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Bottom-Up Economics

Rather than being an essay, this post is really more of a "bleg."

Economics seems to spawn some colorful political sobriquets -- "voo-doo economics," "trickle-down economics," "Clintonomics," etc. The latest of these seems to be "bottom-up economics." I am trying to understand "bottom-up economics," but I am having difficulty finding good resources to study.

Most major economic theories can be traced to well-known economists who represent specific schools of economic thought. Keynesian or "demand-side" economics is of course attributed to John Maynard Keynes. Monetarism is attributed to Milton Friedman and the Chicago School of Economics. Supply-side theory is attributed to Robert Mundell and Arthur Laffer, and loosely associated with the Austrian School (much to the chagrin of hard-core Austrian economists).

Can someone explain the theoretical foundation of "bottom-up economics?" Who is responsible for the scholarship behind the bottom-up economic theory? Or are we dealing (again) with simply another political term?

Web searches have turned up little, save for election-year pep talks and populist appeals, like this one written about a year ago by Robert Reich on his personal blog,

There are only two economic philosophies in America - trickle down and bottom up.

... Bottom up means giving all Americans what they need to be productive - universal and affordable health coverage, good schools, a chance to attend college, job retraining, affordable child care, and good public transportation to and from the job, for starters. But as we learned a decade ago, this requires money - even more, now ... Even if we cut corporate welfare, eliminated subsidies to agribusiness, and banned all earmarks, we wouldn't have nearly enough.

The only way is to stop obsessing about balancing the budget and start pushing for a serious tax hike on the rich.

That sounds suspiciously like good old Marxist wealth redistribution: using the government as a conduit to siphon money from the wealthy (Reich is a proponent of the so-called "wealth tax" that would confiscate assets in addition to income) and award it through subsidies either directly to individuals or to compliant (read: obedient) businesses.

I'm also finding things like this, written by a starry-eyed Obama supporter who, despite her earnestness, seems to have a very poor comprehension of basic economics and finance. (At least one commenter, Aaron, tries to gently point out some of the flaws in her reasoning.)

If there is some good theoretical backbone behind bottom-up economics, I'd like to see it. Can WizBang readers help me out?

- Michael Laprarie


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Comments (10)

what's the difference betwe... (Below threshold)

what's the difference between 'bottom up' and 'demand side' economics? don't both involve feeding money to consumers in hopes that their spending will generate economic growth?

If it involves Reich, you c... (Below threshold)

If it involves Reich, you can stop looking. He's an idiot. People have been trying to do the things he talks about in the blurb you quoted for decades to win "The War On Poverty". We all know how well that's going. Particularly for the black community. They're really making out thanks to this well-meaning but misquided approach, aren't they? Of course the solution, according to Reich and similar redistributionist liberals, is to do on a large scale what repeatedly fails on a small scale until you reach a point where you're doing on a large scale what has already been tried on a large scale (read: Russia). Something about doing the same thing, different results, blah blah. Seriously, there are better things to read about on these here innernets.

If there is some good th... (Below threshold)
_Mike_:

If there is some good theoretical backbone behind bottom-up economics, I'd like to see it. Can WizBang readers help me out?

pardon my hasty 'stream' writing...

Bottom up economics involves taking from the most productive members of society (those who are the best at using wealth to more create wealth) and giving it to those who are the least productive members of society (those who are the worst at using wealth to create more wealth).

Somehow this is supposed to cause the more productive to produce more. My understanding of the claim is that since the less productive will have more wealth with which to consume the goods of the more productive that the more productive will produce more.

However, the reality is that taking materials from a more efficient process and feeding them to a less efficient process simply results in a less overall efficiency (i.e. less overall wealth).

Also, I fundamentally di... (Below threshold)
Mycroft:

Also, I fundamentally disagree with the idea "that you should be paid based on what you contribute and the worth the market puts into that. Isn't that only fair?"

People who work contribute. Period. Service workers contribute. Writers contribute. What we are paid is not a reflection of who deserves reward for work. We have a right and an obligation to understand that "The Market" prays to one God -it's own PROFIT. (Not to be confused with a good economy for the overall country.)

People that work contribute different amounts of value to the company they work for. People also contribute different amounts to the company they work for on different days. We get paid on the EXPECTED value we return to the company while employed.

