How trickle-down economics backfired on Britain’s shortest-serving prime minister
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- Опубликовано: 24 окт 2022
- The U.K.’s ex-Prime Minister Liz Truss goes down in history as the country’s shortest-serving leader - departing just 44 days into the job - after her controversial ‘trickle-down’ economic strategy unleashed chaos on financial markets, political infighting, and her eventual resignation. But just what is ‘trickle-down’ economics and where did it all go wrong?
Disclaimer: CNBC conducted the interviews in this feature prior to Liz Truss’ resignation on October 20.
#CNBC #Economics #UKPolitics
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If you are wondering why she looks so happy with such a bright smile walking to the podium to deliver her resignation speech, after just 45 days in office and then voluntarily quite, she qualifies for £115,000 a year pension for the rest of her life
How do British taxpayers feel about it?
@@FeelFree3We hate it. There should be a minimum term time for them to qualify for that pension.
@@leonbanks5728, why? If you're a former Prime Minister you should qualify for a prime-ministerial pension.
@@elgee6202 49 days isn't enough to qualify for it especially when MPs are getting enough money as it is. They should have to be in charge for a minimum of a year before they qualify for the PM pension.
"I reject the term 'trickle down economics,' nobody's doing that. What _we're_ doing is a plan in which we give money to the rich, and they just keep it, and the poor get nothing. That is a _much_ more efficient method for making the rich richer and the middle class poorer."
Well said
The problem is that the premise that rich people will work harder if the tax is lower is assumed to be true.
One could just as easily assume the opposite, that by raising taxes, rich purple will have to work even harder and build the business bigger to make the same amount of money. Which will in turn generate even more taxes.
Anyone can make up any claim without actual data to back it up.
Since the rich hold the most political power and the first argument benefits them the most, it’s obviously the policy they have been pushing for decades. Getting ever so richer in the process, while wages have mostly stagnated.
I was thinking exactly this while watching the video.
trickle down is how the rich scam the poor into giving them more money lolol.
It only works in Asia. Confucian mindset makes people unlikely to speak out and such a policy will more easily push through.
Yeah and rich people like staying and becoming more rich. Rarely do they have that greater income trickle down. They'd rather keep as much of it as they can.
Spoken with the ease and unfounded certainty of someone who actually hasn’t made much money. I’m neither for nor against trickle down economics, but I am definitely against ignorance and stupidity. Tax rates don’t affect how hard people work - but it does affect what people with money do with the money they have and the initiatives they have planned. Stay in school.
Trickle down will never die, the people doing the trickle controls the policies and the people being trickled on wish they can one day be the trickle-er. Greed and delusion makes trickle-down economics infallible.
trickle down is just a ruse invented by the rich to stay in power.
The idea that giving all the money to the rich may eventually trickle down to the poor is a wild theory claimed by the rich.
@@elle9316 no
Of course trickle down works! When the rich are taking a piss all over us!
‘Trickle down’ was as ineffective as deregulation
The only thing trickling down is the piss they're taking.
You're telling me that neoliberalism is a horrible system for normal people?
@@MomopilotCool Yep.
When conservative take power national debt soars and ultimately the economy crumbles
@@Angelstar7774 80% of last century in the UK. The government was Conservative
She’s smart.
Came out an stupid plan.
Everyone uproar.
Stepped down.
Enjoying the rest of her life without doing anything and periodically receiving handsome sum of money.
Win
When rich get richer they just keep it for themselves. When politicians apply trickle down effect they are just helping their friends the rich.
Trickle down theory is one of the dumbest ideas. The idea is that they "hope" that the rich will grace the poor. Why does the poor need the graces of the rich and when did that ever worked in history?
It's not grace. The idea that less taxes for the rich will incentivize the rich to expand their businesses or start new ones. So more business, more employment, and thus more tax revenues generated.
But like the video says, it is a zombie idea; proven wrong, yet popular among the masses.
I’m not a trickle downer, but everyday, rich people do operate businesses that give poor people jobs that ordinarily wouldn’t have existed. Obvious example of this are companies that outsource manufacturing to poor countries, using their cash and market position to scale up and sell goods that ordinary people in those countries wouldn’t have been able to exploit themselves. Pretty much every major brand does this everyday.
It’s not “gracing” the poor with money, it’s creating economic opportunity that requires capital, connections, or skill that ordinary people either don’t have or aren’t willing/able to cooperate to obtain. It’s how business and entrepreneurship of all types works; making businesses usually costs significant cash.
The real question is if lower taxes effectively incentivizes that behavior and to what extent, relative to other options for improving society. I’d argue in general, there are almost always better options.
