Pope Francis and trickle-down economics

By Reade Brower | Dec 08, 2013

"Thousands of candles can be lit from a single candle, and the life of the candle will not be shortened. Happiness never decreases by being shared — Buddha.

My new favorite Pope, Pope Francis, recently said: “Some people continue to defend trickle-down theories 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 facts, expresses a crude and naïve 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.”

The Pope continues to share a philosophy that is not only inclusionary in nature, but also brings in the kind of common sense that our leaders need to adopt in order to move the global interests of everyone ahead.

I am not an economist, but a simplistic view of trickle-down economic theory is that if the government gives tax breaks and incentives to the wealthy and to the business owners, it improves and enriches the upper levels and the improving economy the wealthy create will then benefit the poorer members and the society as a whole.

This flawed theory suggests the upper classes need more tax breaks and that, if given, they will use those breaks to create more income and wealth for the middle and lower classes.

What Pope Francis recognizes is that theory and reality do not run parallel in this instance and that while the rich get richer, the poor get poorer — just the opposite of what happens when you don’t look at helping the lower classes keep more of the money they make.

The holiday season is a perfect time to reflect on the “haves” and “have-nots." The “haves” buy what they want, when they want, for the price it costs. Giving them more money does very little to spur the economy because it does nothing to generate consumer sales and it is consumer sales that are the engine that will give the economy a jolt.

Tax incentives for businesses can be effective when they create a specific incentive to business owners to buy machinery or hire people. Used correctly, they do increase the spending capabilities of the masses and should not be abandoned; rather they should have specific goals in mind when offered.

The problem exists because the current system is predicated on the wealthy not hoarding and protecting their wealth. Do you suppose a tax break to a multi-millionaire will create more wealth for the working classes? I think not because their spending is not predicated on how much they have, rather by how much desire.

Class warfare has been a consistent issue during the history of mankind. People in power are afraid to give it up in fear that somehow their own worth will be diminished if the lower classes are more empowered. I think the exact opposite would be true; the more you shared, the more you would get back.

In a business I owned a couple of decades ago, we started a “bonus based on profit” program. In theory, it seemed like a good idea so off we went with it. The company took a fair profit off the top and then shared what was referred to as “excess profit” with management and all associates. We created a somewhat complex system so that some of the bonus would be invested for future year give-backs and the bonuses were weighted on the lower end of our work force with the theory being that it was our production and inserting staff (what might be referred to as our “blue-collared” workers) that was directly helping our management and office (what might be referred to as our “white-collared” workers) make their salaries.

In the end, it was a reward for team effort and most associates were grateful to be included, and it led to an increased accountability and empowerment for all members of the working team. At one point I got a little worried when I saw the annual amount to be dispersed. My worry dissipated when I was reminded that it was a “bonus based on profit” formula which meant the more money we shared, the more money that had been made for the company.

Common sense says that if you get more and then give more, you are creating a “win-win” that increases efficiencies as associates do what they can to help the company. In a sense, they begin to think like business owners.

This sharing of profit did not inhibit growth in the slightest. As profit grew, I, as the business owner, did not lack the incentive to add machinery and people. I can also guarantee the bonuses given out to the line workers, office staff, and management went right back into the community and is the consumerism that also drives our local economy. If I had kept that money, I might have invested some of it back into the business but, more probably it would have found its way to my retirement portfolio or into savings for my children’s upcoming college years.

Sharing the wealth, with those who help you get it is a fail safe way to grow your business and your personal wealth, because you retain your most valuable resource, your people, longer while creating a better working environment — when we are all in it together, the productivity, sense of belonging and, most importantly, feeling like you are part of something bigger than yourself, works to catapult you and your company forward.

It becomes a simple axiom, the more you give, the more you get back.

Capitalism at its purest form is the best system the world has in running its economy. Capitalism only loses steam when fear and greed become the focal point. If capitalists could just realize that sharing the wealth with those who help you earn it is the best path to continued successes, then perhaps we would not see fear and greed lead the way in both corporate and local businesses practices.

In the end, it goes back to another of Pope Francis’s major tenets: inclusion. If we could allow this principle to guide our every move, we would be both a better, and a richer society.

Turn the Page. Peace out; Reade

Reade Brower can be reached at: reade@freepressonline.com.

Comments (3)
Posted by: Reade Brower | Dec 12, 2013 16:32

I agree with Mr. York that, technically speaking, capitalism in its' purest form produces a skewed system of wealth, that was my point. What we need is capitalism with insight, restraint and foresight. The adage of "pigs get fed, hogs gets slaughtered" is at the root of why "pure" capitalism isn't in the best interest of our citizens.

Posted by: James York | Dec 12, 2013 00:12

While I appreciate the attention drawn here to the Pope's scathing criticisms of failed economic policies, I would conclude that his criticism are aimed at policies that economist that claim to be 'purests,' or more often referred to as neo-classical or neo-liberal, advocate.  So I think the point is missing here; capitalism in its 'purest' form is indeed the problem that the Pope is shedding light on.

Posted by: Richard McKusic, Sr. | Dec 09, 2013 11:58

Pope Francis and this article are like breaths of fresh air. Thanx. :)

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