Voodoo Economics and the Trickle Down theory
For centuries, consumers had a major hand in determining which businesses grew and which ones closed. If you provided a decent product or service at a fair price, or held a monopoly on a product in demand, your business prospered. As the population grew and the population prospered, so did your business. The rules of supply and demand guided which businesses prospered and which ones didn’t.
The law of demand states that, all things being equal, as the demand for a product or service goes up, the cost goes up, as the demand goes down, the price will go down.
The law of supply states that, all things being equal, as the supply of a product down the cost will go up, and as the supply goes up, the cost will go down.
For years, companies and factories have used these principles in planning future direction. With the introduction of Voodoo Economics and the trickledown theory, the guiding principles of supply and demand no longer apply and are tossed out the window.
Voodoo Economics is very basic and simple. Give investors and large businesses more money and they will invest and expand, regardless of demand. Over the last 20 years, this new set of economic laws has led to the enrichment of the investors, large businesses and the debt load of everyone else, until that is, the current crisis came into play. Since many Republicans are trying to encourage President Obama and his staff to consider these guiding principles as they look for ways to stimulate the economy, we thought it may help if everyone knew the new meaning of the legacy economic terms and how they applied using Voodoo Economics. If we missed some we do apologize and ask that you send us a note to let us know and we’ll try to update the list of terms. In order to help those that don’t fully comprehend Voodoo Economics and the trickledown theory, we’ve provided the old definition of each term, followed by the new and more befitting definition.
Law of Demand |
|
Old Definition |
The quantity of items demanded increases and decreases in the opposite direction from changes in price. At a lower price, people can afford to buy more of an item (and more frequently) than they can at a higher price. At lower prices, people tend to buy things as a substitute for something more expensive. |
New Definition |
The perception of demand increases and decreases in relation to marketing dollars spent. At a higher marketing budget, people will borrow more to buy an item (and more frequently) regardless of the price. At lower marketing budgets, people tend to buy things as a substitute for something more expensive. |
Law of Supply |
|
Old Definition |
The supply increases as prices increase and decreases as prices decrease. Those already in a business will try to increase production as a way of increasing their profits. The reason why quantity offered at a higher price will be greater is that other people will be attracted to the business. |
New Definition |
Prices will increase regardless of supply. Those already in a business will try to outsource production as a way of increasing their profits. The reason why quantity offered at a higher price will be greater is that the business failed to monopolize the market. |
Market |
|
Old Definition |
A condition which the forces of demand and supply interact to set the price at which transactions take place; location where goods and services are exchanged freely. |
New Definition |
A coalition which sets the price at which transactions take place; location where goods and services are controlled and manipulated. |
Market Economy |
|
Old Definition |
An economy based on free choice by consumers and producers. |
New Definition |
An economy based on conditions set by the market for consumers and producers. |
Market Price |
|
Old Definition |
The price at which supply and demand are equal. The market price will remain unchanged as long as supply and demand remains unchanged. If there is an increase in demand or a decrease in supply, the market price will increase. If the opposite occurs, that is, if demand decreases and supply increases, the market price will decrease. |
New Definition |
The price set by the coalition. |
Ability to pay principal |
|
Old Definition |
States that citizens who can most afford them should pay taxes. |
New Definition |
States that taxes should be paid by the majority (middleclass). Those who can afford to invest should not have to pay taxes, or should pay reduced taxes |
Bank |
|
Old Definition |
A financial organization that receives deposits, creates loans, and directly controls a significant part of the nation’s money supply. |
New Definition |
A financial organization that directly controls a significant part of the nation’s money supply. Can borrow money cheaply from the Fed as needed. |
Capitalism |
|
Old Definition |
An economic system based on the private ownership of the means of production. |
New Definition |
An economic system based on the private ownership of the means of production when profitable. All excessive losses would be shared with the public. |
Commercial Bank |
|
Old Definition |
A financial institution that accepts demand deposits and makes loans and provides other services for the public. |
New Definition |
A financial organization that directly controls a more significant part of the nation’s money supply. Can borrow money cheaply from the Fed as needed. |
Competition |
|
Old Definition |
The rivalry between sellers in the same field. The competition is for customers and profit. Because of competition, businesses must provide the best product and best service the lowest price. |
New Definition |
The rivalry between investors in the same field to influence the government. The competition is for senators and congressmen to remove regulations. Because of competition, businesses provide products and services at the highest price. |
Consumer |
|
Old Definition |
A person who buys and uses goods and services. |
New Definition |
A person who must continue to buy and use goods and services regardless of their financial situation for the good of the economy. |
Continuous Improvement |
|
Old Definition |
An important foundation of successful businesses. The company that continues to evaluate its product, either good or service, to improve its quality, performance, availability or price will be able to keep pace or even lead the competition. |
New Definition |
An important foundation of successful businesses. The company that continues to evaluate and reduce employee benefits in order to improve profit margins will be able to keep pace or even lead the competition. |
Contract |
|
Old Definition |
A legally binding agreement between parties. |
New Definition |
A legally binding agreement between parties so long as it is profitable to the larger of the two parties |
Contraction |
|
Old Definition |
The downward movement of the business cycle marked by decreased investment, profits, and consumer demand. |
New Definition |
The downward movement of the business cycle caused by increased taxes. |
Cost of Living |
|
Old Definition |
The quantity of currency needed for a given standard of living. |
New Definition |
This term is becoming obsolete, as the credit score now determines ones standard of living |
Deficit |
|
Old Definition |
When spending exceeds revenues. |
New Definition |
Defines a Middleclass consumer |
Nice writing. You are on my RSS reader now so I can read more from you down the road.
Allen Taylor