The idea behind trickle-down economics is that wealth gradually percolates through the various layers of society and eventually everyone will be better off. There are three problems with this theory. First, trickles are far too slow and inadequate. Nobody wants a poxy trickle of wealth filtering through to them in the cheap seats down below, drop by drop. "Thanks for that trickle!" are the words they will never cry. A waterfall, fast and furious, and very quick, would be more acceptable. A better and faster way to spread the wealth around is by use of one strong sharp attack with an effective tax law. That's faster and more satisfying than waiting for scraps to fall down from the rich man's table.
According to trickle-down economics, entrepreneurs create thousands of new jobs – the wage earned by a shop-floor worker is the end result of the capitalist’s enterprise. That’s supposed to be good news, and in fact the worker is likely to be quite pleased with his wage, until he hears that the entrepreneur is earning 150 times as much. Bummer. Suddenly the paltry wages don’t look so good any more. So that’s the second problem with trickle-down economics: it doesn’t result in fairness. By fairness I mean, of course, a world where everybody earns the same wage. It also tends to fill people with envy when they see that there are folks in the same firm who earn more than they do.
The third problem with the trickle-down effect, already adverted to above, is that the need for Revolution is pressing. Who has time to wait for all that wealth to slowly reach the masses over the course of many years or even many generations? Nobody, that’s who. We want it all, and we want it right now. That way the world will be more equal and more fair. This is where inheritance taxes help: they speed up the spread of wealth by seizing it from the rich old whomsoever, the very moment he pops his clogs, and immediately making all that nice free money available for redistribution so that poor people don’t have to wait for many generations of forced labour, before they finally acquire wealth in their families. Swift social progress, my friends. It’s the only kind of progress worth pursuing.
From this we can conclude that progressive taxes are a superior mechanism for achieving our goals, namely equality and fairness, and much more effective than trickle down capitalism. To illustrate this, consider the redistributive effect of the market compared to the redistributive effect of taxes. With the market, you have to rely on people getting up off their cushy sofa [editor: that's a 'couch' for our North American friends], propelling themselves along on their own two feet, going out there, and entering into market transactions such as exchanging stuff, selling stuff, buying stuff, producing stuff – all manner of tiring activities that are just so much effort and hard work. Here’s how this eventually plays out: some people make lots of money which they stash in the bank, and others make less money and have to approach the bank for a bit of a leg up. Now we see a bit of redistribution going on:
Well, ok, but that also creates serious problems for equality and fairness. What about the folks who can’t get bank loans because they’re wastrels and the bank wouldn’t touch them with a barge pole? Isn’t it better to let the government have all the money, because governments are much more generous than banks when it comes to spreading other people’s money around? At least with government a greater number of people will benefit, and you don’t need a good credit record to feed at the government trough. It’s all about social inclusion, and the greater good.
So there you have it: all the reasons why trickle-down economics is not on the enlightened person's list of Good Society ideas.