The IMF confirms that ‘trickle-down’ economics is, indeed, a joke(psmag.com)
psmag.com
The IMF confirms that ‘trickle-down’ economics is, indeed, a joke
https://psmag.com/economics/trickle-down-economics-is-indeed-a-joke
8 comments
My country is currently attempting trickle up economy. It gave monthly payments to mothers of two or more children (sometimes even one). It's a fixed amount per child. They hoped to boost fertility rates. Of course they didn't because people don't work like that. What it did is allow a lot of poor women to stop working some minimum wage jobs and spend more time with their children. Prices of basic goods predictably started to rise.
Now a new idea is under way. They are going to raise minimal wage to be around 60% of national average wage. There might be regions where this will be such a high boost up that 80% of people there will earn new high minimum wage. This will be of course financed directly by employers. Also they will bear some additional cost of increased monthly social security payments due to higher salaries.
What I think will happen is that this forcibly spread money will trickle up to the owners of companies that sell and manufacture goods that will be bought more by poor people. You definitely want to sell your stuff in Poland in the next couple of years. You probably would want to avoid hiring anyone for simple jobs there.
Now a new idea is under way. They are going to raise minimal wage to be around 60% of national average wage. There might be regions where this will be such a high boost up that 80% of people there will earn new high minimum wage. This will be of course financed directly by employers. Also they will bear some additional cost of increased monthly social security payments due to higher salaries.
What I think will happen is that this forcibly spread money will trickle up to the owners of companies that sell and manufacture goods that will be bought more by poor people. You definitely want to sell your stuff in Poland in the next couple of years. You probably would want to avoid hiring anyone for simple jobs there.
The thing is you cannot avoid hiring people for simple jobs, as they're local, physical and cannot be outsourced.
Especially with the latest changes to contracts. The only way here is illegal work, and of course it's illegal and risky for both parties.
Women taking care of children is precisely the desired (by the political party) and expected social result of this policy.
Especially with the latest changes to contracts. The only way here is illegal work, and of course it's illegal and risky for both parties.
Women taking care of children is precisely the desired (by the political party) and expected social result of this policy.
> The thing is you cannot avoid hiring people for simple jobs, as they're local, physical and cannot be outsourced.
You wouldn't believe what jobs can be outsourced. There are hospitals and nursing homes in germany that send their laundry to poland because wages are lower there. There are restaurants in San Francisco that import sliced cucumbers from places that have a lower minimum wage.
You wouldn't believe what jobs can be outsourced. There are hospitals and nursing homes in germany that send their laundry to poland because wages are lower there. There are restaurants in San Francisco that import sliced cucumbers from places that have a lower minimum wage.
Both of these share an important characteristic called volume. (Including due to regularity.)
Anything else would be already outsourced and/or centralized if labour costs dominate over transport. Polish labour costs are not even close to Chinese or say Romanian, while the hike is not big enough to overcome sunk costs in most other cases.
If you think aforementioned outsourced jobs would evaporate, your right.
Anything else would be already outsourced and/or centralized if labour costs dominate over transport. Polish labour costs are not even close to Chinese or say Romanian, while the hike is not big enough to overcome sunk costs in most other cases.
If you think aforementioned outsourced jobs would evaporate, your right.
manufacturing will simply move further eastward or directly to china.
> You definitely want to sell your stuff in Poland in the next couple of years
not so sure. as a matter of fact I'm looking rn at some property on the Krakow-Katovice axis, they're still cheap as dirt and will grow quite some ways before eventually crashing all down, so there's space for some speculation. and there's still the euro looming at the horizon and that will do a number to inflation so if plan A fail plan B can still extract a lot of value from the property.
> You definitely want to sell your stuff in Poland in the next couple of years
not so sure. as a matter of fact I'm looking rn at some property on the Krakow-Katovice axis, they're still cheap as dirt and will grow quite some ways before eventually crashing all down, so there's space for some speculation. and there's still the euro looming at the horizon and that will do a number to inflation so if plan A fail plan B can still extract a lot of value from the property.
What did Americans think of Trickle Down Economics and Ronald Reagan at the time?
Reagan was re-elected by winning 49 states. (He lost only Minnesota, home state of his opponent. Reagan said he did not campaign there, as it was not kind.)
Make no mistake-- Americans heartily approved of the way the country was run. It lasted even one more election, as the older George Bush (Reagan's vice president) won.
Then the economy soured briefly and Bill Clinton swept into office. Clinton ran the economy well, too, which was another age of prosperity.
Reagan was re-elected by winning 49 states. (He lost only Minnesota, home state of his opponent. Reagan said he did not campaign there, as it was not kind.)
Make no mistake-- Americans heartily approved of the way the country was run. It lasted even one more election, as the older George Bush (Reagan's vice president) won.
Then the economy soured briefly and Bill Clinton swept into office. Clinton ran the economy well, too, which was another age of prosperity.
The beginning and end peaks for the top 0.1% on the last chart are quite similar. If there were more macro data, would we see that sort of high concentration as the norm across history, and more income equality as an anomaly?
Many economists support policies that people who don't understand economics would describe as benefiting only investors, like lowering corporate taxes. But the reason for this is not a belief that the wealth will "trickle down" but to encourage investment and growth.