Do you believe Trickle Down will ever work in the USA?
We have another election coming up, and one side is firmly in favor of more Trickle Down while the other believes growth comes from the bottom up. So it seems timely to ask which one is right. Here’s what we do know.
After growing from barely existent to 65% of the population in the 30 years from 1950 to 1980, the middle class in the US has now been shrinking for 30 years. Only 44% of the public is now in the middle class. If that keeps on, the middle class will largely disappear.
This video asks if the Trickle Down theoy instituted in 1980 is to blame. As this chart shows, from the end of the Depression and WWII in 1950 through 1980, we saw an unprecedented period of growth that lifted household income for all economic levels from the bottom quintile to the top equally. During that thirty-year period, AKA the post-war boom, America created the world’s first great middle class. Spending by the middle class was the economic engine that let the now-famous “job creators” make fortunes developing new products and innovations that improved old ones. There was a market for what they created.
Then in 1980, we changed course. Ronald Reagan sold the American Public on Voodoo Economics—the trickle-down theory that economic prosperity is driven solely by the “job creators” and thus public policy including tax rates; tax loopholes that only benefit the very wealthy; taxpayer subsidies for industries like big agriculture, big pharma, big oil and big coal; and tax benefits for off-shoring jobs will let the “job creators” finally amass enough wealth that it will trickle down to the rest of the nation. It’s been 30 years now, and the chart shows it hasn’t started to trickle yet. It seems that it may be trickling into off-shore bank accounts and tax shelters instead of trickling to the bottom quintiles of the American public. Is a thirty-year test long enough to say trickle-down is a foolish myth, or should we keep waiting, sure that some day in the not too distant future, the trickle will begin?