First of all the term “trickle down” has been used to define economic policies that support the notion that wealth creators need to be supported to generate strong economic activity. The actual economic policy is called “Supply Side.” But economics is at the core very simple. Here it is.
The best economic policy is based in laws that are enforced. Contract law is the under pinning of a strong economic policy. The second component is rules. The rules must be consistent and apply to everyone evenly. No loopholes should be allowed for “special” businesses favored by certain groups. Third is that any successful activity that results in an economic windfall are the property of the individual or corporation creating that activity.
It’s that simple and if you apply the above rules you will have a robust economy. Here are the reasons an economy works:
People engage in creating products and services and they believe the return of their investment in time and resources will reap rewards. They believe the rules will be applied fairly and the confiscation of taxes will be reasonable and limited.
The reasons we are in an economic mess:
The rules have been distorted by government intervention and the future prospects for people engaging in the market place are unclear and undefined. Government regulations are overwhelming and the tax burden is making the return on investment less desirable for people to engage in that activity. The current government is targeting successful people and businesses to pay more and is sending a message that success is no longer admired. The creation of envy against successful people is making people less likely to want to engage in activities that may result in success.
What “trickle down” is really about is when individual people prosper - everyone reaps the benefits. Bill gates founded Microsoft and in turn millions of individuals either were employed by Microsoft or gained efficiencies in their business by using Microsoft products which freed up time and resources to invest in other areas of business creating new jobs and opportunities, that put more people to work making more people efficient to invest their resources in new ideas which… You get it? There are millions of these examples of people creating success and everyone benefiting from the hard work of success driven people.
By taking money away from successful people no matter how much they make is a bad idea. That money if not taken away will find its way into other businesses, investments, savings, etc… That keeps the economy flourishing. By increasing the government’s take of wealth through taxes increases the hurdles and impediments to business by increasing regulations, bureaucrats, and payoffs to special interest groups of the political class in government.
The basics of government should never exceed 18% of Gross National Product. The federal government has a very limited function to be the referee in the three principles of economic activity. The main role of the Federal Government is ensuring the National Security of this nation. Not to micro manage the economy.
When we get back to the intended model of Constitutional government our economy will prosper again…