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Trickle‐down technology and why it doesn’t work (aralbalkan.com)
13 points by achalkley 1368 days ago | hide | past | web | 24 comments | favorite

Does trickle down economics work? Given that 1% of America has 40% of the nation’s wealth, the answer is no, it doesn’t.

This is a fallacy based on a complete misunderstanding of trickle down economics. The premise of trickle down economics is that a rising tide lifts all boats, which has occurred. The poor today are considerably richer than even the middle class of earlier eras.

The same applies to technology. Open source may not be directly used by consumers in the same manner, but it does directly enable those who do target consumers. For example, historically, a company building a product targeted directly at end consumers based on ease of use would need to devote an entire team to building their own webserver (https://en.wikipedia.org/wiki/AOLserver). Nowadays that same organization just uses apache (built by enthusiasts) and the team of engineers no longer devoted to building a webserver instead builds something useful for the consumer.

"This is a fallacy based on a complete misunderstanding of trickle down economics."

I'm also sort of curious in what world "trickle-down economics" is actually how the economy has been run for any period of time in the recent past. Liberals have been running the economy in the US for decades now, even when Republicans were nominally in command, and as far as I know the rest of the developed world has been running even more liberal policies for even longer.

If you believe wealth disparities are a result of government economic policy, and you are unhappy about that, you are unhappy about the result of liberal economic policies.

It's as surreal to me as people who still today rant about how bad "laissez-faire economics" are as if they've ever lived under them. Maybe they are bad, but you sure don't know that from experience. There hasn't been any for a long time now.

While you have a point, and it should be noted that the US government has never been able to tax more than 20-22% of the nation's GDP (not even in WWII), there has been a sea change starting with JFK in taxation policy towards "the rich". The history of top marginal Federal income tax rates is (memory plus http://www.ntu.org/tax-basics/history-of-federal-individual-...):

Peaked at 77% during WWI.

Down to 24% the last time Republicans ran the economy (down and up a tick as engineer Hoover tried to fix the economy :-( ).

63 then 79% under FDR pre-WWII.

Up to 94% during WWII.

Never got less than 82% post-WWII, and "We like Ike???" after he kept Truman's 91-92%.

Then down to 77% under JFK in the first supply side tax cuts.

Bounced between 70% and the mid-70s LBJ through Carter.

Down to 50% Reagan part I, then down to 28% after the great tax rewrite in '87.

Raised to 31% by "kinder and gentler" Bush I and to 40% under Clinton.

The devil 'W' reduced that to 35% ... where it's stayed, even under Obama and Democratic legislative super-majorities.

We also need to factor in that inflation pushed people into higher tax brackets until Reagan, and capital gains taxes have never been indexed for inflation (nice racket, the government inflates the currency then taxes you for merely running in place).

One should also note this is intended to change people's behavior. The lower the max marginal rate, not to mention the capital gains rates, the less people focus on tax advantaged investments. I watched my parents change their business strategies quite a bit from the '70s to the '80s, and in ways that ... trickled down a lot more.

Regulatory capture and anti-competitive regulations seem like they would have a much bigger impact on wealth disparity than tax rates.

What's with this OBSESSION with how wealthy the wealthy are?

That's how this bogus article starts, it says "the poor are not better because so much is owned by the rich", a "Look, a squirrel!" head fake which totally ignores how well off the poor are or aren't. And you're just continuing that focus.

Bottom line: do you care about the poor, or about the rich?

Your statement above only touches on the latter.

It's neo-Puritanism; H. L. Mencken famously said that the original is "The haunting fear that someone, somewhere, may be happy."

In this modern version it's "The haunting fear that someone, somewhere, may be making money." Hence the obsession to the exclusion of all else on how well the nebulously defined "rich" are doing, no matter that one of the biggest problem our poor have is obesity.

Not that that's limited to the poor! It's just that advocates for them are reduced to worries about "food insecurity". And unlike the situation that led to the Federal school lunch program, too many F4s among WWII draftees, after FDR's own Agricultural Department who's major focus was on keeping food prices high found that 1/4 of the nation was malnourished, the government can today get away with fads that starve children during the day because they'll at least make up their calorie deficit when they get home (not that that's at all healthy).

