Trickle Down Doesn’t Work. Neither Does Clawback.
Note: I decided to publish this anyway, it presents the connection between taxes, resource bottlenecks, and blocked resources.
Trickle Down
“Trickle down” economics is the idea, that by setting more generous terms for businesses and the wealthy, poor people will benefit. Some people even say this is the best way to help poor people: “Make ’em work for it!”.
This idea doesn’t work. It is inconsistent at best. It leaves the well being of vulnerable people to arbitrary decisions of individuals who have no responsibility or obligation to help them. I myself am uncomfortable when I encounter people begging for money.
Clawback
A clawback a financial term for the recovery of money already disbursed. In this case, I chose the word to represent a broader set of economic ideas. These ideas reflect the mentality that to improve outcomes for group X, you need to punish group Y.
Neither paradigm works effectively. They both reflect inaccurate and ineffective accounting design.
Trickle Downers Don’t Appreciate Public Wealth
In the case of trickle down, it is a failure to recognize the value of public institutions in representing common interests and the sovereign responsibility these institutions have to build commons wealth.
The most valuable resource is people, and the best way to develop this “resource” is to use it and take care of it, like anything else. People need to be engaged. People need to be cared for. What’s so complicated about that?
Crabs Are Just Sad
People promoting clawback ideas, as a way to improve economic results, I will call crabs, based on the visual metaphor of crabs in a bucket keeping each other from escaping.
There may be justification for punishment in legal systems. It is appropriate, reasonable, and necessary to censor people’s actions. But I find the idea of retributive justice stupid.
There seems to be some kind of shadenfreude justice fetish people enjoy when watching bad stuff happen to the “bad guys”. That’s not how we should design our justice system, and even less so our financial systems.
Crabs either don’t understand or don’t care about how to really help people and improve a situation. They expect all of us to be sad too.
Resource Bottlenecks and Blocks
Certain taxes add unavoidable friction to the process of commerce, there is no way to completely clear these taxes, even for a period of time, and get on with commerce uninhibited. In fact, it can be worse than that. If taxes only created friction, they would just require a little bit more effort on the parties facing the taxes. Instead, taxes sometimes create resource bottlenecks.
Bottlenecks are a nightmare in traffic, there is no limit to the delays they create. If you have twice as many vehicles entering a bottleneck as you have leaving it, you’re just getting backed up more and more.
Most of the time, traffic restrictions just make us go real slow, but we get through it eventually. But it can actually be much worse than that.
Instead of a bottleneck, resource use can become blocked completely! Imagine a crowded lot, where cars are parked bumper to bumper, without lanes for access. There is only one point of exit, but in a rush, two drivers try to use it at the same time, and unsurprisingly, it doesn’t work. Now the entire lot of cars are trapped, honking anxiously! Their drivers seem to have forgotten they are fully functional humans who can walk without their cars.
Do you honestly think something similar couldn’t happen in our financial system, when it heavily features legal processes and exclusive property rights? The good news is, it would get resolved eventually, just as someone would show up to resolve the fictional parking lot crisis. But we can do a lot to not leave ourselves in such a vulnerable position financially, and much of it comes down to the design of taxes! No more trickle down or clawback! We need effective accounting that is based on sound principles for measuring costs accurately and assessing shared priorities diplomatically!
