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Economics

Yesterday Trump tweeted out a condemnation of the Boeing Air Force One contract price, or so he seemed to describe it. Today, big business is having buyers remorse – and Trump is not even president.

Trump’s every word affects stock prices now. If I were a Boeing employee, I’d be pissed off by his latest childish and ill-informed outburst. And, if I were any number of big businesses whose profit margin depends on outsourced call centers or manufacturing, I’d be terrified. Some of these businesses aren’t solvent without cheap labor and even if they are, stock prices of American investors could suffer with a drop in profitability.

Trump is supposed to be pro business. Even if the government is spending too much, on the Air Force One contract, which isn’t immediately clear, his buffoonish approach of broadcasting threats via twitter is bound to upset group after group after group in the business word.

As the man running the show, it’s his job to fix the machine, not go to war with his own government. Good leadership would dictate that he put his head down and get to work on fixing things that he perceives to be broken. He gains nothing by playing this little game except PR and he does so at the expense of the people who now work for him. Ultimately that’s not the path for a successful president.

Even before I became a business owner the concept of trickle down economics never made sense to me. The fact that Republicans have so successfully been able to push this concept decade after decade, well let’s just say I find it astonishing.

On its face, trickle down economics makes no sense. Lowering income taxes on the wealthy won’t create jobs. First, employers don’t hire simply because they have money. They hire when they have a need – that is when they have demand for their product or service and they need people in order to accommodate that demand. Why for example would someone who only needed five dishwashers hire more if he had no need for more people? Having the money to hire is beside the point. Either you need people or you don’t.

There’s usually a point where you have spent as much as you can on your business and now it’s time, as a business owner, to take the rest for yourself. Well, if the rest happens to be $50 million, then that is money that is being taken out of circulation for the benefit of the person who made it. So lowering taxes on people who already make hoard-worthy piles of cash is just a give-away in the end, since that’s just extra profits for the business owner to keep.

Also, tax breaks on wealthy income earners means they pay less personal taxes, not corporate taxes. This is money that’s paid to them as a salary. If they were planning on hiring people with that money, they wouldn’t be paying themselves money to begin with. They would leave the money in the business. All an income tax reduction does is let wealthy people keep more money from their paychecks.

Also, while rich people do generate jobs by spending their millions, those paltry numbers pale in comparison to the job growth that would come if that same tax break were given to far less advantaged people who need that money to pay bills. Those people would spend the money, and in so doing, stimulate the economy. A tax break to a wealthy man is worth less economic stimulation than that same tax break being given to lower income earners who actually need the money to pay bills and buy things.

This is the most confusing thing to me about the trickle-down crew. If a millionaire makes more millions, he’s basically going to put it in the bank or buy toys. If a poor or middle class person makes more money via a tax break, he’s probably going to spend it. So it becomes fairly obvious who’s going to stimulate the economy more – the small guy who immediately puts the money back into circulation, not the rich guy with the impressive bank account.

If I got a tax break, all I would end up doing is pocketing the money. If I were rich, it would just make me richer.