The most insidious thing about trickle-down economics is not the claim that if the rich get richer, everyone is better off. It is the claim made by those who oppose any increase in the minimum wage that if the poor get richer, that will be bad for the economy. This is nonsense.
Interpretation
Trickle-down economics is flawed; claiming that helping the poor harms the economy is misguided.
In this quote, Nick Hanauer critiques the idea of trickle-down economics, which suggests that benefits for the wealthy will eventually benefit everyone else. He argues that the assertion made by some that raising the minimum wage for the poor would negatively impact the economy is not only incorrect, but it also undermines the importance of equitable economic policies that support all levels of society for sustainable growth.
In practice
In a debate about economic policy, one might use this quote to argue against trickle-down economics.
The most powerful forces in economics are not numbers or facts. They are prejudices and preferences. No amount of evidence will ever change the degree to which many of the rich and powerful prefer themselves to be richer and more powerful and others poorer and weaker.
Raising the minimum wage allows business people to stop thinking about workers simply as costs to be cut and allows you to start thinking about workers as customers to be cultivated.
When you have a tax system in which most of the exemptions and the lowest rates benefit the richest, all in the name of job creation, all that happens is that the rich get richer.
You show me a highly unequal society, and I will show you a police state. Or an uprising. There are no counterexamples. None. It's not if, it's when.
The thing I've learned most about poverty is how expensive it is to be poor. It's super easy to pay rent every month if you earn enough to pay rent and have a decent job. It's super hard to pay rent if you need a coupon from the state and then need to go find an apartment that will accept that coupon and only that coupon.
If low taxes were the way that people like me created wealth, then we'd be starting our companies in the Congo or Somalia or Afghanistan, but we're not. We come to places where there are lots and lots of customers.
The welfare of a nation can scarcely be inferred from a measurement of national income as defined by the GDP.
China's government has far more control over the country's economy than our government has over ours, and it is moving from export dependence to a model of growth driven by domestic demand. Any restriction on exports to the U.S. would simply accelerate a process already underway.
We have this culture of financialization. People think they need to make money with their savings rather with their own business. So you end up with dentists who are more traders than dentists. A dentist should drill teeth and use whatever he does in the stock market for entertainment.
During the two centuries since the publication of 'The Wealth of Nations,' the main activity of economists, it seems to me, has been to fill the gaps in Adam Smith's system, to correct his errors and to make his analysis vastly more exact.
Economic growth is very important, but it is not the only thing, and it must be accompanied by sharing with those who are left behind, through effective social services and provision.
I truly believe that capitalism was created to help people live better lives, but sadly over the years it has lost its way a bit. The short-term focus on profit has driven most businesses to forget about the important long-term role they have in taking care of people and the planet.
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