You’ve heard the criticism of supply-side economic ideas as “trickle-down” policies. Kevin Williamson of National Review takes aim at that criticism in his latest column, then explains why the “trickle-down” label applies more accurately to economic theories of the left.
Perversely, those advancing trickle-down ideas are mostly the same ideologues who denounce “trickle-down.” But they do not call it trickle-down — they call it “stimulus.” …
… One of the problems with the traditional Keynesian view of stimulus is that it assumes that the increased aggregate demand in the economy will be matched by a mirror image of underutilized productive capacity. But we know from experience that this is not always the case. For example, we spent years around the turn of the century stimulating the economy with lower interest rates, tax cuts, and welfare spending, and the result wasn’t general prosperity — it was a housing bubble. These things tend to be unpredictable, and it is as likely that such efforts will deepen the misalignment between production and consumption as it is that they will mitigate it. …
… The important point here is this: The argument that the government should spend on infrastructure because a certain piece of infrastructure is needed is one kind of argument; the argument that government should spend on infrastructure because doing so is good for the economy is a different kind of argument — specifically, it is a trickle-down argument.
If you doubt that, ask yourself: What kind of firms get federal contracts? Do you think any of those unhappy people in Ferguson, Mo., own firms that are in line for Department of Defense or Department of Energy contracts? Do you think impoverished Appalachian pillbillies are in the running for upgrading Treasury’s computer networks? If so, I have a bridge I’d like to build you at a very reasonable price.
Federal contracting is dominated, as one would expect, by large firms, often the dreaded multinational corporations of angsty soy-latte-liberal legend.