@@osdiab And they also prevent middle and working class people from creating their own businesses as they will never be able to compete.
Why should they get all that power? There are so many small businesses that got bought by the big ones. They were doing excellently until the big corporation came to their town.
@@Rolando_Cueva They're not preventing middle and working class people from creating their own businesses, anybody can still create a business. Just they have to be better than those big businesses, and if they can't, then that's not a viable business. That's competition, not big businesses bossing people around.
And when small businesses get bought by big ones, it's not just big businesses smashing the small businesses against their will. Those small business owners are agreeing to be bought out and receiving something in exchange for control over their business. If a big business comes to you and says they'll pay you millions for your business, do you think it's unreasonable for you to want to accept? Would you suggest the small business owner should not be allowed to accept such an offer and must work on their small business forever or lose everything they put into it? Those small businesspeople seem to value getting money and relinquishing the responsibility, more than "doing excellently."
If you don't think people with money should have power then you probably ought to have an issue with capitalism itself, since that's exactly what it does. Regardless, I don't believe that cutting taxes on the rich makes them more likely to do socially productive things. Like I said, there are better options.
@@osdiab yes capitalism is an issue
Hmmm, when she was elected and revealed her budget, I seem to remember a ton of right wing outlets exclaiming the brilliance of her plans. Only after the stupidity of the plan was universally acknowledged by the markets did said outlets throw her under the bus. Damn, I almost feel sorry for her...
right wing are corrupt to help themselves stay rich and stay in power
I dont. Margret Thatcher Jr. fucked around and found out real quick
She sold her body and soul to corporations
she's the Proof Why Blonde Jokes Exists 😂
Interesting comments from the IEA guy, slightly undercut by the fact that one has to wonder about the 'qualifications' of someone who is in his 20's, has a moustache to look older and a voice that is just breaking out.
Truly an experienced individual.
I thought we already learned from Ronald Reagan that trickle down economics didn't work smh
Clearly not, because some idiots in the US in 2017 also passed a bill to give more tax cuts to top earners, while raising middle-class taxes.
“How many times do we have to teach you old man!”
It does work (under certain circumstances, like when taxes and regulations are too heavy), but it's just that it tends to introduce massive inequality. Korea and China are examples of it working.
@@zhang_han no just plain wrong
@@zhang_han it only works when nations are developing
Guys I just thought of a great idea:
Instead of giving tax cuts to the rich, hoping they'll help lower income earners, why not just...
Give the low earners tax cuts 😑
Yes. Then there might be trickle-up economics.
Middle earners *
Always giving advantages for the poor,while the middle earners have to carry the whole economy
Why not just have a flat tax?
@Hopper33 Just as you could have a negative interest rate, you could have a negative tax rate.
Hopefully, a warning sign for all politicians around the world who still want to impose this tricke-down idiocy.
The Caesar treatment for those who refuse to heed the signs
It only works in Asia. Confucian mindset makes people unlikely to speak out and such a policy will more easily push through. Liz Truss and her experiments might find their place there.
Trickle-down economics has proven itself to be a colossal failure. Deficits skyrocketed in the US with the Reagan, Bush Jr, and Trump tax cuts, but the US actually achieved a budget surplus - and a booming economy to boot - after a significant tax increase pushed through by Bill Clinton in 1993. The perennial debt problems of the state of California went away almost overnight after a tax increase likewise instituted by Gov. Jerry Brown a few years ago.
In a 2012 survey of over 50 economists from schools such as Harvard, Yale, Stanford, and others - including the right-leaning economics dept of the University of Chicago I might add - not a single economist agreed with the statement that tax cuts would increase revenue more than the amount reduced by the cut, according to the ironically titled report "Laffer Curve." It's time we relegated "voodoo economics," as Bush the Elder so memorably called it, to the ash heap of history.
The Insitute of Economic Affiars guy is full of crap. it was classic trickle-down economics. Look at the tax cuts. I'd also like to hear how he expected the UK economy to grow from it as it's still dealing with the exit from the largest free trade zone in the world. What an example of cognitive dissoance. Claiming to push for "free markets" but only through tax cuts and completely ignoring that the EU is a free market.
And replacing taxes with loans
Whatever they say, whoever wins the office..remember WE always lose!!!
I like CNBC for explaining various issues so clear within 10 minutes. What makes it even better is there is English sub for those non-native speakers who may not be able to follow fast speeches of the narrator and some speakers. I know that with English sub, the content is easier to follow as those non-native speakers are mostly exposed to English textbooks more than English sounds, at least for older generation like me.
