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Thursday, 05 June 2014 07:11

Trickle-Down Economics Confronts an Insurmountable Challenge: Reality

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MARK KARLIN, EDITOR OF BUZZFLASH AT TRUTHOUT

trickledown345(Photo: Bankenstein)If someone insists that it is not raining when it is, you might think that you can persuade him or her by taking the denier to a window and showing him or her the downpour, with drops splattering against the glass.

When the person insists that the drenching rain is really only due to a sprinkler being on - even though the sky is filled with lightning and booming with thunder - you know that you have a reality denier in your midst.

The upholders of the reigning economic policy in the US - trickle-down economics - are once again taking issue with data that disproves that the concentration of wealth will benefit the economy as a whole. Such is the case in financial media criticism of Thomas Piketty's data in Capital in the Twenty-First Century, which Piketty has already refuted. (You can watch a highly informative conversation between Piketty and Sen. Elizabeth Warren (D-MA), in which he handily dismisses challenges to his book.)

Aside from periodic economic studies that debunk the idea that the concentration of capital in the hands of the few improves the US gross domestic product and expands jobs and wages - as BuzzFlash at Truthout discussed in a commentary last week - there is a more compelling refutation of the notion that letting the rich get richer benefits everyone: reality.

There is no evidence of any kind that the explosion of wealth that began with the self-servicing narrative of trickle-down economics more than four decades ago has reduced income inequality. Furthermore, as the diversion of the nation's income and assets have accelerated since 2000 into the hands of the 1% (who received 95% of the gain in national income in the first few years following the crash of 2008, as detailed in the BuzzFlash commentary last week), the income gap has widened - as the economy barely sputters along.

This is not debatable data: it is reality, like seeing rain gushing from the sky as proof that the sun is not shining. You can spin this reality, as The Wall Street Journal and The Financial Times - among other pro-Wall Street media - do but you cannot deny the facts of what is occurring. The US has two economies: a soaring stock market and wealth for the plutocracy, and a declining standard of living, lower pay, increasing debt and long-term joblessness for the rest of the United States.

As I recently heard someone acerbically but accurately comment: "For nearly thirty-five years, money has not been trickling down; it has been trickling up (or one might argue gushing up)."

This is a reality that is so evident it is palpable in our own lives and the economic struggles of the people we know.

Therefore, if you live in the reality-based community within the United States, nearly thirty-five years is long enough to provide concrete evidence - not theory - that trickle-down economics only makes the rich richer. In fact, this self-serving exercise in economic theory has resulted in the most massive redistribution of income upwards in US history.

It is interesting that climate change deniers also reject reality. The polar ice cap and Antarctica may be melting at accelerating rates, the world warming in temperature, the seas rising and drought extending across the planet, but reality cannot compete with propaganda that benefits corporate bottom lines.

Abraham Lincoln tartly commented, "How many legs does a dog have if you call the tail a leg? Four. Calling a tail a leg doesn't make it a leg.” 

Lincoln understood that reality cannot be altered by false narratives.

Thomas Piketty's Capital is crammed with supportive data, but the reality that exposes trickle-down economic theory as a sham is all around you. You are likely to be feeling pinched by the surge of money to the wealthy yourself if you are not in the top ten percent of earners.

We should be wary of an economic system that is based on a fairy tale. One day, it will implode.

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