Trickle down…prosperity.


The term “trickle down economics” was coined by those in opposition to Reaganomics. Their claim was that Reaganomics was a system designed to increase wealth for the rich so that they would then spend money and let it "trickle" down to the poor. No such economic theory was ever part of Reagan’s economics.


Instead what he proposed was "supply side economics.” The theory of supply side economics holds that, if you reduce tax rates, controls, and regulations on producers as well as individuals; they will work and produce more. That of course is exactly what happened. We had 25 years of almost non-stop record levels of production, record low unemployment, and a technological boom the likes of which the world had never seen.


The derogatory term "trickle down economics" needs to be more accurately renamed "trickle down prosperity.” Wealth is goods. And in the 25 years preceding the Obama Presidency we had the products of new technologies in the hands of the average person as never before.


What trickled and then rained down, were computers, mobile phones, GPS technology, flat screen TV's, satellite radio, online trading, online banking, e-mail and bill pay, Facebook, new hi-tech cars, new medical devices, and medicines that extended and enhanced life. All of these became common place. So much so, that a person born after 1980 wouldn’t recognize the world before it. We need to return to the policies that gave rise to that wonderful era.


Wealth should be computed in increased standard of living for individuals. However, wealth can be stored in assets. Which is why, for example, those who tied their money to productive companies since 1980, became wealthy. The Dow was about 700 back then and is of course now around 13000. Any average person could have established a plan to accumulate stocks and participate in the American dream. Many still have stocks at the core of their pension and retirement plans today. Ironically, “Wall Street” is being vilified by those claiming to fight for the “middle class.” Yet it is the middle class who will retire on the backs of Wall Street!



Item: Capitalism on trial.


In a lifelong study by British economist Angus Maddison, global per capita (GDP) or individual income, in inflation adjusted terms, over the last 2000 years, was only $500 per year up until 200 years ago. Individual wages literally flat lined for 1800 years. Then, between the years 1800 and 2000, individual wages went from $500 to $5,000 per year.


What changed? What happened 200 years ago to cause such a huge rise in world wages? I submit it was capitalism. Adam Smith helped break the bondage of feudalism and statism that prevailed, where kings, emperors, and dictators made economic decisions instead of markets. Smith made the case for free trade and free markets. He promoted replacing the heavy hand of government with the “invisible hand” of the marketplace. When the link between servant and ruler was severed it freed individuals to produce and keep the fruits of their labor. England thrived, America was born, and along came the industrial revolution.


Capitalism has led to a greater increase in the standard of living for more people in the last two centuries than all of the increases experienced in the rest of human history--combined. Of all the goods and services produced by man throughout time, 25% of them have been produced in just the last 10 years! Again, what changed? The Soviet Union broke up, Eastern Europe was liberated as the Berlin wall fell, and China relaxed its grip on its people and began to look to the market for solutions rather than political decree.


Yet, today we are once again putting capitalism on trial. We’re told that individual profit is bad and should be confiscated as needed by the government, whose regulations and decision making are so essential, they should ultimately replace the “unfettered” free market. And the market is being controlled and regulated again on every level. The result? Crippling stagnation. We are returning to the failed policies of the past as President Obama likes to say, but in a search for equality we are returning to failed policies from over 200 years ago—when we were all equally poor.


Watch what you wish for Obama–you just might get it. Which brings us to...



Item: What happens if Obama wins?

What would the face of a second-term Obama administration look like? There will be no Bill Daily, no Timothy Geitner, and no Hillary Clinton. They are all stepping down. Can you name the Administration’s present Budget Director? How about the Labor Secretary? If not, why not? Dozens of Czars, who run multitudes of agencies, are trying to bureaucratically steer entire segments of our economy. Click here to see the unprecedented number of Czars who report only to Obama. Have you seen any of them? Can you name any of them? Can you identify those writing the new rules of Obamacare or Dodd-Frank? These are rules and regulations which will literally decree how we must live in the future.


What happened to Obama's promise that his was to be the most transparent Administration ever? If so, then who are our leaders? What are their policies? What will Obama's policies be in the next term? Isn’t anyone concerned that if he gets his way and taxes the rich it will do nothing to actually reduce the deficit or debt?


From George Washington to George Bush, ten trillion dollars of debt was piled up. That figure increased 4.5 trillion under President Obama, alone, and is scheduled to reach 20 trillion by 2016. Yet Obama continues to blame past policies and past Presidents for the current debt problem.


Obama has done nothing in his time in office to pay down debt or to even reduce the deficit. Instead he’s made it clear he is willing to see the debt increase a trillion dollars a year indefinitely. And even if he got every tax increase he is after, those taxes wouldn’t affect the compounding of debt by more than a fraction. 


As the debt increases day after day, month after month, and year after year; the Senate refuses to even propose (let alone pass) a budget, and the President continues to take expensive vacations and rack up record rounds of golf while he derides millionaires for their greed.


There is a financial train wreck coming, and nothing is being done to avert it. Perhaps Obama's only concern is that we all become more equal? Welcome back to the Feudalism of pre 1800 with all its faceless Czars, rulers, and regulators. Once again, like Kingdoms of old, ours will survive only through “favors” and monies distributed by the King. And welcome back also to untold years of stagnation, as we revert to the real failed policies of the past.