Cutting taxes for the rich is a central dogma of Chicago School economic theory. According to the thinking of these theorists the wealthy should be given every possible advantage by the state to accumulate money because the wealthy are the people who stimulate growth in the economy, and this is supposed to be good for everyone. Government tax incentives and cuts are thought to encourage the investors to invest more, thus creating more jobs and greater wealth in other areas of the economy. The income tax paid by all these workers, and the tax paid on the sale of the goods they produce, should more than make up for what was lost to the national exchequer due to the original tax cut.
That no more than 70 people own more than half the world's wealth is a success because that is what the #FreeMarket is designed to do.—
Unit of Labour (@UnitOfLabour) April 13, 2016
This is roughly what is meant by the term trickledown economics; the more money the rich have the more money everyone can make. It sounds good. The only real problem with the theory is that it is a complete and utter load of bullshit. From the time of Reagan and Thatcher, right across the West, the rich became the super-rich, and over the face of the global economy an oligarchy was created. Understanding that the key to their prosperity was the control of the world’s democracies, they set about a strategic takeover of the political world. It was a roaring success. Having a near infinite supply of money tends to have that effect on what people do.
Due to the fact that the super-rich’s control over the political world was made possible only by their massive and increasing wealth what they were really incentivised to do was to hoard the money. Rather than invest in the economy, empowering the workers who might challenge their dominance in politics, they took the money out of the economy and placed it in their private offshore accounts in tax havens where their governments could never reach it. So instead of trickledown what happened was that economies – the sort of economies that employ and pay workers – quickly dried up, shrank, and became ossified. This wasn’t the case for the financial markets, which ballooned with the colossal influx of private wealth, and it has been on these figures that Western governments have been able to continually broadcast economic growth despite rising unemployment, deprivation, and homelessness.
On paper therefore, the only thing that really matters to the bureaucratic state, this is a winning formula, and so they continue the policy of cutting taxes to the rich – and round and round it goes; taking more from the economy with every passing turn. Can governments really be this dumb? No, as it turns out. Western governments know exactly what is going on, and they know because they are involved. It’s no accident that the number of politicians in government who are millionaires is on the rise. The liberal state has become the defence team of the oligarchy, and they execute this defence by oppressing discontent and protest on the ground, criminalising poverty and waging a brutal economic and media class war against the people they are robbing.