# Think Tank > Austrian Economics / Economic Theory >  Need help refuting argument comparing Austrian Economics to trickle down economics

## raanderson20

I'm trying to debate someone who is claiming Austrian Economics is trickle down by another name. 

Need some help. 

Any suggestions...??

----------


## Guitarzan

Send them here to visit the economics subforum.

----------


## bb_dg

When I was taught  Keynesian Economics, I came to the conclusion that Keynesianism is trickle down. Exactly what's his reasoning?

----------


## dannno

> When I was taught  Keynesian Economics, I came to the conclusion that Keynesianism is trickle down. Exactly what's his reasoning?


Yes, I have similar reasoning in that big corporations are given priority to massive amounts of cheap credit from the Fed. Not to mention all of the govt. subsidies. 

Austrian economics is trickle-up economics because it puts the consumers in charge instead of the government.

----------


## Sola_Fide

> I'm trying to debate someone who is claiming Austrian Economics is trickle down by another name. 
> 
> Need some help. 
> 
> Any suggestions...??


Trickle down economics is an idea about tax policy, whereas AE is concerned mostly with the business cycle theory.  He's confused about what the issues are.  Some of these supply-siders like Art Laffer are as clueless about the economy as hardcore Keyensians like Krugman.

----------


## Ben Bernanke

Trickle down usually refers to Reagonomics, or Supply-Side economics. So no, it's not, although Supply-siders draw a lot from Austrian thinking. 

http://www.capitalismmagazine.com/ec...straw-man.html

----------


## Sola_Fide

> Yes, I have similar reasoning in that big corporations are given priority to massive amounts of cheap credit from the Fed. Not to mention all of the govt. subsidies. 
> 
> Austrian economics is trickle-up economics because it puts the consumers in charge instead of the government.


Well said.

----------


## raanderson20

His reasoning was a two word response: Low taxes.

----------


## pipewerKz

Austrian is bottom up. Plans by the many, not by the few.

----------


## pipewerKz

> His reasoning was a two word response: Low taxes.


Did you ask how actually letting people keep their money instead of giving it to big government to pass it out is bad?

----------


## StilesBC

AE argues that failure is the market's mechanism for redistributing assets from the incompetent to the competent.   Without failure, wealth transfers cannot occur properly.  The incompetent (bankers are a good example nowadays), have been legislated wealth security via bailouts.  That is not what it is about.  Nor is it about inflation gradually stealing from the poor via price inflation of necessities and giving to the already wealthy via asset price inflation that is explicitly guaranteed by the Fed.  

Nowhere does AE claim that free markets create prosperity for all like magic.  It creates an environment where people can raise their standard of living unhindered by government force and coercion to do otherwise.  Individuals are just as likely to fail as succeed at this.  But their success or failure will be their own entirely.  This is the only ethical way of determining wealth distribution.  All other methods require the use of force or coercion - both being unethical.  

If this person thinks "low taxes" are the mechanism for achieving a trickle-down effect under AE, he/she is not all that sophisticated in their understanding of it.

----------


## AlexMerced

> I'm trying to debate someone who is claiming Austrian Economics is trickle down by another name. 
> 
> Need some help. 
> 
> Any suggestions...??


Send him to LearnEconomicsNow.com as an Ex-Liberal, I know how they think and can be pretty effective.

----------


## erowe1

> I'm trying to debate someone who is claiming Austrian Economics is trickle down by another name. 
> 
> Need some help. 
> 
> Any suggestions...??


Isn't the Obama stimulus trickle down by another name?

----------


## zyphex

Keynesians also claim that cutting taxes stimulate the economy and create jobs (See Mundell-Fleming model). So if he wants to play the trickle-down game, you can play it back at him.

----------


## brandon

Tell him you would rather discuss specifics than argue semantics. Tell him trickle-down/up/whatever are stupid buzzwords meant to illustrate complex subjects to the ignorant masses, and you would rather rise above that.

----------


## Agorism

Tell him that the current tax code is* trickle down* because it gives the government money for bombs to *drop down* on people (or U.S. citizens.)

Give them no money and they can't do anything wrong.

----------


## Sola_Fide

> Isn't the Obama stimulus trickle down by another name?


Yep, that's a great way to frame it.

----------


## 1836

On some level, I want to say _who cares_?

Since you are posting in Grassroots Central one would assume this has something to do with Ron Paul. Newsflash: you don't have to buy into Austrian Economics to support Ron Paul or libertarian ideas generally.

While I find Austrian economics fascinating, I think it can be largely inadequate in dealing with certain questions. My economics could be best summed up as Chicago school, though I seem to drift in a more classical direction every day.

