Trickle down economics? Trick is right!
There’s no such thing as a new idea, just the some old ones continually recycled.
Tragically what started out as a band hall joke has become the hallmark of successive recessions.
Will Rogers, an American humorist and circus cowboy could not have known his words would still be resonating across the world almost 80 years after he spoke them.
“Money was appropriated for the top in hopes it would trickle down to the needy,” he remarked. It was the height of the Great Depression of the 1930s and even though it didn’t work it was picked up, repackaged and renamed.
On this side of the Atlantic we knew it as Thatcherism across the pond it was rebranded Reagonomics. Now Cameron and Osborne have picked up the ball and are running with it and certainly the good times are rolling – the lads have spent five years circling the wagons around the bankers, ensuring their rich benefactors stay fat.
What Rogers was describing nearly a century ago is trickle down economics. The basic idea is that buy reducing the tax burden on the well offs is, in the end, good for everyone. With more disposable income the wealthy will spend more on houses, cars, holidays etc… creating jobs in the process.
An economic version of Upstairs Downstairs.
Except it doesn’t work. It’s based entirely on the premise that the rich will re-invest their additional money in goods and services at home when in reality all it achieves is an upward redistribution of income.
The net result is no additional spending – the rich get richer and the poor get poorer.
Economic inequality is accentuated, wages stagnate and huge swathes of society are cut adrift. It’s a dangerous game and one that depends entirely on the assumption that those with means will spend to improve our lot.
But with the government refusing to close international tax loop holes where is the incentive for anyone with money to take a risk? They simply plant their money off shore and order another Pimms.
In America rising inequality has resulted in such pressure at the bottom of the food chain that cheap credit is being made available to the low paid – so rather than reduced debt, it is increasing. And is that not what started all this at the outset?
And the warning signs are already here. The government’s own figures indicate that household debt will surpass pre-recession levels by the end of the decade. So while the national debt is coming down our personal debt is rising.
In short we are having to dig deep to cover the deficit caused by Cam’s banking pals.
There’s little we can do here to affect change on a national scale when it comes to May 7, and you certainly won’t hear any of this from the Tory lovers among our representatives at Stormont.
But anyone thinking of propping up such a regime is just as guilty.