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Concept
Trickle-down economics
Summary
Trickle-down economics is a term used in critical references to economic policies to say they disproportionately favor the upper end of the economic spectrum, i.e. wealthy investors and large corporations. In recent history, the term has been used broadly by critics of supply-side economics. Major US examples of what critics have called "trickle-down economics" include the Reagan tax cuts, the Bush tax cuts, and the Tax Cuts and Jobs Act of 2017. Major UK examples include the economic policies of Friedrich Hayek, and Liz Truss's mini-budget tax cuts of 2022. As of 2023, a number of studies have failed to demonstrate a link between reducing tax burdens on the upper end and economic growth.
Trickle-down economics contrasts with trickle-up economics (also known as bubble-up economics) which is more associated with demand-side economics.
The Google Ngram Viewer shows that the term "trickle down economics" was rarely seen in published works until the 1980s. However, the concept that economic prosperity in the upper classes flows down into the lower classes is at least 100 years old. The term itself is used mostly by critics of the concept.
In 1896, United States Democratic presidential candidate William Jennings Bryan described the concept using the metaphor of a "leak" in his Cross of Gold speech:
There are two ideas of government. There are those who believe that if you just legislate to make the well-to-do prosperous, that their prosperity will leak through on those below. The Democratic idea has been that if you legislate to make the masses prosperous their prosperity will find its way up and through every class that rests upon it.
In 1982 John Kenneth Galbraith wrote that "trickle-down economics" was known in the 1890s under the name "horse-and-sparrow theory".
William J. Bennett credits humorist and social commentator Will Rogers for coining the term and noted in 2007 its persistent use throughout the decades since. In a 1932 column criticizing Herbert Hoover's policies and approach to The Great Depression Rogers wrote:
This election was lost four and six years ago, not this year.
Official source
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