Trickle Down: Here’s How It Happens

Our country’s 40-year experiment in trickle-down Reaganomics has shown us one thing: left to its own devices, a free market pumps the money to the top. It’s the nature of the beast, an inherent property of the system.

Despite wild-eyed assertions to the contrary, trickle-down doesn’t happen unless we make it happen.

Here’s further demonstration of that from the redoubtable Lane Kenworthy. He uses long-term cross-country comparisons — the closest thing we can get to a controlled experiment in a field where you can’t do anything like randomized, double-blind studies. Data from the Luxembourg Income Study — the best data set available.

Over twenty-five years what has made the poor better off?

In the countries where bottom-decile households have gotten better off, it’s happened via government transfers. In the countries where they haven’t (like the U.S.) … they haven’t. Or not much (and that only in the late 90s).

Here’s one comparison highlighting the differences.

Full paper with lots more graphs here.