-Caveat Lector-
William Hugh Tunstall wrote:
If you've read Ravi Batra's critique of free trade, he points
out that the "trickle-down" economic policies of the Reagan
years inevitably must end in class division...and an eventual
economic meltdown, sooner or later.
The 'Trickle-Down Theory' has caused our economic problems.
by K.L. Billingsley
The point of a slogan or clich� is to prevent the
listener from thinking and invert reality through
altering the meaning of terms and phrases. The
'trickle-down economics' clich� has enjoyed tremendous
success.
The clich� started during the first administration
of Ronald Reagan and quickly became a mainstay of
the interventionist vocabulary. The trickle-down
tag remains popular with President Clinton and his
followers, and television 'journalists' attribute
it to venal conservatives. It was even mentioned
on a popular situation comedy show comparing it to
theories about Santa Claus and the tooth fairy.
Self-described socialist John Kenneth Galbraith once
explained the concept on a Firing Line television
program with William F. Buckley Jr. The administration
of the time, lamented Galbraith the wealthy economist,
was 'giving' out all sorts of favors to the wealthy and
powerful, in the fond hope that some would eventually
'trickle down' to the poor and middle class.
Galbraith further compared the concept to stuffing
a horse's trough full of straw, in the hope that some
would eventually get tossed around for the chickens,
ducks, and other little critters. But sound economics
can show that this explanation more properly belongs
to what emerges from the other end of the horse.
In the first place, the federal government produces
nothing that people would freely buy in an open
marketplace. The state is a net consumer of wealth,
not a producer. Returning to the barnyard anology to
find an image of the state, we notice a pig -- portly,
listless, and, of course, always squealing for more.
Every time the state tries to produce something on any
scale, the result is a disaster. The collapsed
economies of the Eastern Bloc stand as evidence of
that fact. As the late F.A. Hayek explained, no
government, however enlightened, possesses the knowledge
and moral detachment to 'plan' a modern society, with
its myriads of daily decisions. Only individuals acting
in a free marketplace can do so. But if the government's
visible hand has its way, individuals can't have theirs.
It's as simple as that.
Only someone with a statist vision could see the
government as the flywheel of wealth in America or
anywhere else. The typical response is that the government
is handing out regulatory and tax concessions, but this too
has fatal problems.
In the United States money does not trickle down from
the government. It flows upward from the private sector.
In a market economy, individuals and corporations earn
money by producing goods which uncoerced consumers will
purchase. More important, in democratic societies that
respect human rights, the government has no prior claim
to what people earn by their honest labors. There was,
however, a system which maintained such a claim. It went
by such names as feudalism, slavery, and totalitarianism.
Hence, for the government to allow individuals to keep what
they have earned by their own labor is not a favor, subsidy,
or 'trickle-down' arrangement of any kind. But for popular
academicians to profess otherwise only shows the
pervasiveness of the statist mindset and its capacity
for self-deception.
This is not to say that there is not a true trickle-down
theory. Here is how it works.
The government currently ignores its legitimate task of
protecting life, liberty, and property, and performing those
tasks which it is not practical for individuals to do, such
as maintaining an army. Instead the government sets out to
achieve 'social justice', largely by the 'redistribution' of
wealth, which it assumes is the product of exploitation.
In reality, as Frederic Bastiat explained in his masterful
treatise The Law, the modern state acts like burglars, who
are also in the business of redistributing wealth. In like
manner, the state plunders the property of its citizens.
And with the proceeds, the state is always careful to take
care of its own benefits first.
Federal employees, for example, boast their own retirement
program, much more generous than Social Security. And postal
employees get their choice of -- count 'em-five medical plans.
Every day brings new revelations of bulging salaries for
little effort, outrageous perks, bounced checks, and general
corruption.
This same government that plunders wealth proposes spending
'programs' that will supposedly benefit the populace, increase
prosperity, and eliminate the deficit. Who says there is no
Santa Claus or tooth fairy? Here, then, is the true
trickle-down theory as an honest partisan would explain it:
You the producer will, on your own initiative and with your
own capital, work hard to turn a profit. We, the government,
will impede you with regulations and confiscate ever-increasing
amounts of your income. With what we confiscate, we will first
take care of the needs of the state, but hopefully some of that
money will trickle down to those we determine to be needy
victims.
Ironically, if you follow this model the clich� is true. The
trickle-down theory is the source of our economic problems.
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