Hillary Clinton: Trickle-Down Ignorance

Hillary Rodham Clinton, future president of the U.S., was deviously rubbing her hands together like one of the Witches of Eastwick when she delivered this line: “Don’t let anybody – don’t let anybody – tell you that, ah, you know, it’s corporations and businesses that create jobs.  You know that old theory, trickle-down economics. That has been tried; that has failed.  It has failed rather spectacularly.”

Of course it is businesses and corporations that create jobs.  Citing “trickle-down economics” is just ignorant.  It shows a basic lack of understanding of economics and a lack of understanding of the Democrats’ own propaganda meme – trickle-down.

During her husband’s administration, 92.5% of the jobs were created by businesses and corporations.  Clinton’s policies had nothing to do with the jobs created by the dot-com boom.  It was led by companies such as Microsoft, Oracle, Google, Netscape, Apple, Amazon, Mobile, and AOL.  Computers, IT, and cell phones came of age, bringing huge increases in efficiency, which led to robust job growth.  This, despite Clinton’s increase in taxes and his other distractions.

The dot-com boom ended about the time Clinton started investigating Microsoft as a monopoly.  By the end of the Clinton presidency, the dot-com boom was over.  When George W. Bush took office in 2001, the country was in a recession.

The tired old trickle-down economics meme should be relegated to the dustbin of history.  It applies to rich individuals spending money on their help and on indulgences.  The money spent by the rich “trickles” into the economy.  Even that is not accurate, as most of the “rich” are really small businesses that have chosen to be taxed as sub-chapter “S” corporations, which pay at the individual rate instead of the corporate rate.  Most individuals who own, say, a fast food franchise or a medical practice or a law practice would choose to be taxed this way.

Large corporations and businesses are a whole different game.  “Trickle down” becomes the multiplier effect – an economic term Hillary Clinton obviously has not heard of.  A look at the deal between Elon Musk and NY Democrat Governor Andrew Cuomo may be instructive:

Cuomo’s New York will spend $750 million to build a new plant and buy manufacturing equipment for Elon Musk’s SolarCity.  SolarCity will manufacture high-efficiency solar panels at the plant.  In return, Musk has agreed to employ about 1,500 at the facility for at least five years.

The multiplier effect will work in two ways: the 1,500 employees will spend money buying houses, renting apartments, buying cars, buying groceries, hiring attorneys, going to the doctor, and patronizing other businesses.  These businesses will prosper and expand by providing services to their new customers and clients, thus creating jobs.

Jobs will also be created as businesses such as trucking companies and solar panel parts manufacturers move to the area.  According to Enrico Moretti’s study in his book, The New Geography of Jobs, each high-tech job eventually creates five new jobs.  Two of these five new jobs will be professional (e.g., doctors, accountants, lawyers) and three will be non-professional (e.g., waiters, clerks).

Caution: boring number stuff here.  Buffalo’s average income is about $35,000 per year.  NY’s state income tax rate is ranges from 4% to 8.62%.  There will be 7,500 (5 X 1,500) external jobs created, plus the 1,500 jobs will mean 9,000 jobs at $35,000 a year each times an average tax of, say, 5% = $15,750,000 on personal NY taxes per year on a $750,000,000 investment.  This equals about a 2.1% return per year.  There will also be returns from taxes on corporate profits and property taxes.  Cuomo may get as much as 5% year.

The point here is that corporations and businesses create jobs through the multiplier effect, not through trickle down.  And Governor Cuomo, in Hillary’s “home state,” believes in this enough to put three quarters of a billion of NY’s state money on the line to get more taxpayers living in NY and paying into the system.

If this is confusing, don’t be concerned.  Future President Hillary doesn’t get it, either.  What we do get is trickle-down ignorance.  That is what should concern you.

You can view CM Phillips's work at his new blog at http://www.CMPhillips.com. E-mail: cm@cmphillips.com.

Hillary Rodham Clinton, future president of the U.S., was deviously rubbing her hands together like one of the Witches of Eastwick when she delivered this line: “Don’t let anybody – don’t let anybody – tell you that, ah, you know, it’s corporations and businesses that create jobs.  You know that old theory, trickle-down economics. That has been tried; that has failed.  It has failed rather spectacularly.”

Of course it is businesses and corporations that create jobs.  Citing “trickle-down economics” is just ignorant.  It shows a basic lack of understanding of economics and a lack of understanding of the Democrats’ own propaganda meme – trickle-down.

During her husband’s administration, 92.5% of the jobs were created by businesses and corporations.  Clinton’s policies had nothing to do with the jobs created by the dot-com boom.  It was led by companies such as Microsoft, Oracle, Google, Netscape, Apple, Amazon, Mobile, and AOL.  Computers, IT, and cell phones came of age, bringing huge increases in efficiency, which led to robust job growth.  This, despite Clinton’s increase in taxes and his other distractions.

The dot-com boom ended about the time Clinton started investigating Microsoft as a monopoly.  By the end of the Clinton presidency, the dot-com boom was over.  When George W. Bush took office in 2001, the country was in a recession.

The tired old trickle-down economics meme should be relegated to the dustbin of history.  It applies to rich individuals spending money on their help and on indulgences.  The money spent by the rich “trickles” into the economy.  Even that is not accurate, as most of the “rich” are really small businesses that have chosen to be taxed as sub-chapter “S” corporations, which pay at the individual rate instead of the corporate rate.  Most individuals who own, say, a fast food franchise or a medical practice or a law practice would choose to be taxed this way.

Large corporations and businesses are a whole different game.  “Trickle down” becomes the multiplier effect – an economic term Hillary Clinton obviously has not heard of.  A look at the deal between Elon Musk and NY Democrat Governor Andrew Cuomo may be instructive:

Cuomo’s New York will spend $750 million to build a new plant and buy manufacturing equipment for Elon Musk’s SolarCity.  SolarCity will manufacture high-efficiency solar panels at the plant.  In return, Musk has agreed to employ about 1,500 at the facility for at least five years.

The multiplier effect will work in two ways: the 1,500 employees will spend money buying houses, renting apartments, buying cars, buying groceries, hiring attorneys, going to the doctor, and patronizing other businesses.  These businesses will prosper and expand by providing services to their new customers and clients, thus creating jobs.

Jobs will also be created as businesses such as trucking companies and solar panel parts manufacturers move to the area.  According to Enrico Moretti’s study in his book, The New Geography of Jobs, each high-tech job eventually creates five new jobs.  Two of these five new jobs will be professional (e.g., doctors, accountants, lawyers) and three will be non-professional (e.g., waiters, clerks).

Caution: boring number stuff here.  Buffalo’s average income is about $35,000 per year.  NY’s state income tax rate is ranges from 4% to 8.62%.  There will be 7,500 (5 X 1,500) external jobs created, plus the 1,500 jobs will mean 9,000 jobs at $35,000 a year each times an average tax of, say, 5% = $15,750,000 on personal NY taxes per year on a $750,000,000 investment.  This equals about a 2.1% return per year.  There will also be returns from taxes on corporate profits and property taxes.  Cuomo may get as much as 5% year.

The point here is that corporations and businesses create jobs through the multiplier effect, not through trickle down.  And Governor Cuomo, in Hillary’s “home state,” believes in this enough to put three quarters of a billion of NY’s state money on the line to get more taxpayers living in NY and paying into the system.

If this is confusing, don’t be concerned.  Future President Hillary doesn’t get it, either.  What we do get is trickle-down ignorance.  That is what should concern you.

You can view CM Phillips's work at his new blog at http://www.CMPhillips.com. E-mail: cm@cmphillips.com.