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Monday, September 24, 2012

National propaganda is like Costa Mesa's 

While surveying local campaigns for propaganda techniques I was amazed by the national “Straw Man” deluge in today’s politics. Straw Man, you remember, is creating an image, a “scarecrow” so to speak, to attack, and then assuming victory in the debate because the imaginary opponent was vanquished.

Disprove the Trickle-Down Theory today!

Have you noticed the often-very-detailed tirades to refute the “Right Wing’s Trickle-Down Theory?” “Trickle-down theory” is the “Straw Man” attacked, discussed and dismissed, although no such theory exists. (Don’t just take my word for it; Thomas Sowell, an economics scholar and columnist and a Hoover Institute thinker at Stanford University can’t find it either.)

As far as I can tell, this imaginary opponent is a belief that tax decreases for the very wealthy benefit the lower income folks because the rich buy a lot of goods and services and the increased business activity somehow “trickles” some wealth down to them. That’s preposterous, of course.

It doesn't work that way

Increased tax revenue follows tax cuts for the wealthy -- yes. But that's because it becomes profitable for those who earn their living by investing their money to use it to grow businesses and the economy.

Here’s how that happens: when the very rich face confiscatory taxes they keep their money in tax shelters and overseas. This means they have lower income and lower taxes, and that the U.S. collects less taxes. But when their tax rate decreases they invest in new and expanded businesses, which increases their income – and taxes paid -- while it creates jobs, and ultimately increases the total tax receipts. Yes, their investment increase the amount that of tax they pay, as well as their portion of the total.

Close their tax loopholes

Why not just close the “loopholes” or tax shelters?  Well, some of those shelters, like municipal bonds, would then get no money. Or, roads and police departments would be financed by bonds that would cost much more, so affordable services would decline.

And, as a practical/political matter, the politician who attempted the closure would find that a great, great deal of money rolled over to supporting his opponents.

So, the practical politician maintains the “loopholes” that benefit both the rich and his own constituents (by funding their infrastructure), but makes sure to stand up firmly in the class warfare. He'll surely insist on high tax rates for the “rich” or the “one percent” so he’ll appear a leader in giving “the little guy a fair shake.” But he'll protect the loopholes.

Is this just theory?

Has all of this ever happened? Of course. Decreasing the  taxes on the rich has been used by both conservative leaders, such as Reagan and Bush, and by Democratic Presidents Woodrow Wilson and John F. Kennedy, just for samples.

Prove it, then

Can we show that lower taxes for the One Percent increase jobs and total tax income – as well as increasing the share of total tax income paid by the rich? Absolutely! Let’s look at the early 20th century first because the numbers are smaller and easier to display accurately.

To quote Sowell (Trickle Down Theory and Tax Cuts for the Rich, 2012, page 3:

The facts are unmistakably plain, for those who bother to check the facts.

In 1921, when the tax rate on people making over $100,000 a year was 73 percent, the federal government collected a little over $700 million in income taxes, of which 30 percent was paid by those making over $100,000.

By 1929, after a series of tax rate reductions had cut the tax rate to 24 percent on those making over $100,000, the federal government collected more than a billion dollars in income taxes, of which 65 percent was collected from those making over $100,000.

And, a bit later in his paper, he says,

There were 206 people who reported annual taxable incomes of one million dollars or more in 1916.

But, as the tax rates rose, that number fell drastically, to just 21 people by 1921. Then, after a series of tax rate cuts during the 1920s, the number of individuals reporting taxable incomes of a million dollars or more rose again to 207 by 1925.

Under these conditions, it should not be surprising that the government collected more tax revenue after tax rates were dropped. Nor is it surprising that, with increased economic activity following the shift of vast sums of money from tax shelters into the productive economy, the annual unemployment rate from 1925 through 1928 ranged from a high of 4.2 percent to a low of 1.8 percent.

Roughing up a Straw Man is easy

Refuting the “Trickle-Down Theory” is easy, since it doesn’t exist. It makes a fine Straw Man for pontificating, though. And, we’ve seen that the national campaigns mirror Costa Mesa’s in propaganda techniques, with “Straw Man” being featured today. But there are so many other techniques being used that it’d be hard to even list them all in one sitting.

Keep repeating it , even if it's a lie

Finally, don’t forget (from the 8 Sep blog):

Adolph Hitler (in a statement formulated by Joseph Goebbels):  "The most brilliant propagandist technique will yield no success unless one fundamental principle is borne in mind constantly - it must confine itself to a few points and repeat them over and over.” Even if they are lies . . .

Is the repetition convincing you?

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