will also benefit”
- Zachriel | 01/09/2014 @ 15:53
Ah. I see the problem here. And it’s partially my fault — I’d forgotten how completely literal Aspergers’ sufferers are. For which I apologize.

Y’all interpolated what you take to be the definitions of “trickle down” and “supply side” into Sowell’s statement. I’m asking you to restate the meaning he’s trying to convey. Focus on the verb.
- Severian | 01/09/2014 @ 16:00
Severian: Y’all interpolated what you take to be the definitions of “trickle down” and “supply side” into Sowell’s statement.

Good. Then we take it you have no disagreement on the definitions. From that, it’s quite apparent that Sowell’s statement is incoherent.

Thomas Sowell: I’m asking you to restate the meaning he’s trying to convey.

“What is often confused with a trickle-down theory is supply-side economics”

Sowell is saying that people mistake supply-side economics with trickle-down. But as is clear from the definitions, Sowell is wrong on this point.
- Zachriel | 01/09/2014 @ 16:14
Sowell is saying that people mistake supply-side economics with trickle-down.

There. Good job. This is progress!

But alas…. regression:

Good. Then we take it you have no disagreement on the definitions.

This is another reason people avoid y’all in public, I’m sad to say. Simply assuming that the other person said what y’all wish to hear, and then continuing to talk at them on that basis, is considered rude by developmentally normal people.

Why would you assume that? What part of the statement

Y’all interpolated what you take to be the definitions of “trickle down” and “supply side” into Sowell’s statement

gives y’all the impression that I have an opinion on the definitions one way or the other? Which specific words convey agreement to y’all?
- Severian | 01/09/2014 @ 16:23
Severian: Simply assuming that the other person said what y’all wish to hear

Quite the contrary. We passed the definition by you several times. We provided an authoritative citation. Then we pointedly asked you to provide a definition. At some point, it’s reasonable to infer you have nothing to say on the subject.

In any case, you are more than welcome to address the topic, which is Sowell’s claim “that there is no such thing as ‘trickle-down’ economics”.
- Zachriel | 01/09/2014 @ 17:03
And I really thought we were getting somewhere. Sigh.

Please point to the comment or comments where I asked y’all to define the terms “supply side” and “trickle down.” Please include the entire comment, so that we can re-examine context.
- Severian | 01/09/2014 @ 17:35
Severian: Please point to the comment or comments where I asked y’all to define the terms “supply side” and “trickle down.”

As Sowell is discussing supply-side and trickle-down economics, knowing how those terms are normally used, and how Sowell is using them is central to the topic raised by this thread. If you want to discuss the topic, you might start by providing basic definitions of these two terms.
- Zachriel | 01/09/2014 @ 17:42
And indeed I do want to discuss it! But as I’ve pointed out to y’all several times, it’s impossible to “discuss” things when one of the parties doesn’t actually understand the mechanics of discussion. You’ve probably noticed that a lot of people see you coming and start walking the other way. This is why.

Context is important. Y’all have not demonstrated a basic understanding of the concept. I don’t blame you for this — I have family members who work with autistic individuals; I know how hard it can be for people like you to process normal conversation. Which is why I’m trying to help y’all.

It’s important to get a baseline for just how limited your functioning actually is. Point to the comment where I asked y’all to define the terms “supply side” and “trickle down,” and perhaps then we can start getting around to my definitions of them.
- Severian | 01/09/2014 @ 17:56
Severian

There doesn’t seem to be anything about the topic in your last comment.
- Zachriel | 01/09/2014 @ 17:59
Yes, I can see how an Asperger’s Syndrome sufferer might see it that way.

So I’ll make it clearer: If you’d like my thoughts on the definitions of “supply side” and “trickle down,” simply point to the comment where I asked y’all for your definitions of them. Not sure how else to help you.
- Severian | 01/09/2014 @ 18:29
Severian: If you’d like my thoughts on the definitions of “supply side” and “trickle down,”

We asked for that above. Never saw an answer.
- Zachriel | 01/09/2014 @ 19:28
I told y’all what you need to do to get one. It’s a little test of y’all’s progress in reading comprehension.
- Severian | 01/09/2014 @ 21:29

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