Trickle-Down Economics Has Failed Its Growth Mission - Bloomberg

The bipartisan infrastructure bill recently passed by the Senate is a sign that U.S. leaders are starting to think differently about government investment. For decades, legislators have tried to push down the cost of capital, believing it would spur a financial investment boom that would trickle down through the economy. But it never seemed to do much to boost capital spending, so a change in strategy is warranted.

When you hear the term “trickle-down economics,” you probably think of the simplified, popular version: Give rich people money by cutting their taxes and they’ll create jobs. But there’s actually a more sophisticated version of that argument support by classical economic theory. Basically, the idea is that if government policy rewards financial investment, people will save more, which will increase the amount of financial capital in the market. That flood of financial capital will reduce the cost that companies pay to borrow money or issue stock, making it more attractive for them to invest. And that investment will create jobs.

Adblock test (Why?)

Trickle-Down Economics Has Failed Its Growth Mission - Bloomberg
Read More