Trickle-up economics

Supply-side economics is often derided as trickle-down economics. It is the idea that we should reduce taxes on the wealthy who will then use their increased disposable income to grow the economy so fast that it will benefit everyone. That isn’t what Thomas Piketty, Emmanuel Saez and Gabriel Zucman have found. The actual pattern is pretty much the reverse. The middle class (and the median) has had higher income growth when the income of the poor was growing faster than the income of the rich as you can see in this graph from NYT writer David Leonhardt.

When the poor had high income growth, everyone had high income growth. Even most of the rich had higher income growth than the average income growth in 2014, so the rising tide really did lift all boats.

More recently, the poor have actually been getting poorer and the rich have been getting a lot richer as the leave the rest of the population in the dust. The economy for most Americans has been fairly stagnant. This is a more crucial issue than another round of tax cuts for the wealthy.

Posted in Medianism, Public Finance
One comment on “Trickle-up economics
  1. […] better, we should focus on trickle-up economics. Let’s help the rich get richer by strengthening the middle class (and poorer) who will then […]

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