Those over a particular age, were taught a particular version of capitalism. It goes something like this. In America, everybody can do anything, and capitalism is the tool that allows this. When the entrepreneurial class goes into business, it provides jobs for others so that they have a good income, ensures a healthy profit for the entrepreneurs which they then invest in other businesses (thereby providing even more jobs), and on top of all this, they are producing and distributing goods which enables everyone to live happily ever after. This is called the dribble down effect.
Why the Trickle Down Effect Used to Work but Doesn’t Anymore.
Yes, the trickle down effect did work once upon a time. That’s because there were different social mores and a different societal construct half a century ago. The people who analyzed capitalism saw the dribble down effect and concluded that it was the result of capitalism. Actually, it wasn't. That conclusion was a bit of fuzzy logic. It was the result of human generosity, one to another. It was also a result of the societal construct that people who had money had an ethical responsibility to leave more than crumbs at the table. Let me draw you two analogies here.
Trickle Down Economy has NEVER worked in America
King Obama has a dinner party. it is attended by the rich of every nation. Every cook, decorator, craftsman, kitchen maid, fine artist, etc. has contributed something to the making of that fabulous dinner party. They have truly worked hard to make that party a success. When the party is over, there is a mass of food and party favors left. King Obama declares that the people who worked on the dinner party can take whatever is left over for themselves without payment as the party has been more than paid by the generous donations of the guests. The workers then take what they like. Some give some of what they have received to other families while others sell it at a cheap price to those who desired to have some of these goods. This is called the dribble down effect. It’s when there is something left over from the table at the top of the kingdom, and what is left over trickles down to the people at the bottom.
The above example is called the Dribble Down Effect.
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King Opposition, on the other hand, also has a feast, but after the guests have left, he immediately calls in the merchants and asks them what they will pay for the food and favors that are left over. They offer him a price but he drives a hard bargain, and pushes it up so high that merchants know that their profit on resale will be very small. Still, something is better than nothing. After the merchants have bought what they wanted, there are still some goods and favors left over but they tend to be the crumbs. However, King Opposition is loathe even to give these crumbs away. Instead, he transfers all the now rotting food to a warehouse and starts selling it off to the very poor of the city. In other words, there is no dribble down effect over here. Even though King Opposition's party was more than paid for by the contribution of his guests, he was so greedy that he didn't eve allow the workers who had worked hard to make the party the success it was to get even one crumb.
The above is called the Emperor or Blast Up Effect.
The Role of Government in the Resulting Poverty of the People
Government was invented by the people for the purpose of taking care of their common concerns.The people agreed to pay taxes to the government they elected in return for the government’s commitment to carry out the wishes of the people, and the wishes of the people were that the common needs, e.g. infrastructure like roads, protecting the people from criminals, clean water, public transport like trains, lights for the street, and modern services like phones and electricity be provided for the people. This used to be pretty much the structure of most governments internationally until Thatcher and Reagan came along and 'privatized' these services.
Let me further explain this agreement between government and the people.
People decided that their children should be able to learn to read and write. Rather than each parent being responsible for that (as they had other things to do, and not every parent could be an effective reading/writing teacher), they decided to have schools. Then they realized it was probably better to have a central body take care of the schools because it was cheaper and more effective to do this. So this became one of the portfolios of government. Always, the tasks allocated to government by the people were for the benefit of the people.
Today, some do not see government as an organisation meant to serve the people. They want to enforce a situation where people take 'personal responsibility' for tasks that their forebears (even when women stayed at home) were better taken care of by government - for which they were willing to pay taxes.
That said, in recent years, this purpose behind taxes and government has been lost.
That said, as a result of the people no longer having cheap, subsidized services like phones, electricity and decent public transport, many of their costs have gone up. At the same time, technology and the export of jobs has removed much of the work. Add to that the slow termination of the dribble down effect, and you will understand why half of Americans are now living in poverty.
When People Starve, They Turn to Crime
Because the people no longer have either the dribble down effect or a livable wage paid to them, the people will either starve or the government needs to provide for them. When people have no way of finding food, many turn to a life of crime.
The government therefore has a choice: either assist the people with food or increase the police force tenfold to stop the resulting crime wave. Of course, the government could enforce livable wages to be paid when governments reached a certain percentage of profit.
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