Gigantic mega-corporations do enjoy increased growth and higher sales, don't they? Or am I mistaken?
Or maybe it was trickle down economics. Trickle up economics still end up with the rich getting the money since we all buy things from companies they own, it just goes through everyone else first. Trickle down cuts out the middleman, which unfortunately is all of us.
The more economically correct way to express this would be that entrepreneurs and companies who innovated increase productivity and that makes the overall economy more efficient allowing your country to grow.
> Or maybe it was trickle down economics. Trickle up economics still end up with the rich getting the money since we all buy things from companies they own, it just goes through everyone else first. Trickle down cuts out the middleman, which unfortunately is all of us.
This just sounds like quarter baked economics ideas you have made up yourself. Neither 'trickle down' nor 'trickle up' are concepts economist use. And that you confidently assert anything about the social outcomes of these 'concepts' is ridiculous.
Give a rich person a million dollars, and they will put it in an offshore tax shelter. That’s not exactly driving economic activity.
Money in tax shelter doesn't go threw a portal in another universe. Its either invested or saved as some kind of asset and in that form is in circulation. And again, even if you assume it increases monetary demand (decreases velocity) the central bank targets AD and balances that out.
Based on your logic, a country that taxes 100% of all income and redistrubtes it would become infinity rich. Your logic is basically 'if nobody saves and everybody spends all income' everybody will be better off.
This is not how the economy works even if it feels good to think that. Its a fallacy.
Where you could have a point is that potentially the tax impact is slightly different, but that's hard to prove.
https://bsi-economics.org/rising-income-inequality-and-aggre...
If we're being realistic a bunch of this will go to paying off existing debt. Still good, but not the economic stimulus you're imagining. There are also "services" like gambling apps that act as a sponge to soak up money from those foolish enough to use them and transfer that money back to the wealthy shareholders. I'm sure there is research on what percentage of that $1000 can be expected to stimulate the economy, but it's not 100%.
Do you think shareholder don't spend money, but employees do or something?
Corruption is killing this country.
If the voters can't even figure out why the debt keeps going up, I think you are fighting a losing battle.
Stock buybacks from who? When stock gets bought the money doesn't disappear into thin air; the same cash is now in someone else's hands. Those people would then want to invest it in something and then we're back to square one.
You assert that if not for AI, wealth wouldn't have been spent on materials, land, trades, ect. But I don't think you have any reason to think this. Money is just an abstraction. People would have necessarily done something with their land, labor, and skills. It isn't like there isn't unmet demand for things like houses or train tunnels or new-fangled types of aircraft or countless other things. Instead it's being spent on GPUs.
Buybacks concentrate cash in the hands of existing shareholders, which are already disproportionately wealthy and already heavily allocated to financial assets. A big chunk of that cash just gets recycled into more financial claims (index funds, private equity, secondary shares, etc), not into large, lumpy, real world capex that employs a bunch of electricians, heavy equipment operators, lineworkers, land surveyors, etc. AI infra does that. Even if the ultimate economic owner is the same class of people, the path the money takes is different: it has to go through chip fabs, power projects, network buildouts, construction crews, land acquisition, permitting, and so on. That’s the “leakage” I was pointing at.
To be more precise: I’m not claiming “no one would ever build anything else”, I’m saying given the current incentive structure, the realistic counterfactual for a lot of this megacap tech cash is more financialization (buybacks, M&A, sitting on balance sheets) rather than “let’s go fund housing, transit tunnels, or new aircraft.”
For example: "Buybacks concentrate cash in the hands of existing shareholders" is obviously false: the shareholders (via the company) did have cash and now they don't. The cash is distributed to the market. The quoted statement is precisely backwards.
> A big chunk of that cash just gets recycled
That doesn't mean anything.
> more financial claims (index funds, private equity, secondary shares, etc)
And do they sit on it? No, of course not. They invest it in things. Real actual things.
> buybacks
Already discussed
> M&A
If they use cash to pay for a merger, then the former owners now have cash that they will reinvest.
> balance sheets
Money on a balance sheet is actually money sitting in J.P. Morgan or whoever. Via fractional reserve lending, J.P. Morgan lends that money to businesses and home owners and real actual houses (or whatever) get built with it.
The counterfactual for AI spending really is other real actual hard spending.