Only the USA, as done under Ronald Reagan, can have unfunded tax cuts. All other countries with unfunded tax cuts must fund them with foreign borrowing, which is in US$, hence the drop in the pound sterling vs the US$. The US federal government isn't penalised for massive borrowing, as investors both foreign and domestic, fall all over themselves to lend moeny to the US government.
Hope long can that last tho?
When you are the "Reserve currency" then you can do whatever you want! All money follows YOURS...
Bernie Sanders and Jeremy Corbin screaming somewhere, “ Told ya so!"
Thank you for the explanation. Over here in the United States, a number of economists see the trickle down as a ,well, trick.
This is a warning to all governments…spending too much $$$ now when inflation is high will get you in trouble.
It isn’t just monetary policy
No, it will get future governments in trouble. When all you care about is being popular now, you don't need to care about the future.
@@Ausf I agree also it will be a problem which will be passed on as long as each generation can pass it on
there's no such thing as "trickle down" economics; it's not a recognizable "theory" of any kind. "give money to rich people & we'll all be better of" is not a modelable hypothesis
Trickle down economic is basically stuffing money on wealthy people mailbox and hope it will spread down the neighborhood.
Trickle down economics was giving a millionaire a bottle of wine and having the drops trickle down to the thimbles of the poor.
Except the millionaire already has a winery.
There is no such thing as trickle down economics that is a term invented by politicians.
The Laffer curve states that the equilibrium point at which taxes tip is at 28% and not “above 50%”.
The Laffer Curve doesn't actually state anything. Only suggests that an ideal rate exists. But of course Ronny said it was 28% so you slurp that right up
Ronald put it brilliantly 2:53
When the whole world is tightening, I don't think anything is gonna trickle.
She looks like someone who believes everything Facebook says.
And you look like a contrarian. Guess that must be reality!
You look like someone who thinks facebook says anything, as oppsoed to sharing data based on what the alogroithm thinks you will interact with.
@@jtgd yummy corporate boot
❤❤❤
Oh those gains will trickle all right, trickle straight to the Cayman Islands.
How did someone who believes that making the most rich richer will help everyone even become the Prime Minister in the first place? That's the core problem here
So was this all a result of brexit? I'm completely out of tune with EU economics and markets. Serious question as I am pretty curious about it!
A contributing factor but not the main cause imo. It did make UK economy more volatile to bad policies. But it was Truss who actually provided the bad policies which led to the disaster. Those dumb policies & the accompanying lack of confidence it generated in the market were the main reason.
Supply side economics only works nowadays when a new industry is forming. Such as with electric vehicles and commercial space travel. Also the problem with supply sided economist and policymakers is that they forget one critical aspect of supply side theory, the assumption that the market is competitive.
Trickle Down Economics only works if humanity weren't greedy by nature.
Was it just me or did this appear to be a defense of trickle down economics? They used to call it laissez faire until it led to the Great Depression. Then, it became neoliberalism. However, you’ll never hear a conservative in the U.S. call themselves a neoliberal so trickle down became a way of describing their policies. Rebranding the problem doesn’t make it better.
Conservative in the US here and would definitely call myself a neoliberal. The Great Depression was caused by an inflationary fed and an endless slew of regulations/government tinkering that ensued following the crash that prevent prices from falling. Laissez faire solved the depression of 1920 and should've been allowed to cure the 1929 crash as well. Unfortunately we ended up with the New Deal instead and a decade of high unemployment and anemic growth rates. Real recovery did not begin until the war ended and Truman pruned much of the New Deal back.
*48 or 49* days of tenure - still the shortest-ever, of course ~
The problem doesn't lie in tax cuts, it lies in incompetent government spending and corruption.
The Uk's government spending to gdp was 51% in 2021. In comparison Singapore's was only 19%.
That's >2.5 times more and Singapore outranks the Uk in Education, Safety and infrastructure while it can allow itself to have low taxes. Singapore's economy relies on foreign companies and investors if it wouldn't have low taxes their money wouldn't trickle down on Singapore.
Should have use "In Liz We Truss"....as her campaign idea....
70s and 80s was a time of stagflation. Its not a problem we have now. Now we have a problem of wealth distribution.
What's with the little monopoly guy that doesn't like the term "trickle down economics"? He looks exactly like he should.
That's funny? I personally remember seeing/hearing (with my own eyes/ears) Laffer stating the 'real' explanation for the accuracy of his Laffer curve theory. The explanation being,....the corporations (the rich) will simply stop paying their taxes, if the tax rates get too high. They will hire lawyers to figure out how to loophole the system, and quite simply refuse to pay it. Of course, this has next to nothing to do with; business growth, supply/demand, hiring increases, layoff decreases, employee wage level fluctuations, product price level fluctuations, etc... They will simply choose NOT to pay!
