What is the “trickle down” theory?
It was not until Ronald Reagan was elected President that the general public began hearing the the term “trickle down” used to describe an economic ideal. President Reagan, referred to as the “Great Communicator” not the “Great Thinker”, used this term to describe the belief that as the corporations became wealthier they would in turn invest that wealth thereby creating more and higher paid jobs for those on the lower rungs of the economic ladder. Although this may sound like a reasonable theory at first , in reality it does not work. Granted some small portion of the increased wealth may go into new ventures and expansion, the wealthy corporations probably could have afforded to invest in these all along. More often than not the increased wealth has found it’s way into the stock market due to “buyouts” and “mergers” where it tends to reduce rather than increase jobs. It has become easier to buy your competitor than to compete with him. The stock market reacts to the “perceived” value
