Thursday, June 18, 2015 

International Monetary Fund (IMF) Research PROVES 'Trickle Down Reaganomics' Do NOT Work !!!

 

The International Monetary Fund (IMF) has now released detailed research that proves a pillar of right wing economic theory DOES NOT WORK !!! Huffington Post


"The International Monetary Fund just blew a big hole through trickle-down economics. You’ve probably heard of trickle-down economics: It gained popularity in the 1970s and was a major part of the pro-business “Reaganomics” agenda of the 1980s.


The theory is simple enough: If you concentrate capital (money) at the top of the economic ladder (among the wealthy and corporations), that money will be more productive than it would be elsewhere, and it will create work and therefore income for everyone else. Whether it was sound or not, it was a compelling theory for many in the business and political world, because it meant, among other things, tax cuts for top earners. And it was used for years as part of the foundation for successive corporate tax cuts around the world.


But now the IMF is raising one little problem with the theory: Apparently it doesn’t work. That’s the argument in the fund’s new research paper, “Causes and Consequences of Income Inequality


Looking at data from 159 countries from 1980 to 2012, researchers found that when the wealthiest 20 per cent see their share of income rise by one per cent, the economy grows 0.08 percentage points slower over the next five years. “In contrast, an increase in the income share of the bottom 20 percent (the poor) is associated with higher GDP growth,” the report says.


When the poorest 20 per cent increase their share of total income by one per cent, the economy grows 0.38 percentage points faster. Translation: Give tax breaks or higher wages to the poor, and the economy will grow. Give tax breaks or higher incomes to the rich, and you reduce economic growth. “The benefits do not trickle down,” the researchers conclude."



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