The Washington Post reports that GM will be cutting 2400 of its 6000 dealerships by the end of next year and Chrysler is closing 789 of its 3181 dealerships. Think for a moment the effect these layoffs will have. The corporation gets itself into financial trouble and the problems ramify all the way down to the mechanics working in the service bay and the stockboys working in the parts department. Many of these workers will lose their jobs so they'll have no money to spend in the communities in which they live. There'll be less money spent in restaurants, movie theaters, on home maintenance, etc. which means that those businesses will suffer also. Moreover, when the dealership goes out of business the local community takes a huge hit in its tax revenue. Thus the devastation trickles all the way down to minimum wage workers in every business in the local municipality.
This all seems pretty obvious so why mention it? Because there has been in our country over the last couple of decades a lot of derision leveled at the idea of "trickle down" economics, the idea that what helps businesses at the top helps everyone all the way down the economic ladder. The left misses no opportunity to mock this notion which is a key element in the justification for tax cuts in the midst of difficult economic times. When the corporation has more money to spend everyone all the way down to the waitress in the local restaurant benefits even though they're unaware of it. A rising tide does indeed lift all boats as Ronald Reagan used to say, much to the scorn of his critics.
It's amazing that people have no difficulty seeing that economic malaise is a trickle down phenomenon, but they refuse to acknowledge that economic vigor also cascades through the society and lifts everyone up. When taxes are cut on corporations they have more money to invest in the business and that provides jobs not only for their own employees but, as in the case of the car industry, also for the dealerships and thus for communities all across the nation. Tax cuts also enable the business to keep their prices lower so their customers have more money to spend on other businesses in their town and a prosperous business is a source of tax revenue for the local municipality.
It all seems so obvious that it astonishes me that the left has been so successful in persuading people that the best way to achieve prosperity is to raise taxes on business, increase their costs, and diminish the amount of wealth available to the hundreds and thousands of people who are effected by that business's economic health.
"Trickle down" is almost a law of economics, whether it's trickle down malaise or trickle down prosperity, and what's happening right now at Chrysler and GM should convince even the most otiose of its inexorability.
RLC