Lately we are seeing a renewed push for trickle-down economics. Of course, this is all based on the claims that the economy is doing well, even with tariffs, sanctions, etc.
Let me address the claim that the economy is doing well first because that is a complete fabrication.
The major part of this claim is based on the performance of the stock market. I have been covering this issue quite a bit for some time. The stock market rose in the last few years because of stock buybacks. Absolutely none of that has to do with the consumer economy and is often at direct odds with the job market. In January this year, a positive report came out stating employment and wages were up. The following day the stock market had a massive drop.
In recent months we have heard of companies laying workers off due to tariffs. Yet the stock market did not start dropping until interest rates went up. Laying workers off runs in tandem with decreasing production. Yet they can only decrease production if consumer sales are on the decline, even with tariffs. Tariffs cause a price increase of similar products across the market, so any increase at all means the same product will remain competitive with other manufacturers. Example: If Ford must increase prices by 10%, so must Toyota, GM, etc. Layoffs are not necessary unless all vehicles are selling less. Then the decrease comes only after the decreased sales are evident.
Side note: The same companies did not increase production or hiring when they got a tax break.
So, Ford is laying off, as is GM, Harley Davidson, GE and more. Sears is bankrupt. Apple has announced decreased production. Toys R Us is gone, as are numerous other retailers and others are scaling back. The only retailers I have heard are expanding are Family Dollar and Dollar Tree.
There have been claims that US Steel is building new plants. US Steel said that is not true.
In fact, many are claiming that new jobs are being created in manufacturing. That’s not even possible. If retailers are closing locations or even going bankrupt, that means jobs are being lost. Fewer jobs means fewer consumers and less consumer spending. So if production were to increase, who the hell is buying the additional products being produced? Nobody, that’s who.
It does not end with production. Less consumer spending means services are impacted, from insurance to cable to massage to fitness centers to taxis and on and on. At each level, profits are lost, jobs are lost, income is lost, consumer spending is lost.
The fact is that trickle-down economics has never worked, is not working now and has no possibility of working in the future. Economies do not work from the top down, they work from the bottom up.
One of the tenets used to promote trickle-down is that the people at the top are job creators. As you can see above, this is not true. Consumers are job creators. Most of the highest paying jobs in this country and globally are occupations that produce nothing. Corporate executives, stock investors, fund managers, bankers. These are people far more likely to demand the elimination of jobs and reduction in wages to preserve their own bloated incomes than to ever create jobs.
Historically, production and trade predates investing. Even today there are “less developed” small societies that may have leadership positions but manage to have assigned workloads, methods of sharing and yet have no money. Barter systems require no money yet have plenty of jobs. Not for profit organizations, including some hospitals have jobs, expand to create more jobs and profits go back into the company and employees. Small local businesses create lots of jobs and used to provide many, many more than they do now, before they were forced out by corporations. In all the above cases, guess how many jobs get deported offshore to other countries? Small retailers may purchase goods for sale from foreign suppliers but small manufacturers do not export labor.
We cannot keep believing the same lies we have been fed for decades, doing the same thing over and over while expecting different results. We cannot believe when we are told the economy is doing well while it is not our personal economy doing better. We cannot believe jobs are being created if we have no opportunity to replace the jobs we have been laid off from or have no room for advancement. If you are overworked, still broke and struggling, the entire narrative should be falling flat. If you can look at anything objectively, you can see through these deceptions.