London Debunks "Trickle" Economics

Trickle Down Economics doesn't work. On December of 2020, The London School of Economics published the first ever study of its kind, examining the last fifty years of economic impact resulting from Trickle Down Economics. And while it has been extraordinarily effective in making the rich richer, it adds no value to the overall economy or society. And in fact, it has dangeously deleterious effects on the stability of social structures.

Trickle-down economics is a "theory" that suggests that if the government provides tax cuts and other benefits to businesses and wealthy individuals, these benefits will eventually "trickle down" to the rest of society through increased economic growth and job creation. While this theory may sound appealing, namely to those who stand to benefit from it, it faced irrefutable scrutiny from modern economists for the following reasons.

1. It doesn't work as intended.

Proponents of trickle-down economics argue that by providing tax breaks and other incentives to businesses, they will be incentivized to invest more in the economy, which will eventually lead to job creation and increased economic growth. However, this hasn't been the case. In many instances, businesses have used their tax savings to buy back stock, increase executive compensation, or pay out dividends, rather than investing in new jobs or economic growth. But perhaps that's exactly how it was actually intended to work.

2. It exacerbates income inequality.

Trickle-down economics assumes that the benefits of economic growth will eventually reach everyone in society. However, in practice, the benefits of economic growth often go disproportionately to the wealthiest individuals and corporations, while the rest of society sees little improvement. This can lead to greater income inequality and a shrinking middle class.

3. It can harm social safety nets. 

Trickle-down economics often comes at the expense of social safety nets like Medicaid, Medicare, and Social Security. When the government provides tax cuts and other benefits to businesses and wealthy individuals, it may not have enough revenue to fund important social programs, leaving vulnerable populations without critical support.

4. It can worsen the national debt.

When the government provides tax breaks and other benefits to businesses and wealthy individuals, it can lead to a decrease in revenue. This can worsen the national debt, which can have negative consequences for future generations.

Overall, while trickle-down economics may sound appealing in theory, in practice it often fails to deliver the promised benefits, exacerbates income inequality, harms social safety nets, and can worsen the national debt. Because without any policy ensuring that the funds "trickled" to the benefit of society, trickle down economics was simply clever rhetoric that served as a wink and a nod to the one percent. It has systematically driven the profits of our collective labor into the pockets of a few, and those few used those ill-earned gains to continue to tip the system ever in their favor.