Trickle Up or Down

Ronald Reagan is famous for his "Reaganomics" policy, in which he highlights the importance of sponsoring the higher class by cutting taxes in order to solve economic stagnancy. He explained that the accumulation of wealth in the higher class would cause money to trickle down to the rest of American society, revitalizing the flow of currency. However, there was no real incentive for the higher class to spend the money, especially during times of heavy inflation. As such, Reagan's economic policies only shifted the distribution of wealth ever more to the side of the rich upper class, causing a huge separation of wealth that lasted to this very day.

Fast-forward to contemporary society, Andrew Yang, who is running to become a 2020 presidential candidate, seeks to pump money into the economy as well. However, he focuses on giving everyone money. His campaign claim is that the government would fund every American $1,000 dollars each month. His argument comes from a different perspective - that the rapid replacement of jobs by autonomous systems would require the government to facilitate a transition of occupations. The $1,000 dollars would be a safety fund to help make this massive transition. From Yang's viewpoint, America is facing a challenge that is almost the reverse of America's economic crisis in the 1970s and the 1980s. Rather than a stagnant economy, America's economy is growing at such a rapid pace that it is abandoning workers from the lower economic echelon of society whose jobs are being occupied by autonomous systems that are being developed at equal speed. As such, although the economy is spiraling in a different direction as it was in the late 1970s, the United States faces the same epidemic of rising unemployment.


Would this concept of pumping money directly into the economy actually work, especially under a different circumstance of an already-prospering economy? Yang argues that as oppose to the "trickle down" strategy, his strategy would allow money to "trickle up." Since his target for this program encompasses all Americans, it would be especially influential to those in the lower economic rank who would value the $1,000 dollars more than the already-rich. According to Yang, this money would not only allow them to take more time from work to learn and adapt into a different occupation - one that will not be immediately dominated by autonomous systems, but also give them more buying power. As such, the money would end up in the hands of corporations that dominate the consumer market. Yang believes that the role of the government is to extract this money from the corporations through the form of more stringent taxes and thus facilitate the cycle and distribution of money between the rich and the poor. In that sense, the projected effects of his policy is very much different from the actual effects of Reaganomics. Instead of widening the gap of wealth, Yang attempts to mend it with a solution that also addresses the current trend of autonomous technology.

Another point of difference between the two policies is that Reagan actively cut federal spending. Yang, who believes that the government is facilitating this transaction of money between corporations and average individuals, encourages federal spending because the money would just cycle back to the government. Reagan did not achieve his objective of increasing the federal budget, however. Instead, due to the ineffective income tax cuts, he had nearly tripled the federal debt. While Yang's plan does not seem to have this problem due to government income from conglomerates, it would indicate excessive government interference with corporations, and also a difficult situation for the government as it becomes the centerpiece of an unsustainable economy.