Trickle down economics is the theory that by giving rich the ability to keep more of their money the funds will eventually reach those that truly need it. This idea could not be any further from the truth. Trickle-down economics takes the ability to buy things away from the majority of the consumers in a society and quickly leads to economic turmoil. This has been proven time and time again in our society with trickle down economics being the theory in place prior to each of the major panics in our history. This timeline does not appear to be changing anytime soon.

Trickle-down economics has been called by numerous names throughout history, but is still the same at heart. The theory gives more money to those that are financially wealthy in hopes that they will use their excess income to invest in businesses and stock. This however means that those with lower incomes are taxed more than those with higher incomes. By taking away from those with lower incomes trickle-down economics takes the buying power out of their hands. This leaves the wealthy with no consumer to sell to and freezes economy. Those without money hold it close to their chest and those with money hold it close to their chest in fear of becoming like those without.

If given the choice to purchase a product that has a ten percent chance of working or keeping your money which would you choose? A rational person would say they would keep their money and this is the fundamental issue with trickle-down economics. The people with money feel that it is an irrational decision to invest. This leaves those without with nowhere to turn, because the money make is taxed at such a high rate that they can’t afford to spend any money. This also leads to price in inflation because the risk of bringing a product to market is higher when there is less of a consumer pool; which means even less of an ability for those without to purchase things they need.

This leads panic because those without are forced to choose between needs, such as health care or housing, dinner or shoes, air conditioning or lights. This is not the American dream. Yes, minimum wage has increased in recent years since trickle-down economics has been put in place, but the dollars value has plummeted. Going to the movies; an activity that used to cost six dollars; cost at least ten dollars before popcorn and a soda. A quart of milk; a good that used to cost a dollar and seventy-five cents for a gallon; now costs two dollars and seventy-five cents. This is a huge problem that is purely caused by trickle-down economics.

Possibly the worst issue caused by trickle-down economics –which normally is the final size that panic is just around the corner- is the separation between the classes. In trickle-down economics because so much money is given to the rich while the middle and lower classes struggle the gap between these classes grows exponentially. This leads to less interaction between the classes and the formation of economic “clichés”. This means that the chance of lower classes getting the help they need is slim to none, because the upper class believes that the lower put themselves there.

The pattern that I have described has been followed at least three times in our society. Once in 1893 with the first panic, again in 1929 with the stock market crash, and finally in 2008 with another market crash. Once the surface these panics appear to be caused by other things, but yet the constant between these three panics is that supply-side (trickle-down) economics was the economic theory of the time period directly prior to the panic.

In 1893 the president of the United States was Grover Cleveland- the first democrat to be elect since the civil war- and therefore he was blamed for the panic that he inherited. However it was not his fault, instead we should look towards the president before him (considering that Cleveland hadn’t had time to even unpack the kitchen china before the panic, let alone affect nation economics). The president prior to Cleveland was Benjamin Harrison, who strove to jump start American industry. The way most presidents have tried to do this (without success) is to put in place tariffs on imported goods. This lead to a split in congress between those that believed the tariffs were a good idea (those that believed in big business) and those that believed the tariffs were a bad idea (those that understood economics). By putting into place tariffs this led to the ability for business owners to raise their prices just so long as the price was under what it would cost to buy imported goods with the tariffs. This is supply-side economics the control of the market system is completely in the hands of the supplier.

This also kept the American supplier from being able to use the basic economic principle of comparative advantage. This means that if it costs a producer less to make a single product or more of a product then the producer should allow someone else to make that product. By not doing using the comparative advantage principle the American producer limited the amount of total possible production. This also leads to fewer goods brought to market which means more risk to bring those goods to market and higher prices. As prices get higher the amount of people that can afford to purchase a good goes down. This is fine when the good is a luxury good, but once this moves into the necessary goods the economy has a problem. The only good thing for Harrison was that credit had not been invented yet. The president that promised for the tariffs to be lifted ended up doing what pretty much every president has done; he spun the language in such a way that the American people would assume that the tariffs were lifted on all goods, but instead only lifted the tariffs on raw sugar goods.

There was a couple of things that Harrison did while he was in office that helped Cleveland work towards fixing the economic turmoil that was left in his lap. Harrison was the president that signed the Sherman – anti trust act. This kept one company from controlling the entire market of a good, but did nothing to keep the numerous companies from having the ability to price gouge. He also during this time period expanded the military while the country lacked the funds to do so. This obscene spending led to the loss of the entire surplus that America had prior to his presidency (sounds familiar). Coming into his term the nation had a billion dollar surplus (at 1893 prices) and when he left Cleveland had no surplus to work with.

Cleveland was determined to work first with the treasury and secure the gold standard by repealing the Sherman Silver Purchase Act. He also then turned to the work force, because the economy must be built from the bottom up. Cleveland choice of how to do so was a very unpopular, however affective on the surface. He used military force to end strikes and get the average man working again. He also used his big stick policy (wrong president, but still applies) to gain respect of other nations, such as Great Britain. By having respect he made it easier for future presidents to deal with them and even future businesses to trade with them. This hard nose policy, despite its effectiveness, led to the end of Cleveland’s president career. The Democratic Party abandoned him for the next election. This shows that getting rid of supply-side economics even if the president throws the lower class to the way side will still make some difference on the surface.