The premise of trickle down economics is that a rising tide lifts all boats, which has occurred.

I don't think this is correct. "A rising tide lifts all boats" is a metaphor to say that an improving economy benefits everybody, and most people agree on the general idea. But nothing is trickling down with this metaphor, all boats are lifted together. Trickle down economy is the idea that helping the rich get richer will eventually benefit the poor (under the assumptions that the rich know best how to improve the economy, and that they will use the money to do it). Here many people disagree.

Richer because of a few consumer products that didn't exist in earlier eras?

Richer because they by and large aren't worried about access to clean water, where their next meal will come from, or having a roof over their head when they sleep. Their transportation and entertainment options are essentially no worse than those of "the rich", if they go to an emergency room they must get treatment, etc. etc. etc.

(Please don't go into a riff about the homeless before you subtract the mentally ill that have been dumped on the streets, plus addiction is a big, but not at all new, problem.)

The poor don't have to worry about where their next meal will come from anymore?

I said "by and large" they don't have to worry. At least worry about starving; elsewhere I noted the concern today is about "food insecurity", and a bigger concern is obesity.

The latter tells me things are qualitatively different. And that's in a very short time, my parent's lifetime, for they were born during the Great Depression. Probably even mine, e.g. the modern Food Stamp program began shortly after I was born.

Ubiquitous access to food that causes disease does not make 'The poor of today better of than the middle class of the past'.

Using the toxicologists' maxim ""All things are poison and nothing is without poison; only the dose makes a thing not a poison." (normally "The dose makes the poison"), is there any food that does not/can not cause disease?

So all food is equivalent! Following your maxim, we can replace food stamps with an unlimited supply of strychnine and just let people choose a healthy dose for themselves.

You're welcome to show me (I'm from Missouri) where anyone has seriously suggested strychnine or other "official" poisons are foods.

Which is very different from e.g. pointing out that while strychnine has an human LD50 of 1-2 mg/kg, "In low dosages, strychnine can act as a stimulant and has been used by athletes to enhance their performance." followed by a couple of Olympic examples in 1904 and 1992 (https://en.wikipedia.org/wiki/Strychnine).

That was an absurd comment, meant to illustrate how meaningless it is to say 'anything is poisonous in the right dose' in a thread about whether the poor today are better off than the middle classes of some past era.

And a smaller percentage of income is spent on things like food and clothes. By creating larger and larger organizational structures, you can more efficiently realize economies of scale. Large structures imply lots of money.

A shirt isn't just made in a small factory the next town over, it's made on the other side of the planet by a company with a million employees, then shipped in a global logistics network that's the result of hundreds of billions of dollars of infrastructure investment, and communications were probably handled by a communications network that's the result of hundreds of billions of dollars of infrastructure investment. The ship the shirt is delivered on won't be owned by a bunch of middle-class income earners but an incredibly rich corporation who can afford to finance and purchase massive ships, the crews that run them and the fuel that powers them.

The very few people who run the tiny portions of these massive industrial giants that delivery the $10 shirt to Walmart should make a lot of money. Somebody responsible for a corporation with a market cap in the billions of dollars shouldn't be pulling down $30/hr. Would it make sense for the store manager where the shirt is sold to make more? They're only responsible for 1 store, while the CEO might be responsible for thousands of stores in aggregate.

Trickle down economics is not just the idea that 1 rich person might hire more cleaning staff to keep their silver from tarnishing, but that they might run larger and more efficient organizations that made a $100 shirt into a $10 shirt. Meaning their cleaning staff can also clothe themselves more readily.

As much as I like the idea of my yard guy living a good and comfortable life, I also wouldn't swap him with my boss's position tomorrow. I know my boss can work a riding mower and a weedwacker, but I'm pretty sure my yard guy can't operate a multi-million dollar corporation. Moreover, every week I debate whether or not I should keep my yard guy, I can also operate a mower and a weedwacker. If he wants to go buy a vacation home someplace and triples his yard rates, he's going to lose me as a customer and end up poorer than before. So the value of what he is offering may only be enough for him to live the economic life he has...at the bottom of the trickle. This is an important market function. There's tons of yard guys in my area and I can switch to another one if I need to. Or if there isn't enough competition to push down prices I can always fall back and just do it on my own.

