Does Trickle-Down work?

The battle is nothing new.  Do we support Keynesian Economics or supply-side economics?  Keynesian Economics in brief states that you should give the poor an extra fish or two (aka money back) which they will spend.  This extra spending will encourage employers to hire more people. 
Supply side or trickle down economics rests heavily on the idea of taxes and revenue.  If the Government charged no taxes, there would be no revenue (for the government).  If the government charged 100% taxes no one would work or report earnings.  So the tax rate at both extremes would generate 0 revenue.  The question that economist Arthur Laffer asked is what is the maximizing revenue point between those two extremes.  He created what is known as the Laffer Curve.  He argued that if tax rates became too high the steep tax discouraged work to the extent that revenue suffered. (if a million dollars is taxed at 50% but anything over a million would be taxed at 90% it would discourage you from working as you get close to reaching that point.  You would settle for a little under a million and retire to your beach house.  Why work harder if you only were to keep 10% of any additional revenue?)  The range when taxes are too high is called the prohibitive range and this range discourages production.

Jude Wanniski then built on this idea in "The way the World Works" explaining that boosting the supply side or increasing production will give more people jobs and they will have money to buy more products.  This has been re-titled as supply-side economics, but the meaning is the same. 
so to sum up the idea -tax breaks improve revenue and boosting production is key to exiting a recession. 

Moving forward-The idea of giving the wealthy tax breaks causes them to invest in equipment and more employees (they spend money to make money) the employer must create jobs before they can expect to see profits.  So the idea is the employers are spending their money and it is the workers who receive immediate relief not the wealthy.  (He has to wait and see if his investments pay off). Somehow we come up with the number 2.5.  For every job created an additional 2.5 jobs is made.  Essentially if you pay your workers well they will then go out and buy stuff.  This means that lots of other commercial businesses pop up.  Imagine the auto industry.  You have a factory that makes cars.  these workers then need to buy food, clothing, find housing and buy luxury goods.  This creates work for real estate agents, banks, food chains and retailers. 

Trickle down follows the idea that a rising tide lifts all boats-an improving economy benefits everyone.
Many people think Reagan was the first president to implement the tactic but Harding, Coolidge and Kennedy all used the theory before Reagan.

The disconnect comes because of globalization.  People don't have to make stuff in the same place it is sold anymore.  So Apple makes transistors and touch screens in Japan, and has their product assembled in China, which is then sold in the USA (and many other places including Japan & China)  But how are US citizens going to buy luxury goods when the products are being made overseas?  Is trickle down broken because it is not working at the local level?  The truth is that trickle down still works but we are now seeing it work throughout a global community.  As Chines workers start demanding more luxury goods at better prices, China will start sending jobs overseas to 3rd world countries.  How many countries would have to be used to support the demand in the USA, China and Europe?  A lot.  You have millions of chines jobs that would be sent to 3rd world countries.  This should lift more and more countries out of poverty due to the huge influx of work.  So we still see jobs (or industry) continues to create additional jobs, they just aren't in your neighborhood anymore.

So in order to improve the situation at home things get more complicated.  Do we want lower wages so we can get those jobs back from China? (no one wants that do they?) Or do we increase our education so we can get the high paying, high tech jobs back from Japan and Germany? I believe Trickle-Down is still the answer as opposed to giving a temporary but false jump start to the economy as Keynesian's suggest.  I believe a lot of economics is based on perception and trust and little hand-outs to the poor don't provide enough trust that the economy is well and back on its feet again.  We just need a nation that knows how to compete.  Something Obama apparently doesn't know enough about.  Which is why I feel we need capitalists in office to get things moving again.