Trickle Down

Ronald Reagan, George H. W, Bush, George W. Bush and Donald Trump all subscribe to an economic theory called trickle down. The idea is the government gives large amounts of money to its richest citizens. They, in turn, invest it to create good jobs for Americans. The catch is, every time it has been tried, it did not work. The rich got richer. The poor got poorer. Unemployment remained high. Wages for the middle class stagnated or dropped. Inflation marched on. The national debt continued to rise. What went wrong?

The program was naïve. It depended on the wealthy doing the hard work of creating jobs without any incentive. The wealthy got to keep the subsidy even when they created not a single job. Why should they bother to create any jobs? The subsidy was like a job where you got paid whether you came to work or not.

So what did they do with the money they were supposed to use to create jobs?

• They created some jobs alright, but in Pakistan, Haiti, China, Vietnam, Indonesia… where wages were the lowest in the world.
• They bought luxuries like diamonds from Belgium, luxury cars from Germany and Italy, expensive wines from France, skiing vacations in the Swiss Alps… These purchases did nothing to create American jobs.

Trickle down has been discredited so many times, but Trump is still able to sell it to the rubes.

Canadian Alternative to Trickle Down

When I was an employer, Canada had a plan to pay half the wages of employees having a difficult time finding employment. I would train them. Usually they would leave my company after a year or so for a higher paying job. This was win-win for everyone. The government did not give me any money, unless I actually created and sustained a job. I think a similar scheme might work for the USA where trickle down has failed. The cost per job is very low compared with many other schemes that I have read about, especially when you take into account savings in income assistance. Anybody who wanted to could create jobs, and get paid to do it, not just billionaires.

~ Roedy (1948-02-04 age:70)