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Not trying to invalidate your larger argument, but it's worth noting that there is no such thing as "trickle-down theory"https://blogs.spectator.co.uk/2015/04/sorry-but-trickle-down.... Never was, never will be. It's a strawman through and through, originating in mockery, amounting to nothing more than "screw the poor" slogan that no self-interested economist could have endorsed. Its only purpose is to ridicule the perfectly valid – and hard – question of optimal tax policy that achieves long-term budget prificit without stifling development of businesses. Hilariously enough, some less than savvy people with conservative inclinations have defended and adopted this strawman as if it was a legitimate model, but this has more to do with meme dynamics than with economic policies.

As for your larger argument, well, this is a just-so model. There are many different ones, in favour of different policies, of course. But, realistically speaking, constant growth of a developed economy was never possible. However well you reduce inequality or deal with automation-related job loss, there are limits to attainable market expansion. Stagnation or, at best, negligible growth are something we need to learn to face.

You cited an article that basically says 'Trickle down doesn't exist, plebs. But hey, trickle down totally works! Here's why!'. What he describes is the policies that people refer to when they say Trickle Down.

Not sure why your getting downvoted. The article largely tries to debunk TD exists because 'no recognised economist of any school of thought has ever had any such theory or made any such proposal'

TD has been referred plenty, not under than name. You'll find a bunch of economist views (positive and negative) under supply side theories which is often steeped in trickle down theory.

And then the article promotes TD under the logic; "the sequence of payments is directly the opposite of what is assumed by those who talk about a ‘trickle down’ theory. The workers must be paid first and then the profits flow upward later – if at all." based on a couple of examples and his loose theory without any real research.

There are plenty of proper studies to the contrary available with an easy google.

This isn't about the number of examples. It's plainly disingenious to say that "TD has been referred plenty, not under that name". Basically, in such way one demands the right to reduce supply side theories – or, in popular practice, to reduce every argument in favor of any taxation rate lower than proposed by the opponent – to a strawman of choice, as if the strawman was the original idea that's "covered up" or "dogwhistled" or whatever. Like this, in extreme:

A: We need to impose 100% tax on the top 10%, to achieve economic growth and lower inequality.

B: This isn't even wrong, this is asinine.

A: Oh, trickle-down much?

Why do this? Naturally, because genuinely debubunking the specific arguments against high tax rates is a lot harder than joking about the bourgeoise that promote TD because of their greed.

I think it's more that, when people sit down and debunk the arguments against high tax rates, the people who believe in supply side economics don't read them. Which in some cases is because they'd rather watch old cowboy movies. In others, it's because they simply don't care. It's an extreme case - but consider what happened to the last accademic economist who tried to use economic arguments against the external imposition of supply side. He was called Yanis Varofakis. They ignored him, the press called him a nut, then they just went ahead with the austerity package.

I'm not saying you're wrong. I understand where you're coming from. You raise good points. I think we need to add to this list one simple idea: regulation.

Housing costs are terrible. They're getting bad even in small towns like mine. There is no way that my house is worth 172k. For many, especially in California and states that followed their lead, housing cost are largely, not solely, due to regulation on new house starts. Environmental impact and associated costs make a new housing community in California on average 1 million dollars more expensive. For many, they don't even put shovel to sod.

Health in the US has a lot of this too. Governmental regulations and the AMA drive up the cost of doctors. All of this is well documented. Interestingly, the free market is coming to a possible rescue on the price of generics: https://www.nytimes.com/2018/01/18/health/drug-prices-hospit...

A good chunk of student debt is due to the government printing money for loans that students can't escape. School saw this bottomless supply and acted accordingly.

Job exporting has some factors due to regulation too. As do the others in your list.

I'm not saying that regulation is bad. I believe in free markets, not unfettered markets. However, a lot of the regulation is old, duplicative, and contradictory. It makes being a business far more complex than it should be. Regulation hampers innovation. We need to remove regulatory cruft at all levels. We need to adopt evidence based regulations.

I'm a strong believer in using minimal but sufficient regulations and taxes to shape market growth.

There are some absolutely unnecessary regulations, like the loopholes Tesla has to go through to sell cars because traditional dealerships don't want to lose money, or unfair taxes against green energy - protectionism must die.

There are also outdated but reasonable regulations, like Seattle's density regulations. Our housing crisis is caused by the market lagging far behind economic growth because it took years for the public to recognize the city was growing, years to change the laws, and then more years for the normal construction timeline. Density regulations as a concept make sense, but we haven't figured out how to auto-scale limits to avoid falling behind.

And then there are areas where we do need more regulations. For example, we absolutely need more regulations on credit cards and loans in addition to better finance education in highschool. Consumers are responsible for being informed, but there's still no excuse for even offering to saddle someone with a high-interest loan that they can never hope to pay off... some people are simply too dumb to understand the math.

I like the phrase "evidence-based regulations", but sometimes the evidence is stale or measuring the wrong thing, and the data doesn't guarantee we implement the right system of incentives.

The main problem with regulation is that it's too easy to capture by various corporate lobbies. Propose a good plan, and see it get shredded and repurposed to serve those it's supposed to regulate. Congress is cheep, and campaign committees wield the purse strings to keep their members in check on policy issues, so the election system doesn't respond efficiently to abuses. We won't be able to get good regulation until we can get the lobbyists and campaign financiers out of there.

Regulatory capture only really happens when your democratic system has broken down anyway, at which point you have bigger issues than regulation. Which the US absolutely does.

>The main problem with regulation is that it's too easy to capture by various corporate lobbies.