This however was soon forgotten, because the U.S. ended up in the same turmoil again in 1929. The presidents prior to the Great Depression of 1929 believed in Laissez-faire government. This basically means they did nothing. President Harding is known for his many scandals during his presidency rather than anything important. He spent most of his time in office playing cards, smoking cigars and drink. He also made a few decision, such as the decision to not press congress to join the League of Nation (eventually leading to World War Two), to put tariffs on German goods (again leading to World War Two) and to stay out of the way of business. This led to an extremely one-sided market system. He might as well have put in the supply-side economic theory himself. The rich got extremely rich during the roaring twenties as the market became more and more inflated and the poor gained nothing. The only thing Harding did right is that he didn’t tax the poor more than the rich.

Harding died in office in 1923 and his vice-president Calvin Coolidge took over. Even though the man behind the desk had changed no policies did. This utter lack of a presence of government in the market system led to voters simply saying, “why change a good thing,” when Coolidge went up for election in 1924. Sadly he would be the last president until Truman that didn’t have to prove he was a good thing. With no government influence in the economy, the stock market got more and more inflated and the rich were able to charge whatever they wanted for their goods because their fellow wealthy were in a buying mood. This one sided system led to the eventual crash of the stock market in 1929 under president Hoover, who received the blame for the crash and was not reelected as a result. The president, who is now known merely because there is a dam named after him, was followed by an economic genius, FDR.

Roosevelt knew that the only was to fix the problems that he had been left with was to create jobs for everyone and put money into the hands of the majority. He achieved this goal by making public works projects and keeping taxes lower in his New Deal. The only tax that Roosevelt put into place was a pay role tax for social security, which gave those that could not longer work the ability to still buy things. This successfully stopped the bleeding of the national economy and kept the nation debt around forty percent which is insanely lower considering the market crashed a mere four years prior to his presidency.

The only thing that set back FDR’s control of the national debt was World War Two, which caused a huge spike in the debt up to a hundred and thirty percent of the gross national production. This however, worked in the advantage of both sides of the economic spectrum. The lower class men had a job in the military and the their wives and girlfriends and mothers and even single women spent their days in factories working on supplies for the war. Granted no one was buying anything so the gross national product was down, but the people were making money. This would allow for them to eventually be able to buy more normal goods and even some luxury goods when the war ended. This led to the most prosperous decade in American history- the 1950’s.

The American people still had not learned that giving the opportunity for the rich to gain control of most of the money supply is a bad idea. As the only adage goes history repeated itself in the twenty-first century. G W Bush has given tax breaks to people for all the wrong reasons. In 2004 Bush passed a bill that gave a tax break to anyone who purchased a vehicle that weighed over three tons would be able to write off that purchase as a farming vehicle. The issue is these farming vehicles ended up in the driveways of suburban Americans not in the fields in the boonies. These vehicles average 10 miles to the gallon at best. This required many Americans to double or triple their trips to the pump causing an excess demand for gasoline and therefore an increase in the price of gasoline. This may seem like a non class specific bill, however these three ton “farming vehicles” with GPS and Bluetooth hands free telephone service and DVD players and twenty-two inch rims, cost at least thirty thousand dollars if not more. This means the main members of this market are the wealthy. Those people that do not need the tax break and certainly are not using their brand new Hummer in the fields were the main beneficiaries of the farming vehicle tax break.

The tax rate of the wealthiest five percent of American’s has also fallen to thirteen percent since Mr. Bush took office. This means that the people with money are more able to spend money, but as history has shown that doesn’t work. This also means somebody else is being taxed, and those lucky people are the middle and lower class. The average American has to pay a third of their income to the IRS. Not only does that take away from their ability to buy things, but it also takes away from the ability for the government to make up for their national debt. Thirty three percent of a little is still a little. This has destroyed the middle class that was created by FDR and reborn by Clinton.

G W Bush came to office with a surplus of four trillion dollars. That surplus, at least last time I checked, has now been turned into a ten trillion dollar debt. Now granted we have been fighting two maybe three maybe four wars in the time since president Bush came to office (sorry I lost count), but that would have not caused as much of an issue if the rich were doing their fair share. The idea that because they worked as hard as they did (I understand how hard they worked) that they now do not have to pay as much in taxes is crazy. This idea will only lead to more economic turmoil.

The United States has a huge tendency to repeat its history and hold on to an idea too. This is seen by the dot com craze of the 1990’s and the Ebay craze and people that are still Cubs fans. This inability to realize that an economic theory is wrong has led to the repetition of panics for the same reason. The gap between the wealthy and the poor was large in 1893 and that gap stayed through 1929 even though on the surface it appeared to have been fixed by Cleveland and his focus on the treasury. FDR was smart enough to get rid of supply-side economics and focus on the lower class. This led to an economic surplus and the development of the middle class (the most important class in a society). This led to the true roaring century, the 1950’s where the dollars held the most value it has ever held. However Reagan and both President Bushes were not satisfied and thought they should give trickle-down economics another shot. These men have destroyed everything FDR worked for and created economic turmoil that will take decades to fix (the only reason it didn’t happen soon is that Clinton delayed it and fought against it).

John F. Kennedy once said, “High tide keeps all boats float,” but that only works when the sailor can afford to the repair the hole in the bottom of his boat. Trickle down economics takes away that ability and therefore leads to economic turmoil if no one is there to stop it.