It doesn’t always pour when it trickles
To quote Tears for Fears, everybody wants to rule the world.
Since there have been parties in power, the powerful have used their position in government to test their ideological theories. Beginning in the mid-1900s, conservatives have pushed adamantly to use the debunked trickle-down economics theory as their main source of economic growth.
Trickle-down economics is the concept that if you decrease taxes to elites and corporations, the extra money is reinvested into the company and redistributed down to the working class. The benefits of the wealthy should increase wages, bank lending and hiring.
This sounds great in theory, but is it reality?
Former President Ronald Reagan shifted the political spectrum as a whole to the right and created a more conservative consensus. Arguably, his biggest legacy was his economic policy, known as Reaganomics, which was rooted in this trickle-down theory.
According to thebalance.com, Reagan cut the top income rate from 70 to 28 percent and corporate taxes from 48 to 34 percent. While doing so, he increased defense spending by 35 percent, more than doubling the national debt from $997 billion to $2.85 trillion. Reagan’s act of cutting top incomes and then redistributing to conservative sectors did not hold any kind of legitimacy when it came to the plausibility of trickle down.
When it comes to United States politics, only mentioning the elites and highest bureaucratic officials won’t suffice. You have to be inclusive.
“When defense spending goes up, government contracts and jobs go up,” said Courtney Edwards, an IT professional with 10 years experience in the United States Air Force working in technology and logistics. “That is why America is constantly at a state of war or aiding in other wars.”
In his dealings with logistics, Edwards has personally seen how a government entity—the military—spends money and orders materials for defense.
Edwards said that there are multiple “engines and streams” that steer the economy a certain way, notably the ever-increasing defense spending and real estate.
Edwards’ words seemed to paint the economy as fragile in how it focuses solely on just two sectors of real estate and defense. That’s why every time the housing market gets a little fractured, the U.S. flips on itself.
Although Edwards can understand the foundation of Reagan’s actions, he doesn’t believe that the trickle-down theory works. This way of economics relies too much on the morale of the executives of corporations and the elites.
“Just because they get tax cuts, does not mean they will reinvest back into the domestic economy,” Edwards said.
This was the main opposition to this theory: the re-investments will happen, but the aid is not at home. It is common knowledge by now that corporations indulge in cheap or free labor available through activities like offshoring, the act of taking production abroad and selling them back to the states, sweatshops, the act of cramping people in unsafe factories, and the free labor of mass incarceration detailed in Ava DuVernay’s documentary 13th.
Big businesses expand and create larger ones, but that growth starts and stops at the top one percent. The wealth and resources don’t trickle down to the common citizen who uses the services from these business. But then why don’t the people take their dollars elsewhere?
The answer: monopolies.
With banks perpetuating the too-big-to-fail businesses, the consistency of the system has roots that are too old and deep. The tight ties between banks and business makes monopolies continue to prosper. In turn, the opportunity for American citizens to shift the flow of their dollars are slim to none.
The product that the trickle-down theory yields are not always re-purposed back into the country it feeds off of. The parallels of how the theory was made and who it exclusively benefits are apparent: constructed for and by the top.
If domestic money stays at home, the economy can possibly repair itself. If not, we will constantly reach for things that exceed our grasp.
Opinion columnist Dana Jones is a print journalism junior and can be reached at [email protected]