"Trickle Down" doesn't work!
How often have I heard that? It's such a ridiculous assertion, because once one has a rudimentary grasp of economics, it becomes clear that branding the trickle-down effect false is as sensible as denying the existence of gravity. Still, many persist. Then along comes this paper* by Peter Saunders, published by the CIS. Peter uses Australian Bureau of Statistics figures to show that in real terms, as Peter puts it, "Average real disposable incomes rose by 15% between 1995 and 2003, and even the least advantaged who earn nothing increased their spending power by one-eighth." The ABS figures show that "Over the period from 1994-95, there was a 12% increase in the real mean income of low income people, 14% for middle income people and 16% for high income people." Oh dear. That's in *real* terms, too. For those who don't understand the significance, that means even after the figures are adjusted to take inflation into account.
This is wonderful news for those who are keen on improving the lot of the poorest people in our society. However, even the above seems to be an issue for some. Even when they're confronted with a situation where the poor's income is rising, that fact is negated because the rich's income is rising faster. My question to them is WHO CARES? This is an ethical no-brainer. Forget the rich. What these figures suggest is that the poor are earning more. They're more able to send their kids to good schools. They're able to build better houses. They're able buy better food and clothes. In sum, they are able to live better lives.
If the rich households saw their incomes rising and the poor saw theirs falling, then yes, I would agree that such a scenario is very bad indeed. However, such a phenomenon seems to be a hallmark of socialist political systems with their elite administrative class, rather than our largely free market society where the wealth produced at the top is shared, nay, trickles down, to the less advantaged members of the community.
*The paper is actually a response to the charity, St Vincent de Paul, and its rebuttal of Peter's original piece, which was itself a rejoinder to a rather hysterical publication by the above charity regarding "The Reality of Income Inequality in Australia".
This is wonderful news for those who are keen on improving the lot of the poorest people in our society. However, even the above seems to be an issue for some. Even when they're confronted with a situation where the poor's income is rising, that fact is negated because the rich's income is rising faster. My question to them is WHO CARES? This is an ethical no-brainer. Forget the rich. What these figures suggest is that the poor are earning more. They're more able to send their kids to good schools. They're able to build better houses. They're able buy better food and clothes. In sum, they are able to live better lives.
If the rich households saw their incomes rising and the poor saw theirs falling, then yes, I would agree that such a scenario is very bad indeed. However, such a phenomenon seems to be a hallmark of socialist political systems with their elite administrative class, rather than our largely free market society where the wealth produced at the top is shared, nay, trickles down, to the less advantaged members of the community.
*The paper is actually a response to the charity, St Vincent de Paul, and its rebuttal of Peter's original piece, which was itself a rejoinder to a rather hysterical publication by the above charity regarding "The Reality of Income Inequality in Australia".
posted by James Waterton at 3:27 pm
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