Trickle up economics

Vince Kean, Murwillumbah

As Mungo so clearly states, the economics of the rich are based on a fiction that has probably never described the real world. Supply and demand have almost certainly never explained anything more complex than the simplest playground transactions.

In the big grownup world the truth of the matter is that economic growth has been created and driven by the union movement. Higher wages promoted solely by the union movement have generated the increased demand, which raised prices and profits and elicited the need for investment that led to innovation that led to further investment and increased profits in an ongoing cycle. This is trickle up, the only process that really works.

The drag on the process has always been the tendency of the rich to siphon off the increased profits and divert them into non-productive personal assets (witness the expansion of the status yacht, barnacle farms, in every estuary). Sensible societies have always used the tax system (progressive income taxation measures, wealth/ inheritance taxes etc) to limit the ability of the rich to subvert the process.. Tax breaks for the rich are entirely the wrong economic policy they will slow the innovation/investment process and drag economic development to a slow but grinding halt.

The innovators/investors of the first generation are eventually replaced by non-productive drones whose main object is to preserve or increase existing wealth by means which have extremely limited risks. Tax breaks fall nicely into that category.

I should state clearly that I have no beef with wealthy people. I have a severe problem with drones who use their wealth and political power to batten on to society to increase their wealth unproductively, at the expense of decent, productive, working people and innovators who drive the prosperity of this country.

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