2. Jun, 2016

"trickle down economics." full steam ahead or chronic fail!

It is a chronic fail! No doubt. But that is today and not from the 1980's. Trickle down economics is also known as Reaganomics or Supply driven economics.  The basic laymans definition is that with a lower tax burden and supposed increased investment, business should produce (supply) more and increasing employment and more and increasing worker pay.

Reagan was right in the 1980's however the move to sharemarket shift, accelerated capital movement and then the internet has made this economic rationale defunct. In fact as the internet grows exponentially the redundency of Reaganomics is growing at a twice times rate. By 2022-25 Trickle down economics will be dead 110%.

Bringing this to a micro level it is easiest described by one element, job losses to innovation and IT. This impact is extrapolated by lower costs of wages in third world countries who have caught up with one basic element of Western economies...ENGLISH LANGUAGE!

Yes telemarketing is the example of this. 

Telstra & any telco, the banks, etc etc, even the ATO now rely on either Indian, Malaysian or Phillippine call centres. In these call centres wages are 10x less than here.  Another example is clothing... a T Shirt is now made in Bangladesh (ask Bill Shorten) to sell in Australia for $4-5 retail.  These are just 2 examples of what has happened to dozens of industries many based in manufacturing or value added services.

So trickle down economics suffers from future schock... yes but only if you have no intention of secondary or tertiary value adding... more on that later. The other aspects of its failure are the internet and IT... that can not be challenged so easily and is inevitable as is wages and conditions. The other elements are 1. share market shift which is also another subject as is 2. The new movement of capital, also another subject.

Not suprisingly both the ALP and LNP follow this ideaology just from a different starting point and via different industry.