Jump to content

Architect Of Trickle Down Economics Finally Put In His Place


Recommended Posts

20601-champagne-trickle-down-economics-3


For those who continue to push for trickle down economics, September 13, 1970 is a date which lives in history.

 

It was on that day which the New York Times published “The Social Responsibility of Business is to Increase its Profits” by Milton Friedman. This piece has been held up by so-called “free market” advocates as the foundation of their beliefs. Of course, their belief falls apart when presented with reality.

 

Milton Friedman was one of the first people to argue that the corporate leadership does not work for the company, but for the shareholders. He went so far as to call the shareholders the employers, and that the company itself held no meaning. When describing the role of a company executive, he said:

In a free-enterprise, private-property sys­tem, a corporate executive is an employee of the owners of the business. He has direct re­sponsibility to his employers.

 

He further went on to claim that any behavior which was not at the pure goal of maximizing profits, even if such profits were at the expense of the company, specifically stating that any idea of social responsibility was anti-capitalism. He argued that the company itself was a mere “legal fiction” and its health could be safely ignored as unimportant. The only thing of importance are the shareholders, and the money pipelined straight into their pockets.

 

He brings up examples, of companies reinvesting in the community, in education, and eviscerated the very concept. He calls such actions theft, denouncing them as “nonsense” and that “there is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” This of course ignores that when profit pools, it enables the enriched to manipulate the rules of the game, to distort it, and therefore what is against the rules, changes. Behavior which was criminal becomes legal. What once was fraud is now accepted. Deception becomes propaganda.

 

Even their greatest “free market” ally, Forbes magazine, has admitted the abstract failure. On June 26th, Forbes released “The Origin of ‘The World’s Dumbest Idea’: Milton Friedman” written by Steve Denning, a veritable renaissance man schooled in economics, leadership, and even a published poet. His piece breaks down the origins of the trickle down theory, and its origin in a single article and the man who wrote it.

 

Companies which embrace Friedman’s model are now dependent on billions of taxpayer subsidies while those who follow the responsible corporate model turn out record profits and have high return on their shareholder investments. In addition, the companies have a higher employee morale, resulting in higher productivity, which again produces higher profits.

 

The problem with Milton Friedman’s premise is that its focus on profits as the immediate end of any action leaves little room for growth or development. The actions which Friedman dismisses as a “suicidal impulse” are instead the actions by which a company ensures its long-term viability.

 

Companies which reinvest in the enterprise, through higher wages, better training, or regional infrastructure, are not stealing from their shareholders, they are ensuring their shareholders investments. As established in Dodge vs Ford Motor Company, by Henry Ford giving his employees an above-average wage for the industry, he ensured his shareholders long-term value, therefore secured their investment. As explained on “The Assembly Line and the $5 Day – Background Reading” website:

At the time, workers could count on about $2.25 per day, for which they worked nine-hour shifts. It was pretty good money in those days, but the toll was too much for many to bear. Ford’s turnover rate was very high. In 1913, Ford hired more than 52,000 men to keep a workforce of only 14,000. New workers required a costly break-in period, making matters worse for the company. Also, some men simply walked away from the line to quit and look for a job elsewhere. Then the line stopped and production of cars halted. The increased cost and delayed production kept Ford from selling his cars at the low price he wanted. Drastic measures were necessary if he was to keep up this production.

By raising his salary, Henry Ford could lower his prices while raising his profits. This is the foundation of business growth, which Milton Friedman threw out the window. To small brained thinkers like Mr. Friedman, profits must be short-term, there is no viability in long-term growth. So long as they got theirs, it does not matter what happens afterwards.

 

His dismissal of the company, and the leap to believe that the shareholders are the employer, undermines his argument which has held sway for over 40 years. Even one-time advocates for Milton Friedman’s model are rejecting it outright and embracing the older model which gave our nation its great strength.

 

Isn’t it about time we abandoned the failed idea that companies only serve to maximize profits in the short-term, and embrace the notion that by serving the public good, profits will come? It has worked whenever we have done it before, and ever since Milton Friedman began pushing his ideas, companies, and our nation, have suffered.