This is like saying "the main problem with laws is..."

In fact, this false dichotomy between "more regulation" and "less regulation" is mainly an artefact of corporate lobby groups (plenty of examples in their propaganda of this).

It dumbs down the issue to a childlike level and lets them play two political blocs who might have fundamentally similar interests off against one another depending upon what particular legislation they want introduced or repealed.

>>The main problem with regulation is that it's too easy to capture by various corporate lobbies.

> This is like saying "the main problem with laws is..."

Is it ? A corporation that already pays employees higher than minimum wage can drive out smaller shops that do not pay much more than minimum wage by working to raise the minimum wage. This enables them to raise prices and screw customers over if the smaller shops go out of business.

'Murder laws help murders by allowing them to capture murder laws'

Does not quite seem to work

>Is it ? A corporation that already pays employees higher than minimum wage can drive out smaller shops that do not pay much more than minimum wage by working to raise the minimum wage.

If you're talking about, say, Walmart, they lobby very hard against minimum wage raises and even go as far as to threaten what appears to be self destructive behavior to prevent it from occurring (e.g. threats to close profitable stores).

Minimum wage goes up -> Walmart profits go down. It's that simple. (see minimum wage across state borders by Dube, Lester & Reich).

They drive out smaller shops by using their buying power to beat suppliers down on price, using their size to get sweetheart land deals and sweetheart tax deals with local officials desperate to bring jobs to the area.

When you say “regulation”, I hear “market protections.”

> research and evidence

The trouble is that income/wealth inequality is often ignored in macroeconomic models. The math gets tough and an easy way to simplify the equations is to assume an equilibrium growth path. More complex models use a dynamic stochastic general equilibrium, but an equilibrium all the same.

Unfortunately, the key feature of rising inequality is that it may move the system into an unstable equilibrium. For example, if a handful of billionaires hang out together at Davos and get a bit of groupthink, they might decide to misallocate some capital (accidentally). If they make a mistake in a truly dramatic fashion, (investing heavily in Bitcoin, for example) they could evaporate a large chunk of the nation's wealth. When a handful of actors has an extreme influence on capital allocation, we've effectively become a command-economy instead of a free-market economy.

I think the “us vs them” mentality is too strong here. Don’t you think these billionaires are just as against each other (if not more so) than against the common man?

If that is so, why are cartels a thing?

I don't think they'd need to intentionally cooperate. In fact, one of the worst motivations could be competitive status-seeking. A few billionaires trying to go to space is good. What if 10 of them do it?

Read about Fordlandia. It's hard to measure the economic impact of Ford's obsessions on Detroit.

> us vs them

I'm not sure where you got that sense. Capitalist societies tend to create log-normal distributions of wealth. There's no threshold where you can say one person is "us" and the next on the curve is "them".

Not at all - other billionaires are opponents, not enemies... they work together to continue extracting wealth from the common person.

I'd like to research this some more, can you name some of those equations / macroeconomic models?

I think this is a good, probing comment, and I would invite you to consider one more factor, because it's a major one: government debt and unfunded liabilities. This amounts to trillions in the U.S., a number so large it defies comprehension. A common solution offered is to simply "tax more", but it's clear that gov spending, by and large, bonkers. I'm sure the reasons for this are the same ones that keep that fat-cats plump, but the big-picture IMO is solving the looming debt-crisis; without that, solving the issues you raised could be for naught.

(edit: removed precise amount of US debt because figure is debatable and I don't want to get caught in weeds. It's a $BIG_NUMBER.

National debt is a looming crisis, but the largest impact on the general public has been irrationally cutting government spending in the wrong areas (cutting $M from social programs to spend $B/$T on foreign wars).

Of course, the general public is screwed when the crisis hits - we don't have any off-shore bank accounts - and this administration has seriously shortened the timeline to crisis.

If we give the government the ability to appropriate funds for social programs and safety-nets, rather than merely enforcing the rights in the constitution, it is inevitable that these funds will inevitably be misappropriated and allocated in ways that benefit the politician and his buddies, primarily.

As we continue on, we discover that, lo and behold, the programs need even more money, time for a tax increase!

Further down the line, we discover that further tax-increases are not politically-viable... no problem, let's just add to the entitlement-burden and let's re-visit the issue.

Later still, it's time to start paying for those unfunded liabilities but, damn it, there's no money in the vault. No problem: let's just print more money, and while we're at it, let's loan it to ourselves and charge "ourselves" interest (the second "ourselves" of course means "taxpayers, LMAFO).

Repeat until your currency, economy, and society collapses.

Other nations have no problem funding social programs, because they maintain a reasonable tax rate for high-income/high-wealth entities and avoid expensive indefinite foreign wars.

Keep in mind that a lot, if not all, of those countries exist under the umbrella of protection that the United States military provides, and thus do not have the same budgetary requirements for their own forces. Otherwise, time to start learning how to say "Please don't shoot" in Russian.

(edit: don't take the above as the complete-picture, by any means, it's just another rarely-mentioned factor that I wanted to bring up. I believe there's a sweet-spot to be found for taxation & social-programs that has a net-gain for society.)

> To what degree does income inequality, consumer debt, and rapidly rising barriers of entry to high-income fields contribute slowing GDP growth? Is there research and evidence on the subject?

I would say that a huge factor contributing to low growth in developed countries is the fact that, on a global scale, they're just very rich and for most businesses it makes more sense to develop in countries with much lower costs. I.e. the next 50 years will be about poor countries slowly catching up with the developed ones, not about developed ones getting even more ahead.