The most insidious thing about trickle-down economics is not the claim that if the rich get richer, everyone is better off. It is the claim made by those who oppose any increase in the minimum wage that if the poor get richer, that will be bad for the economy. This is nonsense.
Interpretation
Trickle-down economics is flawed; claiming that helping the poor harms the economy is misguided.
In this quote, Nick Hanauer critiques the idea of trickle-down economics, which suggests that benefits for the wealthy will eventually benefit everyone else. He argues that the assertion made by some that raising the minimum wage for the poor would negatively impact the economy is not only incorrect, but it also undermines the importance of equitable economic policies that support all levels of society for sustainable growth.
In practice
In a debate about economic policy, one might use this quote to argue against trickle-down economics.
The most powerful forces in economics are not numbers or facts. They are prejudices and preferences. No amount of evidence will ever change the degree to which many of the rich and powerful prefer themselves to be richer and more powerful and others poorer and weaker.
Raising the minimum wage allows business people to stop thinking about workers simply as costs to be cut and allows you to start thinking about workers as customers to be cultivated.
When you have a tax system in which most of the exemptions and the lowest rates benefit the richest, all in the name of job creation, all that happens is that the rich get richer.
You show me a highly unequal society, and I will show you a police state. Or an uprising. There are no counterexamples. None. It's not if, it's when.
The thing I've learned most about poverty is how expensive it is to be poor. It's super easy to pay rent every month if you earn enough to pay rent and have a decent job. It's super hard to pay rent if you need a coupon from the state and then need to go find an apartment that will accept that coupon and only that coupon.
If low taxes were the way that people like me created wealth, then we'd be starting our companies in the Congo or Somalia or Afghanistan, but we're not. We come to places where there are lots and lots of customers.
People stop buying things, and that is how you turn a slowdown into a recession.
If we wait until income inequality is much more severe, we will have a whole class of new superrich who will probably feel entitled to their wealth and will have the means to defend their interest. That's already gone far enough. We shouldn't let it become more extreme.
Good economic theory must give the people the chance to use their talents to build their own lives. We must get away from the traditional route where the rich will do the business and the poor will depend on private or public charity.
Wherever there is great property there is great inequality. For one very rich man there must be at least five hundred poor, and the affluence of the few supposes the indigence of the many. The affluence of the rich excites the indignation of the poor, who are often both driven by want, and prompted by envy, to invade his possessions.
Does inequality in the distribution of income increase or decrease in the course of a country's economic growth?
While it was an experiment to bring them together, nothing has divided Europe as much as the euro.
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