does the credit crisis disprove trickle down?

[ender502]

So, it seems as if the reason the economy would come to a crash if not for the "bail out" was because banks wouldn't lend any more $.

But I thought the point of reaganomics was that lower taxes would equal reinvestment by ma kettle, rich guys and corporations?

With our historically low taxes (for us) and cash handouts (economic stimulus in your eye) shouldn't we not need the banks to loan $ if reinvestment has been handled by the lower taxes?

Or is the notion that lower taxes = reinvestment just bullshit?

Every bus. transactions course i ever took assumed that any sane person wold borrow rather than use their own $ to invest.

thoughts?

ender502

[Great Cthulhu Himself]

There's plenty of reinvestment. In foreign countries.

Reagan never anticipated that India would someday supply 99% of our tech support and Bermuda would be the world's most popular bank.

[takedown275]

That's pretty much it. Supply-side economics presumes a closed economy, or at least one which is heavily protected.

[ender502]

So then does that mean the republican "low tax" philosophy, though certainly better for my wallet, not hold water?

Are taxes then (not considering the extremes of high and low) not all that important to reinvestment and by extension economic growth/prospoerity...for the U.S.?

Would you say that iinterest rates ar emore important?

ender502

[kostka malpa]

Oct 6, 2008 22:18:30 GMT -5 Great Cthulhu Himself said:

There's plenty of reinvestment. In foreign countries.

Reagan never anticipated that India would someday supply 99% of our tech support and Bermuda would be the world's most popular bank.

Well companies are always going to try to save money via cheap labor and and tax havens. There is not a lot you can do about it but become a larger more attractive tax haven or frce everyone else to raise their wages to something comperable. The former is fairly easily done the latter would be impossible.

[syaireba]

Indeed. The fact that Ireland--a model economy based on openness, being a tax-haven and moderately paid workers--is now deeply in recession shows that you can only push this so far in a global economy where credit is fluid and cheap labor trumps infrastructure.

[takedown275]

Oct 7, 2008 8:45:43 GMT -5 kostka malpa said:

Oct 6, 2008 22:18:30 GMT -5 Great Cthulhu Himself said:

There's plenty of reinvestment. In foreign countries.

Reagan never anticipated that India would someday supply 99% of our tech support and Bermuda would be the world's most popular bank.

Well companies are always going to try to save money via cheap labor and and tax havens. There is not a lot you can do about it but become a larger more attractive tax haven or frce everyone else to raise their wages to something comperable. The former is fairly easily done the latter would be impossible.

At least a larger, more attractive tax haven relative to other developed nations. All the US has to do is remain on the bleeding edge more cheaply than other similar states.