TDE is like a store trying to boost sales revenue by letting people take products off shelves without paying.
Globalization and free trade undermines the efficacy of supply side economics. I think a flat tax or fair tax system (or a hybrid of both) would be the best and most fair tax policy.
Professor Eric Beinhocker is describing exactly what China has done to their middle class.
Gosh, mention "China" and an idea, no matter how reasonable and effective, will be shouted down and dismissed.
She clearly never got the hint the first time round as she has subsequently tried to make a return at least twice!
Her budget was very far from trickle down economics
The market, populace, and her own party members think otherwise
00:40 Was that man carrying the document that way to allow everyone to see it?
281% increase is more than triple. It's close to quadruple. If you have $100 and received 281% of said $100, you would have $381, which is more than triple the $100 you started with.
So please prime minister, dont ever be a camper in the grass of sanhok😂
typical of the Conservative party, someone totally over promoted, untested, someone with no brake in the system
This is a great economic plan
she's the Proof Why Blonde Jokes Exists 😂😂
It's not "trickle down", it was an attempt to attract the mobile market of the rich to relocate to the UK - IE, to grow the number of rich paying tax and consuming in the UK.
It's stupid anyway. Those rich people (those who are supposed to attract to make it worth it) have already offshore their wealth
Trickle down does not work. Rich just get richer
Income tax is not the solution, tax the services and add fee per use instead, all other forms of tax are just unfair redistribution of wealth
If they are going to lower any taxes it should be the payroll tax
Trickle down economics will never work on this day and age as economic growth is driven more and more by the rise of the middle class consumption.
Yes, it sank her.
well done camper boy, used to be colonized now taking revenge ha ha Xd
Funny, Karney on fox business had a guest praising Truss. 😅 telling viewers that we need more tax cuts like Truss’s. 🤭🤣
Except it has worked for 80 plus years
The various economic policies that "upper echelon" people propose often comes back to bite those pushing it, such as Liz Truss with Economic Policy maker Kwasi Kwarteng. Had they did their "homework", the policy of "trickle down economics" has not benefited the middle or lower classes, showing their "shallow understanding" of knowing what really works, though Kwasi Kwarteng has been educated at four universities, such as the University of Cambridge in the U.K., and Harvard University in the United States.
The Bible "book" of Ecclesiastes informs a sincere person of this, in which its inspired writer of King Solomon says: "There is something distressing that I have seen under the sun, the sort of mistake made by those in power: Foolishness is put in many high positions, but the rich (in capability, making sound decisions) remain in low positions. I have seen servants on horseback ("barking" out commands or policies) but princes (or capable ones, who can "see way ahead" of what will happen if this or that is implemented) walking on foot just like servants (unable to use their capability)."
So, here is what often happens to those who push their "agenda" without a serious examination of evidence from the past who have already tried their "policy": "The one who digs a pit may fall into it; and the one who breaks through a stone wall may be bitten by a snake. The one who quarries stones may be hurt by them, and the one who splits logs may be endangered by them."(Ecc 10:5-9)
Because politicians or many others in positions of oversight fail to make a careful analysis of their "policy", it comes back to "bite" them, unaware of what is "on the other side" or "down the road", that they are "hurt by them", creating endangerment.
On the other hand, there is one person that has been chosen as capable of oversight and knows how to run a government better than anyone else on the earth, Jesus Christ. And why ? He has wisdom that surpasses any human (2 Cor 1:20), grasp of what true justice is and will implement it (Isa 11:4; Matt 12:18), the power to heal the sick (Matt 9:35), the power to raise the dead (John 11:43, 44), the power to tame the weather (Mark 4:35-39), the ability to read people's hearts (Mark 2:1-8)
The government that Jesus is now ruling rule over is called God's heavenly Kingdom (Matt 6:10), that will remove every single person who is not its loyal subject, so that "meek" ones can enjoy the earth as their everlasting inheritance.(Ps 37:10, 11, 29) No more "bad economic policies", only perfect peace, security, health, love and weather on a paradise earth (Luke 23:43), for money will no longer exist.(see Luke 16:9)
For a developed country/economy what she want to do is right thing to do but they are bombarded by layered problems starting from their brexit deal, unexpected pandemic then the effect of war. Their economy is behaving like a developing economy.
never ever trickle down happens in real life .
Too many people want too much without having to work for it.
I never able to understand why government give tax cut to the richest as if they ignoring egoism and apathy of capitalism.
How has socialism worked out for Britain. The have made huge gains since the days of the horrific coal mines and the London slums but today have gone much to far. Millions of “poor” refuse to work because they make more staying home.
