Posted by: G. Lane Cavalier | November 13, 2008

Money: Trickle Down Economics on the Micro Level

Thought about this post for a while, since I don’t generally get political on my blog, but decided that I wanted to do this one.

According to the Government, we are rich. Not sure how they figured that, I would consider us as Middle Class ( maybe Upper Middle ). I’m not going to complain because we have a nice life, healthy kids, and we don’t need for anything or want for much. As a child who grew up with a single mom, lived in government housing, and didn’t get everything we ‘needed’ as a child ( shoes without holes in them would have been nice!), I understand the difference.

But let’s get to the crux of this article. I recently lost my job. It’s happening everywhere, so I’m not the lone ranger and I don’t feel sorry for myself (see above).

First, for the sake of this article, lets say I am rich. You know the top 25% of the people who pay 80% of the taxes or something like that, I didn’t feel like looking up the stat, but I’ve seen it enough to know those numbers are close.

Being prudent, after doing all the mandatory things you do when you are displaced, I turned to finances. Better make sure we cut discretionary spending.

First things to go are the “Maid Service” and the “Lawn Service” – since I won’t be traveling, we can do that ourselves. Let’s see I just took approximately $800/month out of the economy. I bet those people, not the owners of the cleaning service, but the ladies who work hard to clean my house won’t miss that money. I also bet the independent guy who does my lawn won’t miss the money either.

We figured we will cut Christmas spending by 40-60% this year. Now I know I’m just one person, but I bet that companies won’t feel that loss of revenue at all, I’m sure that won’t trickle down to the sales clerk trying to pay for college.

My wife discussed changing out her car (the New TL) for something we can buy in cash. That will be great to put some money in the economy, but I’m sure the long-term loss of interest won’t be felt by the auto credit company.

Oh, and if I don’t have a job by January, we will probably pull the kids from Before/After school (I’m home anyway). The loss of 2 kids (over $1000/mo) probably won’t even be a blip on a privately owned/woman owned business.

I think I made my point. When people continue to discuss raising taxes on the Rich and the Businesses to give to the poor, they are actually taking money from the poor. Because I thought we have learned by now that businesses that make money, spend money – how do they spend it – growth (people, resources, land, etc.). Taxes decrease the profits and as such decrease the amount of money they have to spend which results in layoffs and deferred purchases which result in layoffs for the employees of the supplying company.

So when I write this (if you’ve read all of it) please understand you do NOT need to feel sorry for me, because us RICH people will probably be OK, we just won’t have a life that’s quite as nice. BUT, a big but here, if there are a number of me’s out there who all feel the need to do the same things to protect their family’s future, then the ultimate people who pay are the people who want to work for a living.

You see, I’m not an economist, but I did grow up on the lower end of the economic scale. I worked for the rich people ( an independently wealthy gun-shop owner, a small pizza shop, a bank, a transportation company, a technology giant, a big pharma, and other major corporations ) and put away money, gained skills, went to school. I moved from government housing to military housing to college dormitories to rental apartments to rental houses to MY house.

I’ll find work. Mainly because as a wise man once said – I will use either my white collar skill or my blue collar skill to make sure I stay “rich”.

“Do you want fries with that?”

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