The Theory of Trickle-Up Economics (Part 1)
Does Rich People Getting Richer Contribute to the Common Good?
To understand “trickle-up economics,” you first have to grasp “trickle-down economics,” which many people attribute to Ronald Reagan but has been around for a long time. Thetrickle-down theory is that if you give vast sums of money to the wealthy and large corporations, they will ultimately spend it, causing economic growth and benefiting society.
Democratic presidential candidate William Jennings Bryan described it as a leak in his Cross of Gold speech in 1896. (He lost). Bryan also thought that free silver would save the economy so take his wisdom with a grain of salt.
“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
Humorist Will Rogers criticized Herbert Hoover’s policies in a 1932 column while the nation was early into The Great Depression. Rogers also noted that money tends to flow up. Rogers hit on something there, which is the basis for trickle-up economics.
“This election was lost four and six years ago, not this year. Republicans didn’t start thinking of the old common fellow till just as they started out on the election tour. The money was all appropriated for the top in the hopes that it would trickle down to the needy. Mr. Hoover was an engineer. He knew that water trickles down. Put it uphill and let it go, and it will reach the driest little spot. But he didn’t know that money trickled up. Give it to the people at the bottom, and the people at the top will have it before night, anyhow. But it will at least have passed through the poor fellow’s hands. They saved the big banks, but the little ones went up the flue. “— Will Rogers
In 1982, John Kenneth Galbraith wrote that “trickle-down economics” was previously known under the name “horse-and-sparrow theory,” the idea that feeding a horse a huge amount of oats will result in some of the feed passing through for lucky sparrows to eat. More accurately, it meant if you gave the horse all it wanted to eat, the sparrow could pick through its shit for the leftovers.
Three examples of trickle-up economics come to mind. One was only considered, and it was the failure to follow through that led to disastrous results. Just before the French Revolution, when Queen Consort Marie Antoinette was told the peasants had no bread. She allegedly said, “Let them eat cake!” Historians say the remark came from Jean-Jacques Rousseau’s autobiographical Confessions and that Marie never uttered those words. For my story, I’m going to pretend she did, as otherwise, the example doesn’t work.
Antoinette was hated by the French people, who viewed her as frivolous and needlessly extravagant during a time when they were starving. They called her Madame Déficit, blaming her for the failure of the French economy. Marie Antoinette was executed in 1793. One of the charges was depleting the French treasury; she was thought to have sent millions of livres to Austria and having planned the massacre of the National Guards. Had she actually given the people cake, they may not have felt so badly about her, and she might have survived.
The first example of trickle-up economics in America was the “headright system,” first seen in Jamestown in 1618. America had plenty of land, though Native Americans currently occupied it. The colonies also had a labor shortage. Though they lacked precious metals like gold, the land was perfect for growing crops like tobacco, indigo, and rice if only there were enough people to do the work and remove the natives. Early colonists were given land grants and up to 50 acres for each indentured servant whose way they paid to come to the country.
The following year, Black people arrived in Virginia, and the headright system also applied to the enslaved. Headrights led to an expansion of indentured servitude and slavery and were the foundation of the economy of the Carolinas, Maryland, and Georgia. So maybe the bulk of the people didn’t benefit from headrights, but it did establish a new class of wealthy Americans that failed to pass that prosperity down.
The final example is when regular Americans were given up to three rounds of stimulus checks in 2020–2021 to offset the impact of COVID-19. Who knew the government had that kind of money to provide for millions, with the most going to people making less than $75,000? Many people did better financially during COVID-19 than at any other point in their lives, unlike trickle-down economics, where rich people often hoarded their money or invested it overseas. People generally spent their stimulus checks, which benefitted the whole economy. Of course, there were the abusive companies who gamed the system, but they don’t fit with my story either.
It turns out trickle-up economics has never been fully implemented without rich people messing things up and taking the most for themselves. An occasional citizen might have cheated the system and got an extra $600 in stimulus money here or $1,400 there. That pales compared to the millions fraudulently obtained by companies, legitimately or not. Over $5.2 trillion was authorized in COVID-19 stimulus payments between the Trump and Biden administrations. An Associated Press analysis found that “fraudsters potentially stole more than $280 billion in COVID-19 relief funding; another $123 billion was wasted or misspent.”
The truth is that trickle-up economics could work but will never be allowed to. Rich people have created a system where they control all the levers of power and would never allow the changes needed to provide for the lower class first. One generally has to be rich to be elected to Congress. There are exceptions, but not enough to make a difference. While it’s hard for a rich man to enter the Kingdom of Heaven, it’s impossible for a poor man to become President. The Supreme Court Justices are appointed by wealthy people to ensure they are protected. In what other system would corporations be considered people as determined by Citizens United?
We have never had anything other than trickle-down economics, though it’s been given many names. We have a name for systemic racism, but systemic classism goes undefined. As long as rich people have disproportionate input into making the rules, they will be the primary beneficiaries. How many rich people have lost their land to eminent domain?
We criticize India’s caste system, not realizing we have one of our own. The one power the average citizen has to make change is the vote. We are often left with limited choices that will perpetuate the same systems. We need not trickle up but flow up in addressing the needs of the people and passing legislation like background checks for guns, which is overwhelmingly desired by the public but never enacted by our representatives. To be continued. . .