If my yard guy was smart, he'd go talk to my HOA about providing a neighborhood-wide service. We already overpay for our HOA services, if we added another $10-15 per month to it, nobody would really care, and our yards would service themselves. No more HOA letters about overgrown weeds or uncut lawns. And in my neighborhood, with several thousand housing units, my yard guy would be moving around a couple million dollars per year and he'd be a very rich man, employing quite a few not so rich men to work a riding mower and weedwacker. But he's not smart, and he doesn't do that, so he ends up in his station in life, trapped by the simple values of economics, yet benefiting from cheap food and cheap clothes.

Does trickle down economics work? Sure it does, to a point. There's also people who find themselves in positions of not just high responsibility, but high advantage, and they use that advantage unfairly. Figuring out what is fair and unfair is an important market function as well.



"The ship the shirt is delivered on won't be owned by a bunch of middle-class income earners but an incredibly rich corporation who can afford to finance and purchase massive ships, the crews that run them and the fuel that powers them."

Through the magic of limited liability corporations (we're supposed to boo the last word) many "middle-class income earners" do own fractions of all these enterprises through their investments for retirement etc. Another magical thing we can do at scale, with electronic data processing, is allow them to spread their risk by making broad bets in sectors of the economy, particular countries, regions or classes of countries, sizes or capitalizations of companies (e.g. S&P 500 index funds), etc. etc. Or debt of different levels and types of governments and companies.

Yeah, that's true and I realized that as I was typing it. But I didn't want to let facts get in the way of a good argument!

This doesn't seem like a good analysis to me. How many consumers use Linux? Let's see, how many Android devices are there? And what about Firefox?

And then he cites the internet as an example, but dismisses it for no apparent reason.

The article reads as very condescending to engineers/technologists. It seems like the author thinks that technologists are out-of-touch geeks and need his e enlightened guidance to show them back to civilized society.

And the end makes no sense to me: "own our own data, tools, and derived intelligence — what I call our digital selves — and avoid becoming a society of digital serfs". So, he wants things to be so easy to use that you don't have to know anything about how they work, but he also wants people to be in control of their digital destiny? It doesn't work like that. Easy to use is great, but without knowing something about how the technology works you will always be a slave to it. No matter how rich you are, if you don't even know how to cook or clean, you will be a slave to your cooks and cleaners.

The only thing he has to offer is "Experience Driven Open-Source", which is incredibly vague. I say, go for it, as long as you aren't asking for my money to do it. I hope it produces some amazing things.

(I set aside the political garbage at the beginning of the article.)

"So, he wants things to be so easy to use that you don't have to know anything about how they work" That's half part of the flawed argument, even it happens you should be able to use it for some purpose, so that's another part that should magically happen.

The reason stated for why trickle down economics isn't working is a non-sequitur, kind of undermines the credibility of the rest of the article. As to the main premise, I mean, open source is obviously a huge bonus to all the freelancers and startups and indie devs, not to mention the proliferation of Android smart phones. I think it clearly is 'trickling down', maybe just not as totally as the author would like.

So much to discuss here: 1) hard numbers; where do I confirm everything you are saying, analogy to economy does not make it true (nor are you proving that the first concept it's true) 2) if you create something specific to A, expecting it to adapt to B magically is wrong, C has to adapt it bringing more work to the flow 3) "Consumers, on the other hand, rarely care about the technology itself but focus instead on what the technology enables them to achieve." Sure, but that would also mean that they are not interested in the enabled features by it so was it interested on the technology or whatever it enabled or not? 4) " How many non‐enthusiasts do you know who use Linux (and who don’t live with an enthusiast who set it up for them and fixes it for them when something goes wrong?)" All android users

What if the problem it's actually that there is no goal, therefore tech is irrelevant?

"Experimentation by enthusiasts is of great value and usually results in the creation of great infrastructure. However, we also need people and companies focused on meeting the needs of consumers."

Nuanced argument.

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