Tuesday, March 11, 2014

Confusing trickle down economics with the free market

Trickle down economics is an ideology, not an economic theory. The term was coined to express derision for the idea that the rich and powerful should be given tax breaks and encouraged to make more money. They are supposedly the job creators, the most important people in our economy, and their success will make the rest of us better off. When they make money, they spend money. By spending money, they uplift all of society; their wealth will trickle down to the rest of society.

Bank bailouts and other bailouts are a direct result of trickle-down thinking. These people are too important to fail, even if they have no talent. Society owes them; they are entitled to vast, tax-funded bailouts so that they can get their salaries and their bonuses, go buy things and help perk up the economy.

Trickle down economics is about a certain section of society being entitled to benefits from the government that other individuals are not entitled to. At the end of the day, a corporation is run by individuals and it is individuals who benefit.

The free market requires that everyone be treated equally by the law. The law gives equal protections and equal rights. You can never have a free market economy without those guarantees; they are fundamental. The free market’s virtue is that we are all human beings who should choose our own paths. We receive the rewards or the penalties for taking risks. It rewards us for exceptional endeavors. The law under a free market does not distinguish between a bank and a bakery. If the baker makes bad bread, he will run out of business; if the banker is a bad banker, he will run out of business. The law does not favor one over the other. Only an unjust system will favor one over the other, claiming falsely that one is more important than the other.

Trickle down economics is best described as fascism, if fascism is as Mussolini described it, a union between corporations and governments. The larger the corporation, the more access it has to government. The free market, on the other hand, requires that government take a minimal role in people’s affairs. It requires maturity. Only in a mature society to people understand that religion and state do not mix without corrupting each other. The same argument holds for state and corporations; they cannot mix without corrupting each other.

Evidence of that corruption is found in quantitative easing. The government has stepped in to help the biggest to survive, to boost their wealth and hope that some will trickle down to ordinary citizens. There is nothing free-market about this; the state and Wall Street have corrupted each other. Liberal and conservative economists fight on all sorts of issues, but when it comes to bank bailouts and quantitative easing, the hoax is clear; they all supported it when it started.

~Bhekuzulu Khumalo

Quote taken from the article: Pope Francis: Confusing  trickle down economics with the free market The Washington Times, December 25, 2013