Stupid article is stupid.
1. "Trickle down theory" isn't a real economic theory advocated by any significant group. It is little more than a pejorative strawman.
While the name isn't a real economic theory for most, the ideas behind it are real and believed by many people. That if you lower taxes on the rich or "job creators" that they will use the money in a way that will boost the economy and help the common person. Look at the Republicans in Congress right now.
2. The summary shows that this study is worthless: "In fact, researchers found that when the top earners in society make more money, it actually slows down economic growth. On the other hand, when poorer people earn more, society as a whole benefits."
Here's why. This study is meaningless unless you know what caused the top earners to make more money compared to when the bottom earners earned more. For example,
inequality in the US has accerated during the Obama administration despite Obama's efforts to target inequality (increased taxes on the rich, etc.). In short, the attempt to make society "more equal" correlates with greater inequality.
In other periods in the US and for other countries, when income tax rates (across all brackets) are reduced and taxes on capital are reduced (often benefitting the rich more than the poor), you often (albeit not always) see lessening inequality as a result of increased economic growth.
Um, nope. The report and a report by the OECD show how the middle class and the poor are losing ground.
“Indeed, empirical estimations using more detailed data for Organisation for Economic Cooperation and Development countries [34 of the world’s richest nations] suggest that, in line with other forthcoming IMF work, more lax hiring and firing regulations, lower minimum wages relative to the median wage, and less prevalent collective bargaining and trade unions are associated with higher market inequality.”
Shockingly that looks a lot like the U.S. right now.
As to the growing income inequality, it isn't shocking. Even though we raised some taxes on the wealthiest Americans, their income is growing at a significantly faster rate, and many of the richest Americans didn't get their taxes really changed at all because we didn't do anything to capital gains. Combined with the fact that the middle class and the poor aren't seeing any real gains in income the gap continues to grow. That is all basic math.
As to the bold, do you have links with the data?
3. Income inequality isn't what causes poor economic growth. Rather, severe income inequality is mainly a symptom of bad economic fundamentals, e.g., lack of private property rights and rule of law, authoritarian regimes, oligarchical control of the economy, corrupt over regulated states that prevent small and mid-sized players from succeeding (those without the political connections or money to get their licenses, etc.) and so forth.
Income inequality is also a symptom of how corporations treat their employees and of the greed (individuals and corporations) in the U.S. It is a symptom of publicly owned corporations that feel a need to increase profits every quarter, where being profitable isn't enough. Also as I already posted
“Indeed, empirical estimations using more detailed data for Organisation for Economic Cooperation and Development countries [34 of the world’s richest nations] suggest that, in line with other forthcoming IMF work, more lax hiring and firing regulations, lower minimum wages relative to the median wage, and less prevalent collective bargaining and trade unions are associated with higher market inequality.”
What a shocker, trying to get rid of Unions is harming the average worker.
Pay low-income families more to boost economic growth, says IMF | Business | The Guardian
ETA: Sorry if this was a little disorganized, I was up all night with my sick daughter.
