Iron Chef Olorinus wrote:
When we start defining the end as being higher quality of life, low unemployment, high productivity, high GDP rate, low inflation, and all the other usual economic measurements, we find that the conservative "small government" approach actually works very well.
The facts say otherwise.
Then show them to me. I mean, everyone insists that "trickle down doesn't work", yet never seem to produce any data to support their claim. First, perhaps defining what policies we're talking about would help. Then some kind of empirical analysis of the effects would be great too.
Also, given that at least in America/Canada Conservatives are HUGE spenders - what the hell do you mean by small government?
Um... Relatively low taxes and social spending. A government that is "small" both in dollars, but more importantly in scope (meaning what it involves itself in directly). Go read up on "fiscal conservatism" if you're unsure what I'm talking about (although the wiki page appears to have been written by a liberal who got the priorities completely wrong, but that's to be expected. Go look up Edmund Burke if you want a more clear idea). We're talking about an economic policy, not a political party.
Ironically, "trickle down" isn't really an economic position at all, but a predicted behavior that is one tiny part of fiscal conservatism. Specifically, it answers the criticism that without government social programs to help lift the working classes up, they'll become more and more poor and the rich will become more and more rich. The counter argument is that the wealth effects "trickle down", meaning that if the business owner earns more money, this results in more and better job opportunities in his business, which helps the poor get jobs. Similarly, more middle class jobs open up when there are more successful big businesses, thus allowing a larger percentage of a population to rise to middle class status. Additionally, the wealth effect in a less regulated economy allows for those in the middle class to invest in ventures and become "rich" themselves.
The false counter to that from the left often involves claiming that trickle down just means that if your boss makes more money, you'll get a raise. That's a ridiculously oversimplified (and easily attacked) interpretation though. What trickles down isn't direct cash, but positive economic effects of all kinds. Better quality products brought to market for a lower cost benefit those in the lowest income ranges, often far more than a slightly larger piece of the direct economic pie would. The positive effects of technologies like computers and cell phones are great examples of "trickle down" economics in action. If we'd enacted a tax policy designed to eliminate undo/excessive profits by companies, it's a good bet that those technologies would not be nearly as available, cheap, and advanced as they are today. Only because we allow companies to retain and reinvest profits instead of taxing them away to pay for benefits to the people that the greedy owners wont pay directly do we see this kind of beneficial economic effect. The reason it's easy to attack trickle down as a process is that it's easy to see the immediate effect taxing those dollars and spending them on direct social programs would have, but it's harder to see (looking forward at least) how letting those rich owners/investors keep all that wealth helps out the poor and the working class.
We have to look backwards to see the effects over time. But when we do that, they're really quite significant. Nearly every thing we have today that is "better" than what was available at some point in the past exists because of profits retained by businesses (the rich folks). Take that away, and we could feed everyone, and house everyone, and educate everyone, and provide everyone with the latest in health care and entertainment. But those things would never improve over time, or would improve more slowly in direct relation to how completely we tax away wealth. Put another way, improvements to our lives over time can be argued to be in direct relation to the amount of wealth retained by the "rich" within our economy. That may fly in the face of liberal doctrine and rhetoric, but it absolutely does follow from both theory and practice once one understands what conservatives are really talking about with regard to small government.