DERRY JOURNAL Editorial: Discredited 'trickle down' economics helps only the rich

If the British Government believes the employment of discredited ‘trickle down’ economics  is a way of protecting people from the ravages of chronic  inequality and collapsing real wages it is deluded.

Liz Truss
Liz Truss

The notion low taxes will create more wealth at the top, which will then percolate to the likes of ourselves, is nonetheless zealously maintained by the Tory party like some lost relic from the 1980s.

The most famous iteration of the model is the ‘Laffer curve’ which took its name from the US economist Arthur Laffer.

Laffer, an adherent of the extreme free market liberalism advocated by the likes of Friedrich Hayek and Milton Friedman from the middle of the last century, once infamously drew a diagram of how the curve should work on the back of a napkin when out on the tear with Donald Rumsfeld and Dick Cheney in a cocktail bar in the 1970s.

Its main political proponents in the Anglophone world were Margaret Thatcher and Ronald Reagan but it outlived them and has survived in modified form to the present day.

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Economists have since called it out as deeply flawed. But citizens have no need to rely on their opinion. Look around. Have low taxation rates on the wealthy ‘trickled down’ and improved your life?

It is notable that when the liberal free market economy was unable to stand the coronavirus pandemic on its own, when the market failed in face of the virus, essentially, that even the Tory Chancellor Rishi Sunak reached in his fiscal toolbox for a massive Keynsian state intervention package to socialise that market failure.

And on Thursday, when the new British Prime Minister Liz Truss and her Chancellor Kwasi Kwarteng, announced their admittedly flawed energy support package they did the same, acknowledging that the free market had again failed, the consumers being too poor to afford the prices being set by the energy companies.

That’s a situation that should give the political establishment cause to take a long hard look at themselves. Let’s just leave ‘trickle down’ economics where it belongs in the ‘mad notions of the 20th century’ dustbin of history.