One day, while working for a major company, I found 1 bad line of code in a program. That one line of code was tying up $10 MILIION DOLLARS of the companies money. On that day, I was worth $10 million dollars to that company. How is someone that pushes a broom going to ever be worth that much to the company?

Ever hear of a little thing called Return On Investment (ROI)? I consider myself as successful at a company if I reduce their expenses by more than it costs to hire me. You know what? I am usually successful.

The term derives from the p... (Below threshold)
jaymaster:

The term derives from the physical position it requires productive taxpayers to assume every April 15.

RE: "That sounds suspicious... (Below threshold)
kevino:

RE: "That sounds suspiciously like good old Marxist wealth redistribution ..."

You got it. "Bottom up" economics is a Liberal fairy tale told by idiots who cannot accept the world as it is.

For example, "Bottom up means giving all Americans what they need to be productive". OK. If we give Americans everything that they need to be productive, then why would they work? Why not just retire?

This is why productivity and innovation stinks in a Socialist State. People don't have much of an incentive to be productive - especially if the State punishes those that get rich by being productive at a high level.

There once was a time in this country when we had in excise tax on luxury goods. It was an idea put worth by the Democrats to tax the rich who were buying things that someone decided most people don't need. The tax was taken off the books when many people - including many Democrats - finally figured out that when you tax expensive cars, private planes, or pleasure boats, you get fewer such items sold. That's bad news to the not-so-rich people that design these things, or manufacture these things, or deliver these things, or sell these things, or maintain these things. It's an example of trickle-down economics spreading pain.

I remember this one lady who was interviewed on TV. She had lost her job when the tax crippled the pleasure boat industry. She had to sell her house and take two part-time jobs. It was a rough time for her and her children living in a small apartment. When the tax was repealed she got a letter in the mail offering her an opportunity to return to her old job. She told the reporter that she looking forward to returning to her old job, but she was ruined financially.

Intelligent people learn from their mistakes.
Really intelligent people learn from other people's mistakes.
Stupid people just make the same mistakes over and over again.

I have a couple of questio... (Below threshold)
GarandFan:

I have a couple of questions. If you're "rich" and opposed to having to "share" with others, won't you just move to a place where you won't have to pay those higher taxes?

Has anyone done a 'study' of how long the "rich" will be able to provide business and job opportunities to others; before their taxed out of the "rich" category?

Reich:"Bottom up means g... (Below threshold)
Les Nessman:

Reich:"Bottom up means giving all Americans what they need to be productive - universal and affordable health coverage.."

I notice he didn't add 'highest quality' to that list; 'cause if it's universal and affordable, it ain't gonna be very good quality.
In the real world you can only have two from that list at the same time:

You can have universal and affordable; but it won't be very good.
You can have universal and good quality; but it will be very expensive.
You can have affordable and highest quality; but it won't be universal because someone has to pay for it.

I think that last example is what the libs/Left/Dems are aiming for in a way. Although their version goes like this:

You can have affordable ('free' for the chosen groups, very expensive for the most productive people) and highest quality (and the gov't will ensure this by having a mountain of paperwork and regulations so that no mean ol' doctor is discriminating against three-armed minority Lithuanian transgendered crack smokers, or is Eco-unfriendly, or important stuff like that) and it will be universal (Und it vill be universal, herr comrade. Except for the political elites and certain Politically Correct In-Crowds of our society, of course. They'll be allowed to spend their filthy money or political capital for better healthcare. )

Has anyone done a 'study... (Below threshold)
Clay:

Has anyone done a 'study' of how long the "rich" will be able to provide business and job opportunities to others; before their taxed out of the "rich" category?

I don't know about a study, but this is one small manufacturing firm that is high-tailing it overseas. Talk all you want about evil corporations, but we're competing in a global market and our only choice is to head offshore to a more business-friendly environment. There's about 100 jobs in this town that will no longer be. It's not greedy corporations to blame here, it's greedy politicians. Maybe someday if Congress puts the corporate tax at a more manageable level, then we'll return. Until such time, I'll be eating durian and mangosteen.

The proposal to stimulate t... (Below threshold)
Anon Y. Mous:

The proposal to stimulate the economy by implementing a temporary payroll tax holiday sounds like it would be a bottom-up approach to things. Instead of focusing on tax cuts for the supply-side of the economy, this would put the money on the demand side. The difference between that and the Keynesian method is that instead of government controlling the spending, it would be left to the consumer to spend their own money.




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