The point is, this kind of difference should not stop someone from embracing Ron Paul.

----------


## AlexMerced

> On some level, I want to say _who cares_?
> 
> Since you are posting in Grassroots Central one would assume this has something to do with Ron Paul. Newsflash: you don't have to buy into Austrian Economics to support Ron Paul or libertarian ideas generally.
> 
> While I find Austrian economics fascinating, I think it can be largely inadequate in dealing with certain questions. My economics could be best summed up as Chicago school, though I seem to drift in a more classical direction every day.
> 
> The point is, this kind of difference should not stop someone from embracing Ron Paul.


I myself am Preominantly Austrian, although I find myself fascinated with the New Institutional School and the work of Douglass North and how Institutions can cause huge differences in performances between countries with Identical Policies.

Defeating Government is only the first step, after that, it's on us to create a environment condusive to good economic behavior, but at least we'll be free to succeed or fail at it instead of being doomed to fail with big government.

----------


## angelatc

> I'm trying to debate someone who is claiming Austrian Economics is trickle down by another name. 
> 
> Need some help. 
> 
> Any suggestions...??


Socialism is trickle down too.  The point is that the free market is the best way to spread wealth.

----------


## raanderson20

Here is how the conversation went down. Any info would help. I'm not good at wording things.


Jack: Low taxes.

ME: Not sure if I follow Dave. I need a little more then just low taxes. I see Keynesianism as trickled down because big corporations are given priority to massive amounts of cheap credit from the Fed. Not to mention all of the government subsidies. Austrian economics is trickle-up because it puts the consumers in charge instead of the government. Plans by the many, not by the few.


Jack: Low to zero tax rates, zero to no government regulation, relying on the free market to sort itself out. Sound familiar? Counting on the "many" (read corporations, not individuals) to do the right thing.

Jack: Bobby I'm open to knowing why you disagree.? I'm not always correct. I'm not going to be Paul go though.

....Any Idea's of something simple to explain why AE is tickled up?.....

----------


## 1836

> Here is how the conversation went down. Any info would help. I'm not good at wording things.
> 
> 
> Jack: Low taxes.
> 
> ME: Not sure if I follow Dave. I need a little more then just low taxes. I see Keynesianism as trickled down because big corporations are given priority to massive amounts of cheap credit from the Fed. Not to mention all of the government subsidies. Austrian economics is trickle-up because it puts the consumers in charge instead of the government. Plans by the many, not by the few.
> 
> 
> Jack: Low to zero tax rates, zero to no government regulation, relying on the free market to sort itself out. Sound familiar? Counting on the "many" (read corporations, not individuals) to do the right thing.
> ...


I am not qualified to speak for Austrian Economics, but here you go in brief for free market economics generally:

All transactions in a free market are voluntary. That is, both parties to the transaction must gain something, or else they wouldn't participate at all. Austrian economics, and other free market schools of thought, wish to protect the liberty of each individual to make such transactions because that allows society to better organize itself, more efficiently, than if resources were distributed by the government.

There are only two real alternatives when it comes to the distribution of our scarce resources (chiefly capital and labor):

1. The government chooses how to distribute the resources
or
2. The market freely allocates those resources according to how consumers and producers interact

In the first model, an all-powerful central government takes, by force, the product of labor of the people (that is, their wealth) and then chooses how to distribute that wealth among the citizens. *This is trickle-down, more than anything else in the world.*

The second model presupposes that people should be free to act upon their own will when it comes to how resources are used and invested, and as a result, wealth is created by individuals interacting voluntarily. The unit of production is fundamentally the individual. *That is trickle-up.*

But realistically, "trickle-down" and "trickle-up" do not exist, because people voluntarily band together into organized entities to improve their production capacity, which can make them a bigger player in the marketplace (i.e., a corporation). But on a basic level, the individual still exists as the base unit: a corporation is composed of individuals participating voluntarily of their time, labor, and skills. The consumer who purchases that corporation's product or service must feel that they benefit more by buying it than if they did not have it; or alternatively, you could say that the amount of wealth represented by price X of the product is of less utility to them than owning the product or buying the service. No corporation or individual can become rich in _a free market_ without benefitting a bunch of people by providing some service or product to them. A corporation that extorts, commits fraud, or uses government to gain an advantage is not operating by the rules of a free market. It is using government to its own ends. See "Occupy Wall Street."

The basic concept here is this: the fundamental unit of the market is a participating individual, engaging in voluntary transactions.

The fundamental unit of everything that would restrict the market is government, which forces its will upon individuals and engages in coercion, not voluntary action.

----------