 

While in the short-term, it can look decent, over the longer period, only collapse is shown. If we do not halt this idea, and bury it alongside its creator, then we shall pass as a nation, great no more and just a faded memory.



Read more: http://www.addictinginfo.org/2013/06/30/the-architect-of-trickle-down-economics-finally-put-in-his-place/#ixzz2Xia8p5HU

Link to comment
Share on other sites

I love watching liberals use Ford as an example of how businesses should pay their employees.

Ford didn't increase his employee wages because he was a nice guy, he increased them because it helped him and the company.

Companies today ALL do the same thing. If they have a position that requires training, they pay that employee more to retain them.

 

The problem is that liberals cannot differentiate between an entry level job like a hamburger flipper, and a job that requires training like a machinist.

That's why you'll NEVER see a machinist earning minimum wage, and you'll never see a hamburger flipper earning $50,000/yr.

Link to comment
Share on other sites

I love watching liberals use Ford as an example of how businesses should pay their employees.

Ford didn't increase his employee wages because he was a nice guy, he increased them because it helped him and the company.

Companies today ALL do the same thing. If they have a position that requires training, they pay that employee more to retain them.

 

The problem is that liberals cannot differentiate between an entry level job like a hamburger flipper, and a job that requires training like a machinist.

That's why you'll NEVER see a machinist earning minimum wage, and you'll never see a hamburger flipper earning $50,000/yr.

 

You appear to be agreeing that trickle-down economics indeed does not work.

Link to comment
Share on other sites

On the date 19 August 1942, Milton Friedman, an economist with the Treasury Department, and Beardsley Ruml, from R. H. Macy Co., Inc., New York, spoke before a subcommittee of the Committee On Finance of the United States Senate. Mr. Ruml was a member of the Federal Reserve Board, and the author of a withholding tax plan. Mr. Friedman agreed that since an inflation problem was inevitable and upcoming, due to the expansion of the economy to accommodate the war effort, it was important that the withholding tax be implemented to withdraw money from the marketplace to ease the inflation problem. Workers would not have this money to spend, and it would be sent back to the Treasury Department. Chapter 619 of the Public Laws of the 77th Congress, Second Session, dated 21 October 1942:


SUBCHAPTER D --- VICTORY TAX ON INDIVIDUALS PART 1 --- RATE AND COMPUTATION OF TAX


SEC. 450. IMPOSITION OF TAX


There shall be levied, collected, and paid for each taxable year beginning after December 31, 1942, a victory tax of 5 per centum upon the victory tax net income of every individual (other than a nonresident alien subject to the tax imposed by section 211 (a)).


The victory tax net income was explained to be the gross income for such year, not including gain from sale or exchange of capital assets, or interest allowed as a credit against net income, or amounts received as compensation for injury or sickness, and minus some listed deductions. Section 454 was the refund of tax section:


SEC. 454. POST WAR CREDIT OR REFUND OF VICTORY TAX


(a) Allowance of Credit. --- As soon as practicable after date of cessation of hostilities in the present war (as defined in section 475 (B)), the following amount of the victory tax paid for each taxable year beginning after December 31, 1942, shall be credited against any income tax or installment thereof then due from the taxpayer, and any balance shall be refunded immediately to the taxpayer:


The legislation continues, stating the amount of refund for single persons, married persons, and heads of families. Section 465, in Part II of the legislation, is the "Collection of Tax at Source on Wages" section. The Americans, in an effort to contribute toward the ending of hostilities, waived their Constitutional right to have the direct tax laid upon the States and accepted this direct tax upon themselves. This legislation was repealed by the 78th Congress, Second Session, on 29 May 1944 by the Public Laws -- Chapter 210, Section 6. REPEAL OF VICTORY TAX. Although the Victory Tax had been repealed, government found the Americans so easily waiving their Constitutional rights, that it continued the withholding tax plan.


