Trickle-down Economics A Bust?

The “trickle-down” economic theory holds that as the wealthy and top income earners flourish that those at the bottom end of income scale will also become more economically stronger. The assumption holds that if those at the top succeed that they will create opportunities for others to do well. Often coupled with this assumption is the argument that if government and regulations were diminished or eliminated that the entrepreneurs will make bundles of money and so will everyone else if they but work hard.

I agree that hard work should be rewarded I have never agreed with the liaise-faire roll of government and that regulations are a hindrance to capitalism. The current states of the American financial and housing industries are testaments that the rosy theory of deregulation is found wanting.

Trickle-down does happen but is more limited that we would recognize. In Scripture there are laws against usury. Usury is a means to help the wealthy to increase their stores at the expense of those with little income and the vulnerable. Farmers were to not pick-up fruit and reaping that had fallen to the ground. Nor were they to go into every corner of the field during harvest. It was a means of providing for the poor…a primitive welfare system. Those with wealth are frequently reminded to care and assist the poor. If the trickle-down theory works, then why would the Bible have these teachings?

History has shown that if the wealthy have unfettered power, that they will maximize their profit and keep their employees in a form of endured servitude. In the middle ages the Lords were fat while the serfs starved. For those who will point out that was not America, I would remind them of the robber barons who paid pittance, kept their employees in high priced poor quality company housing, and threatened physical harm to break-up efforts when employees tried to band together to improve their living conditions and wages as there was nothing trickling down to them. If the trickle-down theory held they would not have had to organize and there would not need to have been a slew of employment laws to protect the workers. These American serfs demonstrate that unfettered capitalism as the trickle-down advocates proclaim has serious flaws.

Until the last year most economists and politicians held that the economic environment was strong. If any environment could give proof of the trickle-down taking place it would be evidenced in the declining poverty rates. In January 2000 the poverty rate stood at 4.6%. Eight years later, in 2008 the poverty rate stood at 7.2% without any significant change in the definition point of the poverty rate.