Trickle-down economics is as old as Plato
Plato knew about the power of lies.
For over three decades, Americans have been fed a lie. Through reinforcement and repetition, from stump speeches to cable news, Americans have become convinced that economic prosperity originates from the vaunted “job creators.” We have been warned that any attempt to regulate or tax these individuals would lead to economic ruin. As a result, we have seen everyone around us accept trickle-down theory as the best way to ensure economic growth.
The theory is simple. It’s persuasive. But it’s also not true. Rest assured, this isn’t the first time the powerful have lied in order to justify their authority.
Over a millennia ago, Plato came up with a very similar concoction in his Republic. Plato needed a clever way to justify the inevitable class differences in his ideal society, so he came up with “the noble lie.” This lie was also designed to be simple and persuasive. It would lead people to believe that the rulers of the land had literal gold within them, while the lower classes merely possessed iron and bronze. Plato suspected that this noble lie would become so embedded into the collective narrative of the society that even the rulers themselves would come to believe it.
While Plato’s noble lie sought to legitimize the political rulers in his society, trickle-down proponents have tried to legitimize the economic rulers in American society. In essence, trickle-down economics has made us believe that the proverbial “gold” of our economy resides within the rich.
And although lies can be well-motivated, the falsehoods of trickle-down economics and the misguided policies which have followed it have established a deeply exclusive type of capitalism. These lies are neither imagined nor are they irrelevant to how our politicians have shaped economic policies since the late 1970s. As Nick Hanauer wrote in Democracy Journal in 2013, “[t]he picture you have in your head about how the world works absolutely determines what you think is possible or beneficial.”
Consequently, a trickle-down framework has stymied the possibilities of our economy. And so, unsurprisingly, we are now left with an economy which “remains permanently skewed toward the upper class.” So while those at the top thrive, the lower and middle classes have been left behind. What’s more, US politicians have “created the myth that helping powerful plutocrats is somehow the same as encouraging the free market.” This myth has led to horrifying levels of wage stagnation. As Elizabeth Warren pointed out earlier this year, “the average family not in the top 10 percent makes less money today than they were making a generation ago.”
That’s unacceptable. Because in order for our economy to grow, we need all American wages to increase. Only growing wages can tackle the American economy’s biggest problem since the 2008 financial crisis: insufficient demand to propel economic growth. Such demand can be found in bolstering the American middle class, as middle-out economics contends. Unlike trickle down, middle-out economics puts the centre of growth in the hands of middle-class consumers, not rich businesspeople. It is inclusive in nature. Its aim is simple: create economic conditions which promote demand from the middle class.
But for middle-out economics to gain political purchase in the US we must first reshape where we think economic prosperity arises. That’s a tall task – considering how much trickle-down has permeated our national understanding of economics. For too long, we have blindly listened to the lies of trickle-down proponents. We need to escape the ideological bonds of our era and ensure that American voters knows the truth; the “gold” of our economy actually resides within the middle class, not the 1 percent.
