My apologies to my fellow economists and economic historians, you may wish to go and do something else just now as today’s post is about the fallacy of trickle-down.
Our current economy still works on the age old principle that the sacred pyramid is still worthy of worship. It is far better for you to be halfway up, or better still, at the top of this sacred pyramid.
The idea that in 2016, we still worship pyramids, is rather hilarious, but nobody who is busy making as much money as they can wants to hear that their efforts may not be entirely effective, or that they are making themselves unworthy through sheer ignorance or self-deception.
To clarify further, since I know many readers of my blog are currently people who have no time to actually think for themselves as they are busy filling their pockets from their very fortunate gainful employment and presumably, like my own siblings, ignoring their responsibility for looking after people other than themselves.
Here are some basic economic facts for our conservative chums:
Dead people cannot spend money
Poor people retain less money in the form of savings
Poor people spend a greater proportion of their income, with the benefit of the multiplier effect, this makes them far more active and useful economic agents than rich people.
The multiplier effect is the principle that moving money is more productive than static money – ergo people who have to spend it have a more beneficial effect on the economy than people who do not.
Centralising economic activity in one region does not benefit other regions, meaning that the creation of infrastructure becomes difficult, expensive and impractical, at the expense of areas which could easily benefit from increased mean income, property prices and in which poor people benefit in terms of standard of living by having richer people to protest about their ‘inhuman’ garbage collection etc.
Housing benefit exists to benefit property owners, not tenants. The only reason housing benefit has not been attacked under the Conservative government is because they own a lot of rental property. It is a construct designed to benefit people with money and property, not protect the rights of the people doing the renting.
Dropping public money in the forms of bombs is not cost effective, unless you are doing it to secure contracts from an ally country, or ensure a living for a friend in the defence business.
Likewise, outsourcing jobs which require no experience or education is a bad idea if you want people to claim fewer benefits. It reduces the base on your pyramid.
Attempting to replace the base of your pyramid with immigrants causes further damage to the foundations, as communities blame new arrivals for issues of poorly maintained property and services, and new cultural influences, such as mosques and outdoor fruit and vegetable suppliers, increase negative attitudes and crime amongst the inhabitants of the base of the pyramid.
Deciding that you are a knowledge economy and then providing no tangible evidence of this, leads to a lot of underemployed and unemployed graduates, who then spot that your system does not work. Indicating that these people are to have their lives effectively destroyed and feel shame over it will not help you long term.
Putting an ever increasing proportion of the population into permanent debt, means that the base of the pyramid is now extremely shaky, and if it falls down, everybody suffers and you are at risk of actual revolution.
Not everybody is a selfish economic agent, capable only of patting themselves on the back for acquiring money. The opportunity cost of self righteous obsession with money, is compassionate and conscious care for others, and consideration of far more important issues.
Failure to address people’s more altruistic feelings leads to unstable politics
Opportunity cost – the opportunity cost of working in a biscuit factory on minimum wage when you have other irons in the fire, is that you may never get to develop your potentially lucrative creative career in app design, or whatever else floats your particular boat. Sometimes giving people the opportunity to develop their ideas is the more lucrative option.
When the economy recedes, an intelligent Tory provides money for small to medium sized business, as this feeds the base of the pyramid, in the form of a disproportionate number of jobs provided, and encourages self motivation amongst the damned and condemned poor that you hate so much.
Trickle-down is a myth, a rumour spread by the same delusional people that think it is ok for them to have more than twice the average income in interest on their parents ‘trickle-down’ wealth, whilst other people rely on charity. The idea was that if one economic class is given money, they would use it to make more, accidentally benefitting the bottom of the pyramid by virtue of the spending involved and potential jobs created.
I have known for some time, that the notion of scarcity in economics is belied by countries with high savings rates. People do not have unlimited wants. People do not have unlimited motivation. What our current government believes, is that if you continue to feed your economic plants from above in the form of tax breaks, that the plant gets bigger.
No, if you fail to feed the plant from the roots, it will collapse. Trickle-up economics is the only way to go.