Trickle-down – the USA and Sweden show how it looks in reality

30 March, 2013 at 17:44 | Posted in Economics, Politics & Society | 4 Comments

In a post up today on his blog, Paul Krugman notices that there “doesn’t seem to be much trickle-down going on” in the USA.

Unfortunately we can see the same pattern developing in Sweden. Look at the figure below, which shows how the distribution of mean income and wealth (expressed in year 2009 prices) for the top 0.1% and the bottom 90% has changed in Sweden for the last 30 years:


Source: The World Top Incomes Database

A society where we allow the inequality of incomes and wealth to increase without bounds, sooner or later implodes. The cement that keeps us together erodes and in the end we are only left with people dipped in the ice cold water of egoism and greed. It’s high time to put an end to this the worst Juggernaut of  our times!

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4 Comments »

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  1. I call it “Trickle down, socialism”. Since it is a form of socialism for the rich. (Not that socialism is about handouts like trickle down economics, but it is in the minds of people who think trickle down economics is a good idea.

  2. There is no mathematical possibility for “trickle-down” to occur unless businesses were to lose money in the aggregate.

    Can anyone, anywhere come up with a scenario in which the net flow of funds is towards the lower 99% of households?

    • Well if we should do a neoklassical argument for it, we could talk equilibrium here. De principle by which money would trickle down through this equilibrium is Le Chatiliers principle. By increasing on one side of the equilibrium it will flow over the equilibrium. However for the 1% (or 10%) we know what the equilibrium constant is, we know that less than 20% of the resources will leave the 1 % and most of that will stay with the top 10%, in the end 10% of the resources will reach the 90% by manipulating equilibrium using Le Chatiliers principle.

      I suspect the argument is that knowing the equilibrium konstant it does not matter what side we add money, 90% will still end up with the really rich. Ignoring time, both will lead to the same distribution of wealth. But for the person unemployed today, time is very important.

      One day the neoclassics will learn kinetics. I suspect they wont do any good with that knowlege tho.

      • Economists can unlike chemists manipulate the equilibrium constants, if I were an economists I would do that instead, changing the equilibrium constant is by far the most effective way to manipulate equilibrium.

        But ofcourse, the point of the neoclassics is to NOT change to conditions that makes resources end up in the hands of the few. Thats what they claim anway.


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