But does trickle-down economics really work?

For this to work, we must understand that trickle-down economics relies on such favourable economical conditions that businesses are encouraged to increase wages and benefits for staff. The truth of it, is that profits never were intended to wages but to shares instead. Investors. There is nothing, obviously, from stopping employees from investing their money in businesses. And many do.

I recall a time when, instead of bonuses, a business awarded shares to their staff. As the business became more successful, the staff reaped the rewards. It was a wonderful relationship. Until another company offered to buy the shares from the employees high above value. Who would say no? Needless to say, the company was bought out and closed down in no time. Captialist conquest at its finest.

Before I make my next point, we must understand the twin peaks of economic disaster. Firstly, debt. For those savvy on the workings of capital growth, you would understand this concept of debt is a powerful tool for growth. In a nutshell, loan money, money returns a profit. Only in economic mathematics, however, can the equity of the loaned money still count towards a company’s overall capital worth. I.e. loan $1m and still technically have the money despite not physically holding it anymore. But that says nothing for the poor chap that borrowed the money.

The second mountain is stagnent money. This is money that sits in coffers and isn’t invested. When times are tough, people hide money away. Especially those who don’t trust banks. And that’s fine for a rainy day. But when enough people do this, money doesn’t circulate. What would big business do if people stop spending? Perhaps loan them money to encourage them to spend again? Put prices up enough that saving becomes harder, perhaps?

And what’s with credit? Once, we would walk into the bank and pitch a business idea, show our worth, and perhaps get a small loan to start our dreams. Buying a house? Show them our income – our worth. Now? We apply online, pre-approved, microloans, high interest. Next thing you know, you don’t have any saving, your expenditure is greater than your income, and owning a house is but a dream reserved for Boomers and businessmen. So what do we do? Find solace in more small debt to fill our financial depression with trinkets and avocado toast.

The Boomers before us though, they lived in hard times too. They worked hard to pay off their five-digit home loans. They didn’t have the temptations of luxurious cars, iPhones, or computers. There wasn’t a cafe on every corner, and pubs weren’t filled with ala carte restaurants and craft beer. The economy grew strong since their generation but so did inflation. Debt cornered us and instead of fighting for us, they blamed us. Told us to stop spending and start saving. Despite income stagnation and hyperinflation, their argument was incapable, they thought.

“Once more unto the breach”, they tell us. Like soldiers going over the top, they believed the tried and true method of bayonets and cavalry charges was enough to overwhelm an enemy with tanks, planes, machine guns. We can’t save money anymore. Tax breaks won’t encourage us to spend and ‘bolster the economy’. They refuse to raise our pay but instead dangle trinkets in front of us – cafes, tax breaks, and microloans. Short term political promises are nothing less than tactics deployed by yesterdays generals against an enemy armed with credit cards and Zip Pay.

So, if investments got us this far, why do we pretend that mindless spending will get us further?

I say invest in schools, hospitals, infrastructure, innovation, and technology and science. Don’t just throw money at the problem and hope it goes away…