Trickle down economics is failing — statistically speaking. Evidence shows that cutting government spending and reducing taxes on the wealthy did not create jobs for the middle class. Statistics from March in the wake of the sequester show that companies won’t hire if consumers aren’t buying enough goods to justify the new hires. And consumers don’t have enough money to buy when they are unemployed. A growing economy depends upon an employed middle class. Employment leads to consumption which drives the need for job creation. Not vice versa.
The hike in the payroll tax (January), the government budget cuts due to the sequester (February), and gas price increases to maximize Big Oil profits (March), are all robbing the middle class of its income. People therefore, are not able to consume. Explicit evidence for this can be seen in that Retail Department Stores have cut their staff by 24k jobs this March.
The booming stock market should not be touted as evidence that the entire economy is recovering. A small segment of society is affected by the stock market. The top 1% of wealthy Americans own 35% of all stock shares. The wealthiest 10% of Americans own 90% of all stock shares. So the rest of the 90%, own less than 10% of stock shares. There is no generalizability in looking to the market as a gauge of middle class economic growth and stability. Even this is evidence trickle down economics is a cultural hoax, which has been foisted on the American people to abet the swindling of wealth by the elite from the national labor market.
Furthermore, the recent recovery in the housing market is not due to employed families mortgaging new homes. The recovery is from wealthy investors buying up real estate and renting it out to middle class families who can no longer request mortgages from banks. Again, middle class wealth and consumer confidence are undercut, and as demand shrinks so goes production and supply. The effect is bottom up.
The American recession mirrors the structural reform in Europe, known as austerity measures, which has exacerbated wealth inequality there. The middle class is asked to live more austerely, while wealth is concentrated increasingly in the hands of a shrinking few. Fewer people are working and generating wealth, thus there is a smaller pie to go around. The wealthy abide this situation, nay even enable it via lobbying congress to legislate trickle down economic tax codes, because their market share of the wealth increases. As long as the market share of the wealthy increases faster than the rate at which the pie is shrinking, they will not be moved to lobby against this state of affairs. Austerity economics is squeezing the average American and European.
A labor-based economy, that rewards work and empowers the central government to tax and create middle class jobs is the best hope for a sustained economic recovery. Economies, like organic bodies, grow bottom up.