Updated: May 5, 2021 8:23:02 am
Gravity, it turns out, may be no match for greed. Since the Ronald Reagan presidency in the US — and Margaret Thatcher in Great Britain — there has been a consensus in the capitalist-liberal world order. And as with all political appeals, it tried to condense the complexities of political economy into easy-to-understand aphorisms: “A rising tide lifts all boats”; “if the pie grows, a smaller share is still a bigger piece” and most popular of all, “wealth trickles down”. The broad consensus in the US for over three decades has been that lower taxes on the rich lead to economic growth, and the wealth so created lifts people out of poverty and strengthens the middle class. But it seems now that while many things roll downhill, money isn’t one of them.
Last week, while delivering his first address to a joint session of the US Congress, President Joe Biden outlined an ambitious post-COVID economic recovery plan. In essence, massive public spending will be used to bolster the welfare state — provide for jobs, healthcare, education, childcare — to ensure that large swathes of the population do not descend into poverty. To finance this expenditure, Biden plans a “bottom-up” and “middle-out” approach instead of a trickle-down one. The super-rich — “the one per cent” — will have to pay their fair share while the poor and working people receive subsidies.
The paradigm shift in the US is significant. The assumption behind trickle-down economics is, essentially, that the market and the private sector would ensure a just equilibrium in society — in pursuing their own interests, individuals making money would serve the social interest as well. But inequality has grown and as the pandemic has shown, the state is so small now, it cannot handle a crisis. Biden seems to have finally figured out what most poor and working class people have always known.
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