There’s got to be a balance somewhere.
Inexperienced
The real question is how to increase productivity. Growth and productivity are two different things. High productivity can lead to growth. The problem is the uK’s low productivity. Tax cuts will have no meaningful effect on productivity. The UK government must somehow stimulate industries or create new ones. Then it needs an effective workforce. All this must be done while it’s erecting new borders. And it’s worth remembering that the progressive tax system means the wealthy always pay more tax than the less wealthy. Being poor means one pays no tax. People often confuse corporate tax with personal tax. Removing the 45p just meant those over 150K would pay 40p and not 45p on those earnings.
Except that corporations and banks don't invest and make loans, all they do is stocks buy backs. Lol
I mean, it seems obvious to me that we just shouldn't be experimenting with the economy right now, when we are coming out of a pandemic, and dealing with the Ukraine war which is extremely disruptive to the Western world
I knew she was going to be a disaster as soon as I saw Arthur Laffer praising her economic plan.
Is trickle down another name for golden rain.
Tell me you're biased without telling me you're biased.
I feel so sorry for the peasants clamoring for trickle-down economics. It's like dancing and giggling while a judge sentences you to death by starvation.
Absolute calamity Jane!! 😂 mind you the whole Tory party is now fkd
Trickle down has never worked, you think she would have known!
It's backfired since the days of Serfdom.....
now talk about the real reason why, she was sp proud of her first non-white non-male cabinet! And we all know what happens to pride.
Give money to the rich, corporations, businesses so that they can create jobs for us to personally service them. They will have enough money to innovate to provide better services.
We buy their products and services on credit because of consumerism and FOMO. So we become a slave to this system.
What happens when this doesn’t happen? What happens when they do not create jobs especially when they cut jobs and only give bonuses to executives and shareholders? Airlines are the best example. They got bailed out and are giving the worst, unreliable service.
Wealth gap only got wider. The rich only got greedier.
💙👍🏻👍🏻👍🏻👍🏻
Neoliberalism has shown its limits and just increased individualism and inequality i.e. the US
People spending money isn’t wealth money can be printed, labor is wealth we can only be as wealthy as the level we serve each other at. In Afghanistan they are poor because they don’t serve each other enough they have their own fucking currency they could print an unlimited amount of money but that won’t do it it’s about labor
"Trickle down economics is a slur"
lol. No, it's an accurate summation of the ridiculousness of the idea that giving more money to those at the top who are already hording vast amounts cash will some how 'trickle down' to those at the bottom.
Like, this is nonsense. He says it's "expanding the pie so everyone get's a bigger piece" but NO IT ISN'T. It's just making the pie bigger, and the people at the cop get to eat even more pie, but the people at the bottom get the same amount. This wouldn't be so problematic, but by expanding the size of the ecnonomy they're making is so people get an even small proportion of the whole pie. Driving up inflation, and down the buying power of people's wages.
You only show Labour and Tori political points of view, there are not more povs? Like, there are only two options? Doesn't seem realistic to think that way
if you cut taxes for the rich, also do the same for the poor
Tvone, 5.000. Utang
sexy meter rating:
margaret thatcher 3.9/10
theresa may 3.8/10
liz truss 0.0/10
Kansas Sam Brownback.
It's disrespectful to even call it trickle down economics, it's just giving money to the rich... If they were gonna share their massive wealth, wouldn't we have seen it by now? It's just a roundabout way of saying corruption
Cap income of the super rich and problem solved.
"The challenge is making that politically palatable" aka "How to convince the dirty, lazy peasants to lower taxes for the long-suffering wealthy".
even the brexit only the rich benefited to it.. and they love it. Lol
While in the human realm, train your heart to be compassionate so that you can return to heaven. If you still harbour greed, hatred and delusion, you will not achieve any level of spirituality in this life.
What's lacking here is a good explanation of what "trickle down economics" really means. Let me help: If you give a horse (aka the privileged rich) more hay and oats than it can digest, some of it will wind up in their droppings, where the sparrows (aka the "little" people who do all the actual work) can peck at it. That's trickle down economics. And like the central image in this illustration, it is pure horsesh*t.
still can earn pension money from taxpayers' money for the rest of her life 😆
Graet!!!
HAha
Biden is doing the right thing.
what right thing
the democrats cant even push through universal health care
Bruh, you’re trolling on the wrong video.
This is about the UK’s government, not the US’
It's all very well to cut taxes but cut spending AND regulations as well. And just minimise disturbance of businesses via endless costky regulations.
Austerity never has and never will work
what! she resigned?