There is no end to the subterfuge, and deviousness of those who grasp for power.
Link to comment
Share on other sites

For those who continue to push for trickle down economics, September 13, 1970 is a date which lives in history.

 

It was on that day which the New York Times published “The Social Responsibility of Business is to Increase its Profits” by Milton Friedman. This piece has been held up by so-called “free market” advocates as the foundation of their beliefs. Of course, their belief falls apart when presented with reality.

 

"Addictinginfo.com?" Hey, let's ignore the country's largest and most prestigious business/ investment/ Economics publications in favor of a moonbat left source.

 

I love psychotic moonbat humor. :D

 

The country enjoyed 24 years of almost uninterrupted economic, job and wage growth, moonbat, an historic boom.

 

Is that failure?

Link to comment
Share on other sites

lets just isolate the 8 great years of Ronald Reagan. People in the US who took advantage of the economic and tax changes implemented by the Reagan administration created more wealth in that 8 year period then any other time before. This was true wealth not paper wealth that has come since Reagan. Reagan's success and the success of the people who built their wealth under his tenure was in a big part due to trickle down economics. It worked, it worked well and people made a lot of money. Lazy stupid people did not but those of us who understood the door that Reagan opened exploited this time period very well.

 

anyone against capitalism, low taxes, trickle down economics etc. is just an ignorant, envious person

Link to comment
Share on other sites

lets just isolate the 8 great years of Ronald Reagan. People in the US who took advantage of the economic and tax changes implemented by the Reagan administration created more wealth in that 8 year period then any other time before. This was true wealth not paper wealth that has come since Reagan. Reagan's success and the success of the people who built their wealth under his tenure was in a big part due to trickle down economics. It worked, it worked well and people made a lot of money. Lazy stupid people did not but those of us who understood the door that Reagan opened exploited this time period very well.

 

anyone against capitalism, low taxes, trickle down economics etc. is just an ignorant, envious person

The first 2 years, and last 2 years being Reagan's least productive, measured by economic gains and not his actions. So let's parse:

 

Lowering the top rate from 70% to 50% was followed by huge job losses, the jobless rate climbing higher than at any time during the Great Recession. But the economy rebounded, despite the top rate remaining higher than it has been at any time since: 50%. Wealth was made, jobs created; indeed it was morning again, in America ... taxing half of all top incomes notwithstanding. Then the rate was lowered to 28%; and the last two years of Reagan's Admin, was not as bad as after the first tax cut, but slowed, and remained poor during most of his 3rd Admin, effectively (Reagan Veep gets one term).

 

So it would seem that if Reagan is the model we should emulate, raise the top rate to 50% and leave it at that. And I'm okay with that.

 

How about you?

Link to comment
Share on other sites

1981 tax act lowered the top tax rate to 28%, created ACRES accellerated depreciation, 10% investment tax credit caused a re birth in manufacturing and manufacturing jobs in this country. steiny you don't know what you are talking about.

Nope. 1986 was when the bill was signed. So in 1987, the top tax rate dropped to 38.5% (higher than every Obama year, except this one) and in 1988 and the top rate was lowered to 28%, which was the same year we voted in Bush 41.

Link to comment
Share on other sites

 

20601-champagne-trickle-down-economics-3

 

For those who continue to push for trickle down economics, September 13, 1970 is a date which lives in history.

 

It was on that day which the New York Times published “The Social Responsibility of Business is to Increase its Profits” by Milton Friedman. This piece has been held up by so-called “free market” advocates as the foundation of their beliefs. Of course, their belief falls apart when presented with reality.

 

Milton Friedman was one of the first people to argue that the corporate leadership does not work for the company, but for the shareholders. He went so far as to call the shareholders the employers, and that the company itself held no meaning. When describing the role of a company executive, he said:

 

He further went on to claim that any behavior which was not at the pure goal of maximizing profits, even if such profits were at the expense of the company, specifically stating that any idea of social responsibility was anti-capitalism. He argued that the company itself was a mere “legal fiction” and its health could be safely ignored as unimportant. The only thing of importance are the shareholders, and the money pipelined straight into their pockets.

