Trickle-down economics
The term trickle-down theory (English trickle, trickle '), pejoratively also horse manure theory refers to the idea that economic growth and general prosperity of the rich would seep gradually into the lower strata of society ( trickle-down effect). It was introduced by David Stockman as other synonyms for supply-side economics.
Leading economists, including two Nobel Laureate in Economics Paul Krugman and Joseph E. Stiglitz, doubt the veracity of the theory today.
So Paul Krugman said in 2008: "We are waiting for this trickle-down effect now for 30 years - in vain. " Similar doubted Joseph E. Stiglitz, 2012, that " [ ... ] on the so-called trickle-down theory [. ... ] a modicum of truth would be. "
2013 presented Pope Francis noted in his apostolic letter that never confirmed trickle-down theory of an undifferentiated, naive trust in the goodness of people [ press ], which hold the economic power in their hands, as well as to the deified mechanisms of the prevailing economic system.
Conceptual history
As the founder of the trickle-down theory is considered by many Adam Smith:
"It is the great increase of production in all possible sectors as a result of division of labor, which is problematic in a well-governed society those universal wealth that spreads to the lowest population levels. "
According to this interpretation, the state control is replaced by the well-governed society by markets as a means of resource allocation. Smith criticized the king and other members of the state strongly as economic actors who used their power to enforce their own special interests, as part of what he called the mercantile system.
Among various other names this idea was represented many decades, particularly in the 1920s, when it seemed as if the laissez -faire for the entrepreneurship of the economy would bring an endless boom in investment and growth. The idea that the peak of the economic structure and income growth produced, which would then be passed down in the form of higher wages, was among other things spread by Henry Ford and had its basis in the former interpretation of Say's theorem. Political opponents of this idea they ridiculed as " Toryism " - in the words of Franklin Delano Roosevelt.
John Kenneth Galbraith pointed out that one called the trickle-down theory to his youth as a horse -and- sparrow theory: " If you give a horse enough oats, will come through a bit on the road to feed the sparrows " where in German also stirs the mocking name of horse droppings theory.
Reaganomics and the trickle-down theory
The term trickle-down theory was coined after a speech by David Stockman, Ronald Reagan's chief economic adviser. He saw the supply-side economics as part of a long tradition of economics in which the laissez -faire not only help those who are well placed in the market, but also the poorest. According to him, it would be " in some ways difficult [ was ] to give trickle down, so that the formula of supply- orientation being the only way to get a tax policy that is in fact trickle down. Offer orientation is trickle down. "
The trickle-down economics was a highly political subject occupied by the Reagan administration. The use of the word abated since the late 1980s, although the program for the reduction of marginal tax rates, the sale of state shares and deregulation continued to be the central subject of the U.S. Republican Party.
Swell
- Economic policy