# Why have trickle-down economics failed to trickle down to the middle-class and poor in recent years?

Trickle-down economics, also referred to as trickle-down theory, is an economic theory that advocates reducing taxes on businesses and the wealthy in society as a means to stimulate business investment in the short term and benefit society at large in the long term.

When it works, wealth created by the rich will trickle down to the middle-class and poor. Hence, the name trickle-down economics.

https://en.wikipedia.org/wiki/Trickle-down_economics

Strangely, one of the richest man in U.S, Warren Buffett, does not seem to think so. Why have trickle-down economics failed to trickle down to the middle-class and poor in recent years?

https://www.cnbc.com/2018/01/04/warren-buffett-on-the-failure-of-trickle-down-economics.html

Buffett says there is a problem with that economic system, which made him a king: Many individuals suffer even as those at the top prosper wildly.

He points to the Forbes 400, which lists the wealthiest Americans. "Between the first computation in 1982 and today, the wealth of the 400 increased 29-fold — from $93 billion to$2.7 trillion — while many millions of hardworking citizens remained stuck on an economic treadmill. During this period, the tsunami of wealth didn't trickle down. It surged upward."

• Please find a scientific reference that explains what you mean by trickle down economics. Right now you are linking to a news piece and I have no clue as to what your exact question is. Does the phenomenon you are thinking of have to do with the current tax rates? The state allowing free enterprise? The existence of the Republican Party? Without clarity you will get rants but no answers. Jan 6 '18 at 10:24
• @denesp, I've edited the question following your feedback. Jan 6 '18 at 10:27
• The references of the wikipedia page you have linked provide several answers. Jan 6 '18 at 10:33
• Using "the extremes" to prove a point (ie. the top 400) is seldom useful and usually leads to the wrong conclusions. More interesting would be what happened to the wealth of the middle quartiles (25% to 75%) or (10%-90%) ranges. The next problem is finding a time when "trickle-down" (which isn't even a real thing) was actually tried. The Reagan years is about the last time supply-side was tried (and even that's arguable) and it is hard to argue that it didn't result in a successful economy for most everyone, which seems to invalidate the premise of your question.
– Dunk
Jan 9 '18 at 0:40

## 1 Answer

Trickle-down economics are widely criticized and many believe that it doesn't work. Asher Edelmanon explains brilliantly in the first 2min of this video (or in the written version here).

The basic logic is that, in practice, doing this only leads to a higher accumulation of wealth by the wealthy.