Trickle down economics and dollar re-circulation works well in a closed system. Dad gets a bigger pay check. Pays the kid to cut the grass. The kid buys candy at the local store, who bought it from the manufacturer down the street. This model however falls apart when tax robs every transaction by a significant portion. Think about what happens when every transaction gets taxed at 30% to 50% for income, sales, and social security. Then think about what happens when you have a trade deficit. The cash trickles down and out.
So, I would argue trickle down economics did in fact work exceedingly well. The problem is the benefits trickled down to the folks providing goods and products. The Chinese economy has been on fire and living standards are rising there. The folks on the bottom in the US got bypassed.
Wow that's not what happened! 1/2 of our population hates business and thought business can take care of themselves and that America does not have to compete against other countries to get them to come or stay here and that we will somehow keep growing like we did when America was the best place in the world to create wealth.
Larry wrote that about in 1980 things when bad for the employee's. His observations are 100% correct!
Historians now looking at history take the end of 1976 as the start of post-Mao reform and argue that China basically became a market economy by 1980 and fully by the end of the 90s before it joined the World Trade Organization in 2001.
It was in 1976 that China figured our socialism was never going to create the prosperity that capitalism had for the United States and they changed there system to a market economy so did Russia abandon socialism for capitalism as did most of the world.
For the 1st time in 1980 we started losing BUSINESSES and JOBS because China out competed with us as a country and we did NOTHING.
China and the other countries only offered lower tax rates, less regulations, and cheaper labor in a country that could take it all away the next day.
The auto industry solved the labor disparity and others too automated with robots to out compete there labor rates with cheaper robot labor that can work 7 days a week 24 hours a day in the dark and cold so labor is not much of a factor anymore.
The problem is automation lost jobs too and China simply out competed us with lower tax rates and less regulation while the congress did nothing to get the jobs and companies back thinking somehow that America will become the best place in the world to do business paying the highest tax rates in the world! What were you thinking????
As the job's left it reduced the ticket down effect the tax base was reduced from both employees job lose and business income.
As the number of unemployed increased the wages should have gone down according to supply and demand but employers know it hard to live on what most earn now so they have keep the wages artificial high according to the laws of supply and demand.
Last year I was ask to come up with the actually unemployment numbers using the government numbers here is what they actually are.
US population is 303M see(
http://www.census.gov/popclock/)
If you add the part time workers of 6.6M to the 118M = 124.6M employed
There are 57M citizens that are under 18, or over 65 plus the students in high-school and college.
So 303M - 57M to young, old, or going to school = 246M labor force.
Subtract 124.6M that are working from the 246M labor force = 121.4M unemployed! Even those who do not know math can see it's almost 1/2 the labor force that are really unemployed!!
Unemployment rate is supposed to be calculated by number of unemployed persons of 121.4M divided by 246M labor force = 49% far cry from the 5% listed by our government here
http://data.bls.gov/timeseries/LNS14000000
Using the same government numbers reported the government math does not match reality for the unemployment rate!!!
Until we create enough new business and jobs to employ another 100 million workers the USA will not see prosperity as we had in our generation when America had a basic monopoly on capitalism.
We have to compete with the other capitalistic countries if with the only thing a country has to compete with lower tax rates and less regulations or just keep watching China become the next country to keep most of your wealth and that is where those who wish to become wealthy will go.
It very simple and so is most of the economic math required to figure all of this out.