There is no phrase used more by the left than, ‘Trickle-Down Economics.’ I’ve heard the phrase attributed to both Franklin Roosevelt as well as Will Rogers, but whomever came up with it, it dates back to the early 1930s, and is likely the single most effective straw man fallacy in human history. There is no economic theory called ‘trickle down,’ and nor has any theory ever supported the notion of giving more money to the rich, as a means of benefitting the poor. No economist in human history has ever called for any such thing. Thomas Sowell once went so far as to offer $100,000 to anyone who could show him any economist outside of an insane asylum who ever advocated for this, and Dr. Sowell still has that money.
Let’s be honest and call ‘trickle-down economics’ what it really is: a caricature. In the 1930s, when Franklin Roosevelt made it a pillar of his campaigns, it was a caricature of laissez faire free market economics. When Reagan ran for office, Jimmy Carter used it as a caricature for supply-side economics. It resembles neither one.
Just to be clear, I do not advocate supply-side economics. The whole point of free market economics is that markets constantly strive for balance, and that balance is optimal. Any policy that strives to knock the economy off balance is short-sighted at best, and that includes both supply-side as well as demand-side policies. While I think Reagan was, in most respects, a very good President, supply-side was dumb.
John Maynard Keynes once compared an economy to an engine, and this is a view most Democrats subscribe to, perhaps even more than did Keynes. Democrats look at the economy as a tool, and tools are utilized for specific purposes. To Democrats, the economy exists to serve the country, and more specifically, to serve the people. The problem with this view is that the economy does not resemble an engine at all. The economy does not exist as some physical object that can be manipulated and controlled, and it is this fundamental misunderstanding of the nature of the economy that keeps Democrats, by and large, from ‘getting it’ with regard to economics.
People live their lives, and seek better lives. Some people seek to learn skills that they can sell to the highest bidder. Some people open businesses, and perhaps hire labor. Some, who have no skills, take jobs doing menial labor, and over time, develop better skills that improve their earning potential. All need food, clothing, housing, and various other things to survive. Most earn enough to afford more than the bare minimum, and spend money on things they may want – entertainment, perhaps a sports car or a coin collection – whatever they want and can afford. Some invest. Some get rich and buy yachts and airplanes. Demand creates opportunities businesses try to meet. Investment helps businesses meet that demand.
The economy is organic, comprised of everyday people living their everyday lives, making everyday decisions about what they want to do to earn income, and what they want to spend income on. Far from being controlled by the economy, ‘we the people’ are the economy, and a free market is the most democratic institution ever invented, giving everyone a vote with every dollar they spend.
The phrase ‘trickle-down’ assumes some magic pot of money some elite group gets to spend however it wants, creating a slow trickle of funds that may or may not make it down to the populace. That is the exact opposite of free markets. There is in fact only one school of economic thought that resembles ‘trickle-down’ at all, and that is socialism. Under socialism, government manages the economy, controlling both supply and demand. All income belongs to government, to distribute as government sees fit. Once government officials are finished spending all of the nation’s income on whatever government officials feel is important – including their own pay and benefits – some of the income will, hopefully, trickle back down to the people who earned it.
I once heard Bernie Sanders say that he does not understand why we have to have thirty kinds of deodorant when we have children starving. Now, never mind the fact that there is no such thing as starvation in the United States; what exactly is Bernie’s point? Is he suggesting that we feed children deodorant?
Bernie’s point is that the resources going into deodorant could go into food, and that Bernie would, if in charge, demand that we produce less deodorant and more food. Bernie wants to allocate all of our goods and services how he sees fit, and before you think Bernie is a good guy who knows what he is doing, remember that his wife ran a college into bankruptcy, and that Bernie owns three mansions and a private jet. Bernie would spend your money for you all right. Bernie would make you ‘feel the Bern’.
Bernie sees that an economic elite have purchased our government. Bernie sees that this economic elite has government centrally plan the economy in the interest of that economic elite, which is often not in the best interest of everyone else. On this Bernie is actually right, but rather than pulling government out of the economy so that this kind of corruption is not possible, Bernie wants to replace the economic elite, running the economy for his own self interest, spending your income on what he thinks is important, and promising that some of your income will trickle back down to you after he takes what he thinks he deserves. Bernie, and others like him, don’t want to end the economic elite – they want to become the economic elite, and unless you can show me how political self interest is somehow more noble than economic self interest, I don’t see how having politicians run the economy is any better than letting bankers do it. Both are wrong, both are corrupt, both are ‘trickle-down’, and at the end of the day, both are the same, except that at least those who worry about economic self interest have to have an economy to be interested in. Socialists, by focusing on political self interest only, tend to burn economies to the ground. Look at Venezuela…
Bernie Sanders, Elizabeth Warren, and others like them, want to be the economic elite. They promise that if you give them all of your income, they’ll spend it better than you can. Theirs is not just Trickle-Down Leftism – it’s a trickle-down lie.