 

He brings up examples, of companies reinvesting in the community, in education, and eviscerated the very concept. He calls such actions theft, denouncing them as “nonsense” and that “there is one and only one social responsibility of business–to use it resources and engage in activities designed to increase its profits so long as it stays within the rules of the game, which is to say, engages in open and free competition without deception or fraud.” This of course ignores that when profit pools, it enables the enriched to manipulate the rules of the game, to distort it, and therefore what is against the rules, changes. Behavior which was criminal becomes legal. What once was fraud is now accepted. Deception becomes propaganda.

 

Even their greatest “free market” ally, Forbes magazine, has admitted the abstract failure. On June 26th, Forbes released “The Origin of ‘The World’s Dumbest Idea’: Milton Friedman” written by Steve Denning, a veritable renaissance man schooled in economics, leadership, and even a published poet. His piece breaks down the origins of the trickle down theory, and its origin in a single article and the man who wrote it.

 

Companies which embrace Friedman’s model are now dependent on billions of taxpayer subsidies while those who follow the responsible corporate model turn out record profits and have high return on their shareholder investments. In addition, the companies have a higher employee morale, resulting in higher productivity, which again produces higher profits.

 

The problem with Milton Friedman’s premise is that its focus on profits as the immediate end of any action leaves little room for growth or development. The actions which Friedman dismisses as a “suicidal impulse” are instead the actions by which a company ensures its long-term viability.

 

Companies which reinvest in the enterprise, through higher wages, better training, or regional infrastructure, are not stealing from their shareholders, they are ensuring their shareholders investments. As established in Dodge vs Ford Motor Company, by Henry Ford giving his employees an above-average wage for the industry, he ensured his shareholders long-term value, therefore secured their investment. As explained on “The Assembly Line and the $5 Day – Background Reading” website:

By raising his salary, Henry Ford could lower his prices while raising his profits. This is the foundation of business growth, which Milton Friedman threw out the window. To small brained thinkers like Mr. Friedman, profits must be short-term, there is no viability in long-term growth. So long as they got theirs, it does not matter what happens afterwards.

 

His dismissal of the company, and the leap to believe that the shareholders are the employer, undermines his argument which has held sway for over 40 years. Even one-time advocates for Milton Friedman’s model are rejecting it outright and embracing the older model which gave our nation its great strength.

 

Isn’t it about time we abandoned the failed idea that companies only serve to maximize profits in the short-term, and embrace the notion that by serving the public good, profits will come? It has worked whenever we have done it before, and ever since Milton Friedman began pushing his ideas, companies, and our nation, have suffered.

 

While in the short-term, it can look decent, over the longer period, only collapse is shown. If we do not halt this idea, and bury it alongside its creator, then we shall pass as a nation, great no more and just a faded memory.

 

 

Read more: http://www.addictinginfo.org/2013/06/30/the-architect-of-trickle-down-economics-finally-put-in-his-place/#ixzz2Xia8p5HU

 

And your ideas lead to trickle up poverty.............it's a fact that lower taxes and lower regulations create a better business environment that all tax payers benefit from....................it's not the tax payers fault that mentally ill degenerates like you cant hack it in the real world..............

Link to comment
Share on other sites

1981 tax act lowered the top tax rate to 28%, created ACRES accellerated depreciation, 10% investment tax credit caused a re birth in manufacturing and manufacturing jobs in this country. steiny you don't know what you are talking about.

Learn something; then you'll know what you're talking about: http://en.wikipedia.org/wiki/Tax_Reform_Act_of_1986

Link to comment
Share on other sites

I was heavily involved in tax sheltered real estate syndications during this time. I do know what I am talking about. Under the 1981 tax act limited partners could get back well over 100% of their cash investment in federal tax benefits. you invested $10k, received $100k in tax losses,at the 28% rate you actually made $18k tax free in federal tax refunds. steiny, you are way out of your league.

