Archive for November, 2012

Tickle-Down Theory

Tuesday, November 6th, 2012

Remember, this trend in corporate thinking, where THEY are doing US a favor by giving us jobs (trickle-down theory), is not only wrong, but it’s demeaning to their employees. They hire employees to do one thing, and that’s make them more money. Do you honestly believe they are hiring people out of the goodness of their heart? They would have you believe that.  Supply and demand is what creates jobs, not the kindness of your corporate fat cat. They don’t care about you, and the second they can get away with cutting costs (you), they’ll do it. Don’t be fooled by the Trickle-Down economic plan, all that does is keep profits up on the top shelf with the people least likely to send it your way.

This is a double edged sword, however. The corporate big wigs are also aware that a strong middle class is what creates demand for their products. This is something they lost sight of when they were screwing us from every angle. Too many companies had their own agendas and nobody was paying attention to what the other guy was doing. This led to overlaps in their systematic reduction in the middle class. In turn they were as surprised as anyone when the whole thing collapsed, and they immediately started pointing fingers at each other. Each thinking that the other guy had infringed on their turf, so to speak. When one company attacks the consumer/middle class, it was with intention of control.  By this I mean the corporations had in their plans to maximize profits for the top 1% while keeping the middle class barely propped up, without totally destroying them.  They needed to keep them down while still being able to purchase their goods and services. Call it, sustainable slavery. You add some nice amenities to their mundane lifestyles to keep them happy and stupid, and hence more easily controllable. The problem occurred when too many corporations dove into the pool, essentially collapsing the entire structure.  Too many companies “maximizing profits” equals too much strain on the demand base, not enough money to keep up the demand for goods and services.

The very theory of trickle-down economics goes against the basic principles of a capitalist economy.  You can’t sell more widgets to people with no money, and you can’t hire more people without selling more widgets. You have to spend money to make money, not the other way around. Shipping jobs overseas insures that you will be able to increase profits by lowering overhead, yet cutting jobs decreases your customer base.  In theory, the amount of jobs you decrease the base by should be a small enough percentage that it doesn’t overtly affect your profits. However, when EVERYONE is following this formula, there is a HUGE decrease in the overall customer base and then nobody can afford your widgets. Trickle-Down Theory relies on the generosity of the greedy, and that’s why if fails.

You can continue to believe that your boss has YOUR best interest in mind, and not his bank account. If that were the case, I’d be greatly mistaken on the amount of pure philanthropy in this country. 

So sure, give the large corporations tax breaks and a cornucopia of other subsidies, I’m sure they’ll pass along the fruit of our labor. Or you could give those same tax cuts and subsidies to the middle income families, and they’d have more money to buy your corporations widgets.

Trickle-Down Theory asks corporations to create jobs before there’s a demand or need to do so. That simply isn’t going to happen. Not when they could just as easily add that money to the profit bin and pay themselves handsomely.