Thursday, April 2, 2009

Trickle Down Economics Cannot Fail

they can only be failed.

The rich really are different:

Matt Yglesias considers, and rejects, the notion that taxes on the rich impede capital formation:
Remember, folks, Matty Y. exists for two reasons; to put a 'liberal' seal of approval on war, and to be a punching bag for the likes of Megan. And to be cited by otherwise good lefty blogs because he makes weak versions of common arguments for websites that get lots of hits. Bah. Anyway, Megan.
It sounds deep and smart when you call it "capital formation", and stupid and crazy when you call it "the rich uncle argument", but they're essentially the same thing. And it should be noted that many, even most, liberals believe that this is true--or at least, they used to, back when they were discussing the Bush tax cuts. At the time, the ground was thick with liberals complaining that it was a terrible idea to cut taxes on the rich during a downturn, because the rich save their money, while the poor and the middle class spend it.
Nope, I didn't fail to reinsert links. Shockingly, Megan is making this ludicrous claim without the slightest bit of documentation, because documentation doesn't exist. Matty Y. and Ezra agreeing to stop her spazzing out at the lunch table doesn't count.
The only possible explanation is Megan, being a movement conservative at heart, thinks the MSM talking heads promoting tax cuts that benefited them, and the people signing their paychecks, personally a great deal counts as a liberal anything. Of course, this is a woman who thinks complaining about how gender based pay discrepancies affect her personally makes her a feminist, so let's not pretend to be surprised.
*Update* - I shouldn't have written this so late. I have to be honest, I effed up and misinterpreted what she wrote. Somehow I morphed what she was arguing into a claim that some liberals were in favor of the tax cuts, instead of opposing them because of some bizarro half belief in trickle down theory. My bad.
Then or now, saved money is where all the capital that funds startups--or any other sort of investment activity--comes from.
Of course, if we will have a government, we are going to have to tax someone to fund it, and the rich have more spare cash in their possession than anyone else. But of course, when we tax the rich, they don't just cut back on their yachts; they also cut back on their saving and investment activity, which in the long run means that we will all be a little poorer. Life is full of tradeoffs that can not be vanquished with even extremely biting sarcasm.
I guess it's biting sarcasm to state that trickle down economics demonstrably don't work. She takes it as a given, which must mean it is one. After all, Megan is on the cusp of being a homeowner, and it's thanks to the charity of a rich person, so that would work for everyone if they'd just work hard as an ass kiss for a decade or so so, like she has.
The sad part is that last bit isn't really snark. It's quite possible she believes such a pile of mush. I've known heirs of name brand fortunes who believe they earned their vast inherited wealth with hard work. Never underestimate the capacity of a human mind to contort itself to avoid self-recognition.


Susan of Texas said...

And she doesn't even have to balls to say she supports Greenspan or Reaganomics or freedom from reproductive choice. She has to weasle around it, just like she refuses to name sources because then everyone would know she bases her posts on watercooler chat and what the guys were talking about in the bar last night.

bulbul said...

saved money is where all the capital that funds startups ... comes from
I guess this would be the time to ask if Ms. McArdle had ever been involved in a startup or, indeed, any real commercial enterprise. I've worked for three startups so far and the only thing they had in common was the way they were funded - through loans.

Chad said...


Damn, I missed that. Not only does she make a statement that cries out for (and doesn't receive) a little hard data and a citation, but it's such a ridiculously blanket statement - "all the capital" - that it raises questions like "Did Megan flunk College Comp?" and "Does she even care about appearing at least halfway competent?"

For a struggling writer and researcher like myself, reading Megan is the mental equivalent of having every single person in charge at the Atlantic line up to punch me in the stomach.

Yuppers said...

Ah, but saved money in banks is in fact the money that banks loan out. So she's not entirely wrong; if no one saved money in the bank, there would be much less money for the banks to loan out to startups.

Susan of Texas said...

You grow up worshipping writers because you're a reader-- you read everything you get your hands on. It's as essential to you as air and food. You dream of being able to do what writers do---move people, persuade them, make them laugh. You try to write yourself, agonizing over not being good enough, not having enough talent, not having any talent. You write almost every day because now it's become like air to you as well. And after a long time you recognize that you will probably never receive any recognition or money from it. But you don't care, because a person who writes in a writer, no matter what the circumstance.

Then you read the Atlantic and realize that everything you've ever known has been a lie.

Oh well.

The Ignorant Investor said...

So after 10 years of some of the worst investment decisions ever made by rich people, including lending money to people who couldn't pay it back, investing in derivatives, and bubbling up the housing market- we're all going to be screwed if rich people don't have enough money to invest?

As a taxpayer I'm out a few trillion because of the wealthy's idiotic use of their capital. You didn't see poor people lining up to give money to hedge funds. This is maybe the worst time in history to argue that we need the rich to make efficient use of capital.

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