Thomas Sowell discusses his essay “‘Trickle Down Theory’ and ‘Tax Cuts for the Rich.’”

This week on Uncommon Knowledge, Hoover fellow and author Thomas Sowell discusses his essay “‘Trickle Down Theory’ and ‘Tax Cuts for the Rich.’” (39:52)
“Now anyone who studied history knows that for the first 150 years of this country the federal government did not intervene when the economy turned down. And all that time the downturns all corrected themselves; one of the most classic examples was under Warren G. Harding when, during his first year in office, he found the unemployment rate at 11.7 percent. He did absolutely nothing; he did not spend more government money, he cut back on spending. The Federal Reserve had the interest rates up at 6 or 7 percent, not down at 1 percent, where they are now. The next year unemployment was at 6.7 percent; the year after that it was 2.4 percent. So the economy has recuperative powers. I mean employers have an incentive to hire people. Workers have an incentive to get jobs. Lenders have incentives to lend.”

Recorded on Wednesday, September 12, 2012

Cast

Thomas Sowell

Thomas Sowell

Related

Limiting Federal Spending Growth to Balance the Budget

Many think that balancing the federal budget would require deep cuts in entitlement programs. This paper shows to the contrary that the budget can be balanced within 15 years through modest and sustained federal spending restraint and moderately higher economic growth. Key to this restraint is to limit the growth in the average future value of entitlement benefits per recipient to today’s level, after adjusting for inflation and rising healthcare costs. 

November 10, 2026

Working Papers

The Anatomy of Capital Returns over the Very Long Run: Germany, 1465–2025

Economics Working Paper 26128

November 6, 2026

Articles

We Know Price Setting Leads To Disaster, But We Still Do It Every Year In Medicare

How do prices work in functioning markets?

November 4, 2026