‘Trickle-Up’ Economics Continues To Fail

Written by William Pauwels on April 9, 2013

MH900441325Trickle-up economics – as advocated by the tax-and-spend  Democrats and the Obama administration – continues to fail. Only 88,000 jobs were created last month and another 500,000 discouraged workers dropped out of the workforce. Fewer people are working today than in 2007 when the Democrats seized control of Congress. The situation has gotten even worse since Obama took control of the White House in 2009.
For those unfamiliar with the terminology, “trickle-up economics” refers to the Democrat’s economic philosophy that advocates stimulating the economy from the bottom up – from the consumer up. They claim, if you put enough money in the hands of the consumer, they will spend it, thus increasing demand and creating jobs and prosperity.

One must wonder if Obama and his Democrat colleagues still believe in trickle-up economics – as witnessed by their payroll and dividend tax increases this year. Raising taxes is entirely inconsistent with trickle-up solutions to America’s jobs and economic growth problems. Higher taxes take money out of the hands of spenders, thus reducing the positive, trickle-up effects they advocate.

During Obama’s recent campaign, he condemned “trickle-down” economics as advocated by Reagan Republicans. This seems inappropriate in view of his failed, first term, trickle-up strategy. Trickle-down gave us 20 years of prosperity – whereas trickle-up has given us eight years of economic decline – with no end in sight.

The problem with trickle-up stimulation is that it lacks staying power and repeatability. While it certainly has some positive influence, it lacks the cumulative staying power of trickle-down. When taxation and regulation on tens of thousands of businesses are reduced – a trickle-down strategy – businesses invest in new products, new applications, new markets, and new promotions of their goods and services – thus stimulating demand and enhancing employment and national prosperity for years to come.

Politically, trickle-up – which the Democrats favor – has considerable populous-voter appeal especially to the under-informed.  Trickle-down, on the other hand, has the opposite political effect on this group. The under-informed voters see trickle-down as benefiting rich businessmen, investors, and the elite, which it does – while hurting the working man, which it does not. Trickle-down creates new businesses, new products, new services, new markets and new jobs – and pays its own way.

Unfortunately, Democrat politicians see their political careers more closely associated with the creation of government dependency – thus their promotion of trickle-up economics and it’s populist voter appeal.  And the liberal-leftist media, which should be setting the record straight by educating the public, apparently fail to understand the folly of the Obama/Democrat trickle-up advocacy.
It is becoming abundantly clear that the growth of American prosperity is doomed as long as a trickle up strategy is deployed in our nation – and as long as voters remain ignorant of its negative consequences on them and their children. Trickle-down is our only hope of re-establishing the kind of economic growth that made America the most prosperous nation in history.

William Pauwels
William A. Pauwels, Sr. was born in Jackson Michigan to a Belgian, immigrant, entrepreneurial family. Bill is a graduate of the University of Notre Dame and served in executive and/or leadership positions at Thomson Industries, Inc., Dow Corning, Loctite and Sherwin-Williams. He is currently CIO of Pauwels Private Investment Practice. He's been commenting on matters political/economic/philosophical since 1980.