"TOP DOWN" VS. "MIDDLE OUT" ECONOMIC GROWTH: REALLY JUST “JOBS VS. HANDOUTS”
This week at the Democrat convention the American public will hear no shortage of the party's new mantra for growing the economy: "We’re going to grow the economy from the middle out, not the top down". With all the times we have heard this said on the mainstream Democrat media, have any of them ever asked what this really means?
Let’s think about it. First of all, the Republicans have never described their program as "Top down", or even "Trickle down". No, this is the Democrats’ description of the Republican plan so as to trivialize, belittle and demean it in American political thought. But, assuming we accept the Democrats’ description of the Republican economic growth plan, let’s explore what it means.
The Republicans propose to grow the economy by incentivizing job creation. Such incentives typically include lower taxes and less regulation (or “red tape”) on the ones starting a business, so that businesses are simpler to start and simpler and more cost-effective to operate. If there are fewer laws and regulations to be complied with, there is less need to spend company money on hiring lawyers and accountants to figure out how to comply. On the profit side, if the government takes less of the profit you make, you obviously get to keep more of it and then can decide whether to use it for yourself or your family (usually spending it in the economy) or whether to use it to expand your business (by hiring more people, ordering more furniture, etc.).
The premise of the Republican plan is based upon a fundamental understanding of human nature, and it is proven by Generations, even centuries, of history confirming its principles. On the most basic level, think of yourself. Let’s say you have an idea for a business that you’d like to start in your own small town. You think there might be a market out there for what you have to offer, but in order to find out for sure you have to spend some money for advertising, office space, furniture, etc. If what you want to do requires a license, you will have to study hard, probably spending money on preparation courses, and take and pass a certification test, and keep up with any continuing education requirements on the profession. All of this will require a significant outlay of your energy and savings. And if the business isn’t successful you’ll be out all the time and money involved. The significant risks involved put you on the fence.
Enter Republicans. They tell you they will lower your taxes and decrease regulations so your business is easier to start and less costly to maintain.
All of this means that your business will have a better chance of realizing a profit that will support you and your family, any that may even be enough to hire some people to help you with the business in the future. Now you start to get interested. Now, the idea of risking your savings and spending your energy to get a business going is much more appealing. The ability of a business to prosper sufficiently to be able to create more jobs is what the Democrats call "trickle down” economics. Republicans just call it “job
Now go back in time. You’re considering starting a business and you hear the President say that the wealthiest among us (hey, wait, you say, that’s what I wanted to be) “don’t pay their fair share”. You get the clear sense
that with all the national debt and with the economy faltering and no discussion of cuts in government spending, that this is only the beginning of the taxation on your business. You suspect that after spending all the money and effort to get your business off the ground, that the President (if he’s reelected) will just want to take more and more of your profits to pay for all the programs and bureaucracy he’s started and all your hard work just won’t pay off. Then you hear that speech he made in Virginia, and you decide, “Yep, that’s what he’s going to do because he doesn’t even think I’m the one to be credited if my business succeeds.” So, you say to yourself, if I’m successful, this President’s going to take more and more of my money. You conclude that it’s just not worth risking your savings and putting in all the effort required to get something going if the government is just going to take more and more of the profit. It’s only human nature.
Since the economic policies of the Democrats in fact inhibit job creation (ala the above fictional account), they have to come up with a different strategy for explaining how an economy could grow under their leadership. In this election cycle, they are calling it “growing the economy from the middle class out”. This sounds good – who doesn’t like the idea of the middle class growing? But what does this really mean? Well, it doesn’t mean “growth by job creation.” If the middle class (this is really code for the "non-job creators") is getting more money than they have now to spend into the economy, where will they get it from, if not “from the top down”; i.e., from a job? The obvious answer is that they will get it directly from the government, who has taken it, pursuant to their promised plan, from the job creators. In other words, they will get a “government handout.” What the Democrats won't say, though, is that their program is still dependent upon the profitability of the job creators since this is where they intend to get the money to give to the middle class. But with policies in place that dis-incentivize business growth, their policy of “middle out growth”is destined for ultimate failure as businesses grow less and less under the weight of the government taking more and more of the profit out of it.
So, the next time you hear: “We want to grow the economy from the middle out, not the top down,” just remember what the Democrats are really saying: “We want to grow the economy by government handouts, not by jobs.”