I liked the sentiment behind this post from South Korean economist Han-Joon Chang of the non-delusional, non-Chicago free market fundamentalist variety:
And I built on it a bit:
We have heard so much over the years of trickle down economics: that you pay the rich a lot of money and reduce their taxes and they will spend it. Actually they don’t. It is bullshit; not actually empirically born out. The top 1% and top 0.1% especially earn so much that they save a lot of it, Even they can’t find enough vapid fripperies to spend their millions on. This sounds like a good idea: someone doing the saving until you figure the consequences.
The financial crisis as with the 1929 crisis was firstly a global crisis of income inequality, of under-consumption, as income was sucked from those who will spend it to feed and clothe their families, to those who simply snow ball it into ever vaster private wealth and trust funds to replicate the inequality in the next generation and to create our new unequal inherited wealth feudalism. And of course to use their money to buy the politics of the status quo from both parties in the US and the status quo parties in the rest of the world.
A decent minimum wage for instance, ideally inflation linked, contributes to a less delusional, more real world form of trickle. The trickle sideways effect: those earning $15 an hour for 2000 hours a year earn $30,000 and can finally afford to feed, house, educate, clothe and ensure good healthcare for their families and this money they spend and it helps the local economy too. My experience is also that people paid a decent wage in our local businesses here provide better service, are worth training to make them more productive and also turnover is lower.
And yes spending on local infrastructure is also a good idea. I wish more of the US 2008 and 2009 financial stimulus had been spent renewing our infrastructure so it was a longer term investment with a pay back in reduced car damage, improved freight shipment etc. We need a strong shovel ready set of infrastructure investments for the next major downturn Wall Street will inflict on us given it has used its political muscle to stop regulation of bank leverage, too big to fail banks, reckless lending practices and bonuses with no downside risk for such recklessness.
But let the trickle sideways economics get underway.