The idea of trickle-down economics is one of the more curious ironies in modern economic thought. The first element of that irony is the name, itself. The second is that while the name was meant to belittle the concept, it accurately expresses that which makes the principle good and true.
Ronald Reagan came up with the idea that if you let people get rich, they’d spend money and it would diffuse over the entire economy and everyone would benefit. Of course, he wasn’t the first one to think this, but the statists like to pretend no one else was stupid enough to think that if a private citizen spends money on something, that money will actually go to other people.
The left holds the idea in utter contempt, and will use it as a club of sarcasm against anyone who has the nerve to intimate that all people might be better off if real affluence were possible. They call the idea “Reaganomics,” as if it were the product of a mind so sick and twisted and preposterous as to actually advocate liberty – albeit for the sake of the state.
At the core of trickle-down is a very simple proposition. Let’s say some guy buys a 10-million dollar yacht. What happens to that money? I will follow a single stream of it. Some will go to the shipyard that built the yacht, and of that, some will go to the owners, some to the designers, and some to the workers. Some of what goes to the owners will go to pay for materials, transportation, utilities, advertising, and a jillion other things. Of that which goes for materials, some will go the providers of fiberglass, some to lumberyards, some to steel mills, some to fabric mills, brass and aluminum foundries, and so on. Of that which does to the lumberyards, some will go to the owners, some to the sawyers, some to the truckers, some to the HR people, some to the secretaries, and so on… and on…. and on.
That money will go to tens of thousands of people in a never-ending cycle. Every person who gets a cut of it will either save or spend it, and even that which is saved will touch others, because the banks will loan it to entrepreneurs for startups, to young couples for houses, to hospitals for expansion… There is literally no end to it. Every person who touches any that money will benefit from it. But we can’t have that!
Enter the government. Reagan believed that by allowing that 10 million dollars to diffuse freely through the market, everyone who touched it would pay a share of it in taxes, and the government would be better off. Unfortunately, he was exactly right. Not moral, but right.
In a free economy, all of those people would decide, on their own, what to do with their cut. Anyone who wanted some of it would have to come up with something those people would be willing to trade for. Some things are obvious: food, clothing, housing, medicine, and such as that. Other things, though, are discretionary: fishing gear, new cars, pets, art, vacations – and, yes, for those statists who suffer a glandular compulsion to shriek of the horrors of freedom, some would go to booze and commercial sex. Remember these hookers; we’ll come back to them.
When people are free to act in their own best interests, there’s no telling what they might do. Scary, eh? But the government has a cure for that. The government steps in with a luxury tax, to punish that rich SOB for having 10 million bucks, in the first place. Instead of all that money going into the monetary wake of that lovely yacht, half of it goes to taxes. That means the rich guy only gets half as much yacht, so his lifestyle is cramped. The shipyard, steel mills, truckers, secretaries, and everyone else in the system has to split 5 mil instead of 10. The lifestyle of every one of those people is now cut in half, just like that of the rich guy. So the trucker has half as much to spend on necessities and luxuries. He is considerably less comfortable, but the rich guy has to slum it in a 5-million dollar yacht. Who got punished?
It sure as hell wasn’t the blood-sucking vermin in the government! That 5 mil went to people who never did a stinkin’ thing in their lives but rob those who had more courage, more vision, and more drive than they. It went to breed more treasury rats to scurry about the land, gnawing at the entrails of the people’s dreams, and at the desecrated corpse of the people’s liberty. Some of it went to New Orleans, to buy crack and booze and Chicom CD players for the “victims” of Katrina. And again, some of it went to the hookers who serve the bureaucrats.
To be sure, some of it went to relieve the worthy poor – like the mother of the trucker – the trucker who couldn’t afford to pay his mom’s rent because he was only making half what he should have. And don’t forget the hookers, whose income has strangely doubled. Oh, and some went for penicillin shots for the 13-year old Guatemalan sex slaves in Acorn’s cathouses. That’s a good investment, don’t you think?
The stark fact is that “trickle-down” means nothing more than that if people are allowed to make money and spend it, everyone but the looters benefits. That’s precisely why the statists hate it so much. They hate freedom because free men will serve their own values, not those of some two-bit thug in an imported suit. They hate happiness because happy men will find better things to do than enslaving their neighbors. They hate wealth, because having tasted it, no man with a shred of honor will ever stick his head under the yoke of poverty and dictatorship.
Two things about those hookers: they’re getting paid for doing what the rest of us are paying to have done to us, and, unlike the government, they are actually providing a service.
(PS – My spell checker told me that “cathouses” is one word, not two. It struck me as funny that a spell checker would know that – and that I wouldn’t!)
Sic Semper Tyrannis