In a Labor Day political push for a minimum wage increase, President Obama ridiculed trickle-down economics and reiterated his support for what he calls bottom-up economics. The former is the pejorative frequently associated with former President Reagan’s supply-side economics, a philosophy built on lower business/corporate tax rates and reduced regulation. While Reagan’s approach was largely positive, it’s fair to say that supply-side economics has some shortcomings. That’s a topic for another post. What’s interesting here is that Obama seems to have backed into the truth with a catchy, but poorly understood quip.
I’m sure bottom-up economics has been thoroughly tested with focus groups or the President would not be using it. While it rings of concern for the common man–the “bottom” of the supply chain–Obama is anything but willing to let individuals determine their own economic fate. His proposed minimum wage hike is a top-down, centrally planned approach to economic growth. It would cost jobs by raising the cost of labor for employers. Prices of products and services generated by minimum wage workers would also rise as employers pass along the increased labor costs to consumers. There’s nothing bottom-up about raising the minimum wage, or about health care mandates, carbon taxes, or most of his fixes for our stagnant economy. Obamanomics is top-down economics.
Many on the left think that corporations control free markets, but consumers have the last say in a free economy. At the end of the day, buyers decide what to buy and companies must compete to win their favor. While many corporations wield lots of power these days, this is due to cronyism–collusion between firms and government–not the free enterprise system. The President has is backwards.
Contrary to the President’s rhetoric, a bottom-up approach to the economy should mean letting individuals make their own choices in the marketplace. Government interference picks winners and losers, and constitutes the very cronyism that is stifling economic growth. I’m all for bottom-up economics. The President is the one who doesn’t understand it.
As al gore used to say- what is up is down and what is down is up
Perhaps the idea is to lift those at the bottom up at the social ladder?
Your thoughts on the shortcomings of supply-side economics would be a great read. I would like to understand how lower taxes and reduced regulation would be a problem. It seems like the opposite of Obamanomics. What am I missing?
Overall, the supply-side principles are sound, but I’d like to take it a step further. I’ll consider addressing this in an upcoming post.
“Perhaps the idea is to lift those at the bottom up at the social ladder?”
Is this even a real comment? The article is about ECONOMICS and the minimum wage? Your comment belongs on the “Let’s have more parties for low-income workers” thread. There should be a web site where you can see your social score (I’m on ladder run 723 out of 1000). Good lord.
D or R doesn’t matter any more it’s them vs us and the “us” is getting smaller everyday.
Orwell was right.