People love to say “trickle down economics” doesn’t work, but I would submit those people don’t understand the premise.
It’s not even a question of whether or not it works. “Trickle down economics” is just nature.
What “trickle down economics” posits is that for every action, there is a reaction that ripples through the economy.
For example, the more money that people spend, the more money moving through our economy. And the more money moving through our economy means more people are touched in a positive way.
Whether they intended to or not, Quicken Loans’ new Super Bowl ad for Rocket Mortgage explains the essence of “trickle down economics.”
This ad has been criticized because some claims it describes the 2008 meltdown. But even in 2008, it was the actions of government and industry that led to the reactions that created the crash. (And as an aside, this product is not suggesting that now a teenager can download the app and start getting mortgages. One still has to qualify.)
What detractors of “trickle down economics” usually don’t realize is that sometimes people are negatively affected. It’s not all positive. In fact, when it’s negative, it’s still “trickle down” working.
For instance, if people stop spending money and start saving because they’re worried about the economy, that means less money circulation, which means less buying, which means less need for production or services, which means less need for employees. That is also “trickle down.”
The fact is, you can’t avoid it because it is essentially holistic science. The best you can do is understand that it exists and how to create economic conditions that get the most out of it.
Another example is a business tax. I recently read someone who said there’s no such thing as a business tax. What he meant was that any burden you place on a business will simply get passed on to the consumer. So a business tax becomes a consumer tax.
Raise the minimum wage, and a business will shrink its workforce and raise its prices. Raise a business tax, and the business will shrink its workforce and raise its prices.
Lower or remove the minimum wage, and a business can lower prices and increase its workforce. It’s all simple math, but math that I’m afraid too many voters don’t understand.