Trickle-Down Economics by Gerry O’Shea

I invite readers to join me in a modest experiment in theoretical economics.
The manager in a town with a population of 5000 finds that she has a surplus of a million dollars coming to the end of the financial year. She decides to distribute it in whatever way is deemed most likely to generate economic activity that will benefit the whole town.
One senior advisor strongly recommends that she divide the money among the 50 richest and most financially successful local people. This expert was very clear that these rich people, all with life stories indicating a high level of success in fiscal matters, would make the best use of the $20,000 check that each would receive, and this would redound to the advantage of the whole community.
Another advisor had a very different perspective. He counseled that the money should be distributed among the 500 poorest people in the town. He argued that the $2000 that each person in this arrangement would receive would generate far more economic activity locally than the other option. This expert pointed out that by giving the surplus one million to the people struggling at the bottom of the economic ladder she could be certain that most of the money would be spent quickly with nearly all the advantages accruing to local businesses.
You are the judge of the two approaches, the first is aptly called trickle-down and the second can be dubbed trickle-up, but please don’t write this off as just an intellectual game. It is really serious and the choices involved are being made every day by Republicans in Washington in favor of option one: give more money to the rich, give them big tax breaks – 650 billion over ten years in the most recent proposal – and somehow everyone will be better off.