 

Reagan's 1981 Tax Reform Act of 1981 lowered tax rates to the lowest tax rate in decades. 1982 TEFRA increased some taxes but left in all of the depreciation and tax credits brought in by the 1981 law. 1986 massive tax reform. so massive that the IRS Code of 1959 was updated to the IRS Code of 1986. This act started to do away with tax deductions, started to extend depreciation periods and phased out tax credits. The working man even got a great tax break in Schedule G: income averaging. Under Reagan so many people made so much more money the govt allowed them to average their income over 4 years so they would not pay the full tax rate on their higher income created by Reagan's excellend economic policies. This exclusively helped the middle class.Trickle Down!

 

I started at Villanova in 1983 in the Masters of Tax program. I graduated in 1988. What I learned up to 1986 was no longer law and what I learned post 1986 was inconclusive because there were no court cases, revenue rulings, etc. to base things on. This is about the time I exited the tax side of my business and focused more on development and cash flow. But it was because of the Reagan tax and economic policies that made me wealthy before I was 30.

Link to comment
Share on other sites

I was heavily involved in tax sheltered real estate syndications during this time. I do know what I am talking about. Under the 1981 tax act limited partners could get back well over 100% of their cash investment in federal tax benefits. you invested $10k, received $100k in tax losses,at the 28% rate you actually made $18k tax free in federal tax refunds. steiny, you are way out of your league.

 

Reagan's 1981 Tax Reform Act of 1981 lowered tax rates to the lowest tax rate in decades. 1982 TEFRA increased some taxes but left in all of the depreciation and tax credits brought in by the 1981 law. 1986 massive tax reform. so massive that the IRS Code of 1959 was updated to the IRS Code of 1986. This act started to do away with tax deductions, started to extend depreciation periods and phased out tax credits. The working man even got a great tax break in Schedule G: income averaging. Under Reagan so many people made so much more money the govt allowed them to average their income over 4 years so they would not pay the full tax rate on their higher income created by Reagan's excellend economic policies. This exclusively helped the middle class.Trickle Down!

 

I started at Villanova in 1983 in the Masters of Tax program. I graduated in 1988. What I learned up to 1986 was no longer law and what I learned post 1986 was inconclusive because there were no court cases, revenue rulings, etc. to base things on. This is about the time I exited the tax side of my business and focused more on development and cash flow. But it was because of the Reagan tax and economic policies that made me wealthy before I was 30.

I was filming a documentary on the mating habits of anteaters on top of K2, which qualified me for a tax credit, since Reagan really liked anteaters and high elevations.

Link to comment
Share on other sites

I love watching liberals use Ford as an example of how businesses should pay their employees.

Ford didn't increase his employee wages because he was a nice guy, he increased them because it helped him and the company.

Companies today ALL do the same thing. If they have a position that requires training, they pay that employee more to retain them.

 

The problem is that liberals cannot differentiate between an entry level job like a hamburger flipper, and a job that requires training like a machinist.

That's why you'll NEVER see a machinist earning minimum wage, and you'll never see a hamburger flipper earning $50,000/yr.

Geez! I am amazed at your brilliance! Absolutely stunning!

 

Your right. I never have seen a hamburger flipper making $ 50000 a year. Except when we had NO DOC NINJA mortgages!

Link to comment
Share on other sites

1981 tax act lowered the top tax rate to 28%, created ACRES accellerated depreciation,

10% investment tax credit caused a re birth in manufacturing and

manufacturing jobs in this country. steiny you don't know what you are talking about.

 

Learn something; then you'll know what you're talking about: http://en.wikipedia.org/wiki/Tax_Reform_Act_of_1986

 

Learn something? Pretty hilarious coming from someone who utterly bungles basic and accepted Economics. :D

 

Who claims that Reagan's tax cut hurt economic growth. :D

 

That takes a special kind of stupid.

Link to comment
Share on other sites

Join the conversation

You are posting as a guest. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

 Share

×
×
  • Create New...