Trickle-up economics
January 23, 2012 2 Comments
There is a good old-fashioned argument to be had over the merits of a redistributive taxation policy versus the trickle-down effect supposedly inherent in free-market capitalism.
A redistributive taxation policy is one where the worst effects of capitalism are ameliorated by a direct taxation system that makes the rich pay more than the poor. This is best evidenced by the tax bands. The further left one goes politically, the harder one wants to squeeze the rich, usually by introducing higher tax rates for high earners.
The trickle-down is an effect that is meant to be generated by the spending power of the rich. Those that support this move towards the idea of more indirect taxation, arguing that tax take increases as a result.
It is an argument about fairness, but not just that. It cuts to the core of how capitalism works, and is used to justify a particular methodology when addressing taxation.
The more you earn, the more you pay is an easy principle to understand. This understands that the rich have an obligation to help support those less well off, and it also acknowledges that an unfettered free-market is unfair. There is a strand of Libertarianism that wants no tax on income, believing that fairness is best served by making taxation liable to choice. This ignores the reality that the poorer you are, the more of your income has to be spent proportionally on life’s essentials – items where choice does not figure (I can choose whether to buy a Picasso, I cannot choose not to eat).
As any scientist will tell you, the best measurement of the efficacy of any system is the outcome it produces. If your aim is towards more equality then what we have today is failing. The gap between rich and poor is growing, and even those one would usually describe as comfortably off are being left behind by the ever more avaricious.
I wonder what the advocates for the trickle-down effect make of all this? For some this is further evidence of the failure of the neocon-liberal consensus. Whatever the causes, today we are seeing a trickle-down engaged in reverse gear. However you look at it, fairness is not being served.
Ironically ‘freedom’ is supposedly at the core of libertarian parties. Yet there fail to recognise that freedom depends on a indivauls ability to choose and if somebody is shackled with debt, on minimum wage employment or unemployed what freedom do they really have? Redistributive taxation liberates working people (who create wealth in the first place) from the free market. Providing them with free, quality public services and other benefits to redress wage inequality. Without this many working people would be denied access to their basic human rights.
I thought Thatcher and her corner shop economics was pathetically inadequate, combined with the experiment in Supply Side economics it was an absolute recipe for disaster for this country. Cameron is a buffoon, the policies from a cabinet seemingly devoid of any real understanding of politics, economics or what has gone before. He seems to be driven by the most simplistic of principles that things should be simpler, quicker, cheaper, easier with no real understanding if these thungs are achievable or the complex relationships between investment, unemployment and economic growth. It is like watching the country being run by a group of wide-eyed, excited & enthusiastic students who are are just woefully inexperienced and out of their depth.
The Tories pander to the Bankers and the Liberals pander to the Tories, it is almost surreal. Given this political backdrop you would assume that Labour would be racing ahead in the polls and dictating the political agenda ………. step forward Ed Milliband, the thinking mans book marker. I can’t remember any Labour Leader with such a weak public profile, I’ve started to feel sorry for him, I can’t help thinking the dispossessed in this country deserve a politician who will fight for them, who will champion their causes. Sadly Ed has missed a ton of tricks and has missed the boat, he’s not at the Races and is not a fascinator. Where do we go next, Yvette Cooper?