Monday, April 20, 2015
Trickle-down Effect Of Economics
We often hear our large scale enterprises must do well, if the common people are to live well. Jobs are made, incomes improve: at first glance this makes a lot of sense. A priest sociologist working with laborers, in an article in the Catholic Times, does not agree.
Government apparently believes this to be true, and does what it can to make the growth of these conglomerates as smooth as possible. Removing many of the obstacles that prevent growth. However, is it true that the workers benefit from this largesse?
When big business does well, and we have the trickle down effect as it is called, the overflow of wealth from the big enterprises and the rich will enter the lives of the masses--no proof, only an hypothesis and common belief.
Government and the Korea Bank Statistics shows something different. Under the government of the past president the income of the conglomerates continued to increase with the business friendly policy. The income of families on the other hand continued to decrease. Why are the incomes of the families supposedly increasing, and why more poverty?
Pope Francis has expressed the opinion that there is little to warrant this kind of thinking, and said so in Joy of the Gospel. "In this context, some people continue to defend trickle-down theories which assume that economic growth, encouraged by a free market, will inevitably succeed in bringing about greater justice and inclusiveness in the world. This opinion, which has never been confirmed by the facts, expresses a crude and naive trust in the goodness of those wielding economic power and in the sacralized workings of the prevailing economic system. Meanwhile, the excluded are still waiting."
In 1997 the Catholic Conference of England on the issue of the common good was sharp in criticism of this thinking-- when the rich get richer the situation of the less wealthy and the poor is improved-- The bishops expressed doubt on this position, and said there is no evidence of this and goes against common sense. This kind of thinking only goes to justify the search for wealth.
When big business does well this does not translate into the good for the ordinary citizen. For this to happen the government has to get involved with regulations to make this happen, and to extend the welfare system to include more people. When the government sides with big business and abrogates many of the regulations this is not only hurting the citizens but not making for an efficient financial market. If the government is to take an interest in the life of the citizens they have to be conscious of the solidarity of the basic community and the common good.