Neoliberal capitalist governments tend to support concepts such as trickle-down economics providing tax breaks for corporations and the wealthy. The expectation is that tax savings will flow through to new investment and the creation of more and better middle-class jobs. It has been a proven failure countless times, from the 1890s horse-and-sparrow theory through to 1980s Reagonomics, yet, almost comically, the same programs are reintroduced time and time again.
The horse and sparrow theory suggests that if the horse is fed enough oats, some of it will pass through the horse’s digestive tract and be excreted on the road, where the sparrows will find enough to satisfy their own modest needs. Although a somewhat graphic analogy, it sums up the root problem of wealth inequity in today’s society.
The latest installment of trickle-down economics, Trumponomics, resulted in record government deficits and, corporately, a dispersal of quantitative-easing funds (tax credits totaling over one trillion dollars) that did nothing to stimulate the economy. Unfortunately, corporate windfall tax savings tend to be used for non-systemic economic programs, such as share-buybacks (benefitting only the shareholders) and employee reduction buyouts (again, benefitting only the shareholders).
The autumn 2018 announcements of GM staff reductions (over 25,000) and plant closures (five: Oshawa, ON; Detroit, MI; Warren, OH; White Marsh, MD; Warren, MI) were a direct result of the cash flow made available through trickle-down tax savings. Ironically, the GM taxbreak of over $500 million was intended to stimulate growth and employment in local manufacturing.
As the wealth-inequity ratio of rich-to-poor declines (i.e. what used to be the top 10% moved quickly through the top 1% and is now closing in on the top 0.1%), it is becoming obvious that the extra cash flow held by corporations and wealthy individuals is not invested in new business opportunities.
And perhaps a sign of our generally weakened social conscience, the rise in extreme poverty rates is a key indicator for the lack of empathy and philanthropy found in today’s nouveau riche.
Government hand-outs to the rich end up in the stock market where the shareholder is king and an increasingly small number of exceedingly wealthy individuals benefit from the closed system of mutual self-serving intent (Rx Music 2020).
Keith Loach 