President Obama has recently said that he wants to grow our economy from the “Bottom Up”. But exactly what does he mean, and how does that work?
I suppose that he could be promoting the Keynesian saw of giving free money to people who don’t pay income taxes at the bottom (his word) of our economy, so that they will spend it and stimulate demand for more goods.
While I personally believe that these efforts over the past four years have only wasted money and increased the interest that taxpayers (the other half of us) will have to pay on our debt, I can conceive that such a move might be justified in the short run, even if only for psychological reasons, to stabilize the economy. But to grow it?
Our economy grows because of innovation, increases in productivity which make goods cheaper and workers more productive, and investment by the private sector. Not by taxing money from some of us to give to others, or by running up the debt, with increased interest payments for the first group.
Will people at the bottom hire their friends and fill out all the government forms and meet all the government regulations to become new businesses? Will they spend more on innovation from their food stamp allotment? Will they invest in new technologies? I don’t think that will be possible. Hopefully after a few years of employment, once they have some savings. But not while they are still at the bottom.
Of course maybe the President did not mean that at all. Maybe he meant that we should use another great government tool: raise the minimum wage. If we just made the minimum wage $20 per hour, then there would be no more “bottom” overnight. Right? No problem. Except for all the millions of additional people, especially young people, who would have no jobs at all. Just like what happened when we last raised the minimum wage.
So perhaps I don’t understand “Grow the Economy from the Bottom Up.” But probably no economist does, either. Please, Mr. President, enlighten us on exactly how this works.
Or is this just another one-liner that plays well but makes no sense?
To quote Bertrand Russell: “It is undesirable to believe a proposition when there is no ground whatsoever for supposing it is true.” It is particularly undesirable when the speaker is the President, who understands so little about our economy, yet never fails to have an opinion on how to change it.