Why ‘trickle down’ economics doesn’t work

Hillary should have done a better job explaining why “trickle-down” economics won’t work. If it would do what Donald says, I would hold my nose and support him.

Here’s the real problem. Companies hire more workers when they sell more products. Tax breaks don’t increase sales. Tax breaks might increase profits but companies have three options with profits: buy back stocks which pushes their stock price up; pay higher dividends which helps stockholders, invest in new or expanded products which involves hiring.

As Donald is quick to point out (correctly), corporations have the primary legal (fiduciary) duty to operate on behalf of their owners (the stockholders). Two of their three options directly benefit stockholders and the third carries the most risk for the stockholders. That’s why trickle-down doesn’t work. It sounds good, but everyone should understand why it won’t work.

This story was originally published November 3, 2016 at 7:17 PM with the headline "Why ‘trickle down’ economics doesn’t work."