Trickle-down economics

From Mises Wiki, the global repository of classical-liberal thought
Jump to: navigation, search

"Trickle-down economics", also referred to as "trickle-down theory", chiefly and originally in United States politics, is the idea that tax breaks or other economic benefits provided to businesses and upper income levels will inevitably benefit poorer members of society by improving the economy as a whole.[citation needed] According to Dan Hannan:[1]

What free-marketeers in fact advocate is not trickle-down, but trickle-up. The way to become rich, in a competitive economy, is to offer a service to the broad mass of consumers. . . .

Trickle-down, by contrast, would represent the precise opposite of an open market system. It would involve handing wads of cash to the undeserving rich in the hope that their affluence would somehow transfer itself to the rest of us. Now such transfers do occasionally happen. The bank bailouts were the most notorious example: they shifted a great deal of money, through coercive taxation, from people on low and medium incomes to wealthy bankers and bondholders. The Common Agricultural Policy is another instance: its cost falls disproportionately on the poor, who spend a relatively high percentage of their income on food, and its benefits go overwhelmingly to big landowners. Likewise the alternative energy boondoggles that force the general population to subsidise those same landowners through higher fuel bills.

Every free-marketeer I know opposes these rackets.