Trickledown Economics

This is the comfortable idea that the way to improve an economy is to give resources to the wealthy, who will then spend it on improving their businesses, oiling the wheels of the economy, thus benefitting everyone else. Pouring money in at “the top” and letting it trickle down.

Well, it’s a comfortable idea for the rich, anyway. Whether they really believe it, or merely want the rest of us to, is another question. Perhaps, to be very charitable, some of them might believe it – but they can’t all be that stupid, even if they think the rest of us are.

An older meme, very much more apt, is to say that the poor survive on the scraps from the rich man’s table.*

A much better way to improve the economy is to pour money in at “the bottom” – poor people are more likely to spend money fairly quickly, because they need the things they can buy with it right now. The way to improve a business is not to allow it to borrow money to expand, so it can make things no-one can afford to buy – what really works is to give its customers some money, so they can afford to buy its products. A business with access to loans but no customers is doomed; a business with customers who can pay will have no problems about money.

The rich really shouldn’t worry about this: trickle down doesn’t work well at all, but trickle up works very well indeed.

The best way to pour money in at the bottom is described in my next essay, Universal Basic Income

* When they survive at all. Under the current Tory government, quite a lot of them are NOT surviving.