Trickle down theory / Political economy

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The term oozing theory or Trickle down theory (English trickle = seeps), devaluing also horse apple theory, designates the thesis that economic growth and general prosperity that ooze realms into the lower layers of the society (Trickle down effect). It belongs to the acceptance of an offer-oriented economic policy.

Term history

The expression coined/shaped after a speech of David Stockman, who was of Ronald Reagan a chief advisor in economic questi0ns. It painted the offer-oriented economic policy as the part of a long tradition of the economics, according to which the laissez-faire helps not only those, which are well in the market platziert, but also the poorest ones.

The general principle is well described by the sentence in Berne pool of broadcasting corporations de Mandevilles, The Grumbling Hive (1733)) "private vices are public virtues ". By the wasteful expenditures that realms and their employment arms become from the Wohltaten for realms the Wohltaten for arms.

As a founder to the Trickle down theory is considered many Adam Smith: "The large Vermehrung of production is common in all possible sections as consequence of the division of labor, which causes that universal wealth in a well governed society, that itself up to lowest population conditions" (English under: At Inquiry into the Nature and Causes OF the Wealth OF nation Chapter 1). After this interpretation the national steering element replaced of the "well governed society" by markets as means of the resource allocation (see political economy). Smith criticized the king and other representatives of the state seriously than economic participants, who used their power for the penetration of their own special interests, than part of its that he called the Merkantile system.

Under different other names this conception many decades was represented, particularly into the 1920er years, when it seemed in such a way, as if the laissez-faire for employers of the economy would give an endless boom of investments and growth. The conception that the point of the economic structure growth and yields produced, were then passed on downward in the form of higher wages, among other things common by Henry Ford and had their basis in the interpretation at that time of the Say theorem.

Political opponents of this conception it as "Toryismus "- in the words of Franklin Delano Roosevelt - or with John Kenneth Galbraith' of famous remark: "If one a horse enough oats gives, will also somewhat come out, around the Spatzen to feed ". The actor wants Rogers witzelte, if one remains the point of the economy also for gold it to hang above.

Reagonomics and the Trickle down theory

The Trickle down economics was a high-politically occupied the subject of the Reagan government. The offer-oriented economic policy was introduced, and the economy recovered. It is however debated, what caused this recovery. Paul Volcker, the boss at that time of the US issuing bank (see central bank), had already begun fewer controversies means of the monetary policy with the introduction from far to solve the problem of the stagflation and it said many that these measures of its monetary policy were, which brought the economic turn. David Stockman, Reagans's economic adviser, characterized later the offer-oriented economic policy and the Trickle down economics than purely rhetorical affair.

The use of the term left the late 1980er for years, although the program for the lowering of the marginal tax rates, for the sales of the state portions was and to the Deregulierung further the central the subject of the US-American republican party.

Developing countries

The Trickle down theory is also frequently used, in order to describe appropriate effects for the developing countries. Representatives of the modernization theory assume that that also in the developing countries with economic growth an Trickle down effect occurs, rising prosperity thus also the lower social classes to property come, whereby the Trickle down effect is often to be released by a Big push. This is denied particularly by the so-called globalization critics. The investments would go always there, where the use for the socially weaker ones was smallest. This became particularly by the globalization a problem. The IWF however means: "With progressive globalization the living conditions (in particular with consideration of broad calm indicators of the well-being being issued) in nearly all countries improved considerably."