"There are two ideas of government. There are those who believe that if you just legislate to make the well-to-do prosperous, that their prosperity will leak through on those below. The Democratic idea has been that if you legislate to make the masses prosperous their prosperity will find its way up and through every class that rests upon it."
~ William Jennings Bryan, 1896
Something to consider, we have tried one theory and found it to be flawed. Why not take a shot at something different, yet still familiar enough not to frighten people and see what happens.
I propose; The Trickle-Up Economic Theory; The "Trickle-Up Effect" (a corollary to the trickle-down economic theory) states that benefiting the poor directly will boost the productivity of society as a whole and thus those benefits will, in effect, "trickle up" to benefits for the wealthy.
This theory proposes that benefits to the wealthy can be realized by an increase in sales relative to the amount of income and/or benefits that the poor are able to earn. The trickle-up effect argues itself as more effective than the trickle-down effect because people who have less tend to buy more. In other words, the poor are more inclined than the wealthy to spend their money. This being so, proponents believe if the lower, and lower-middle classes, have low unemployment and are given benefits, such as tax breaks or subsidies, the increased funds would be spent at a much higher rate than would the upper class, given similar circumstances.
Furthermore, the trickle-up effect argues that many upper-income individuals do not spend their entire yearly salary to begin with, which is an indication that they will most likely not spend any additional funds that might come to them via Capitol Gains or from Wall St. Investments.
Instead, they will save those additional funds. Ultimately, withholding those funds from the economy and increasing the gap between rich and poor. This theory goes on to suggest that the unspent funds that are withheld ultimately become sheltered from taxation, either legally or illegally, which has the ability to stall economic growth which, studies have shown, can lead to recessions or depressions in the economy.
Let's look to history for clues as which way we should try in the future:
20 of the last 28 years of presidential administrations (Reagan, Bush I and Bush II) have been an experiment in 'Trickle Down' economics. 8 years (Clinton) were spent under leadership that was not necessarily a Trickle Up or Down adherent, although he obviously leaned more Up than Down. (NOTE: I am intentionally excluding the current administration in my calculus because I believe that it is unfair to summarize, or provide a snapshot, of an administrations overall performance while still in office.)
During the 20 years under Trickle Down Republicans we saw several banking bubbles pop, a tech bubble pop, a housing bubble pop, deregulation gone mad, tax cuts for the wealthy, stagnation of wages, a squandering of surpluses, the largest bail-out in the history of man, engagement in multiple wars, defense spending thru the roof and the return of huge deficits.
In the 8 years under a Democrat we saw the lowest unemployment rate in 30 years (3.9%), wages increase, a rising standard of living and a projected 10 year budget surplus of 5.3 Trillion dollars.
These stats speak for themselves. I will leave it up to you as to the direction this country should take in the future.
~EJK
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