Finance, Forex and Investments

Building the economy from the top down or the bottom up?

It seems that Obama v. McCain economic platforms come down to building the economy from the either the bottom up (Obama) or the top down (McCain). It would seem that the tax rebates and stimulus checks that we got under the Bush administration lends a certain air of credibility to the "bottom up" theory - give more money to the lower and middle classes who then go out and purchase the good provided by corporate American which increases their profit margins or at least maintains them - but what evidence do we have that trickle down economics can work in 2008? I'm not advocating either candidate because there are gapping holes in both of their proposals but my question is, in a world that is so much smaller, what motivation would a company have to reinvest in American families? Trickle down worked very well in the past because companies were built and maintained in the United States. Now, these companies are shipping jobs off to India and China because we cannot compete with their labor costs here not to mention illegal immigration undercutting American labor. Maybe someone has a better understanding than I do? Thoughts? I'm all for the free market but I would argue that it no longer exists. The government had no choice but to bail out Fannie and Freddie and these two entities were quasi-government entities to begin with. We live in an economy where the well being of 300 million people is predicated on the success or failure of comparatively few companies. As such, the government almost has to bail them out. When the real free market existed, things were far more localized and there was an ebb and flow but that no longer exists. We sold out our local economies and a true free market so that we could save three dollars on laundry detergent.

Public Comments

1. it's obvious trickle down hasn't worked. Time to move on.
2. top down the jobs leave, bottom up the companies and the wealthy leave, take your pick
3. With any thing you have to build from the ground up!! You can't start building a house with the roof you have to start with a foundation.
4. Top down works in our economy It worked for Reagan, Bush CLINTON and has been working for Bush Jr. First surprise - Clinton's economic policy was very conservative. Alan Greenspan himself said that Clinton's economic policy was not all that much different from Reagan's. Secondly - If we didn't have to police the world to protect ourselves from radical terrorist groups, could you imaging what our economy would be doing right now. We have pumped billions of dollars into war and we still are showing signs of a growing economy. The last person that tried to use bottom up economics was Carter - anyone want to go back to those days?
5. Building the economy from top down, or for the corporate companies, will not trickle down and benefit the common working man, as corporations are only interested in building their business and globalization has helped these large corporations. So we have to start thinking about equality of education in this country and it has to start by fundamental education, not helping the big corporations.
6. You can't build it from the bottom up. You can give the bottom money and they will buy some cool things and put some money into the economy temporarily. That's what the rebates did. They don't create jobs. They don't invest their money. You take away from the people who create jobs and you will hurt the economy. Like it or not, those who want the govt to rescue them and not take care of themselves are of very little value long term to the economy
7. Trickle down worked during the 80's and got energy prices, inflation and unemployment all down. During the last eight years their are more millionaires in this time then any other times in history. Many of these people where able to grow there businesses in to multimillion dollar companies. This also allowed for many smaller business to be able to grow at the same time. Bottom up takes money from the companies. These companies then need to look at a way of reducing costs, so they get rid of labor or just outsource it completely. This effects the unemployed as they do not have money to spend in this consumer market. So when we do end up spending money it goes to another country. This will also hurt small businesses as they will be taxed more and thereby have less money to either invest back into the company or hire more workers. ]
8. this all started almost 100 years ago ss welfare food stamps hud all government programs to make us dependent on government! WAKE UP AMERICA we just eliminate government and start over again with what our founding fathers started (we the people)
9. A top bottom solution only works if there're SPECIFIC problems at the top. Otherwise the money just ends up in stocks and with that off shore on in the bank accounts of the super rich. This will never create jobs. Simple for the fact that business is not about making jobs but about making money. To get more jobs you have to strengthen the local market. To do that people need money to buy all that crap. Back then (when dinosaurs roamed the earth) it was a working solution because 99% of U.S. products were manufactured within the U.S. So it didn't really matter if the U.S. had the market or not. The jobs were created here. Today the jobs are created where the market is located. If you produce for the european or chinese market you produce somewhere local.
10. You cannot build an economy from the bottom up. Paying the lowest worker more will only cause us to have to pay everyone more which will lead to lay offs and more companies moving over seas. You need to build an economy by having a pro business environment where business is able to hire more people and pay them more money for their labor.
11. Actually, it should not be a matter of "bottom up" or "top down" approach. Also it would be misleading to say that Obama and McCain have different plans for economic policies. When you get to the bottom of their issues, you will see that they don't have any difference at all. Both are for government meddling when it comes to our economy.Government intervention is the main cause of all the economic problems we have right now. Always remember that whatever the government touches, it makes it worse. The best thing to do (which actually made the USA great in the beginning) is to get the government to stop meddling with the economy. The less the government intervenes with the market, the more the individual energy and creativity of people are released, thus prosperity ensues. The argument that "consumption" as a driving force for the economy is a fallacy. What drives the economy are savings and investments - NOT consumption. The market (which is the aggregate influence of every individual in the economy) is more powerful and knowledgeable than a few people in the government thinking that they are the great "planners" who will get us out of economic disasters. Example: the business cycle that we all hear from the media is actually NOT a cause of the free market. The business cycle exists BECAUSE of government intervention through the Federal Reserve (Central Banking). Now, in the business cycle, we have booms and busts. Booms are caused because of false signals given by the government to the market (artificially low interest rates etc), thus causing all these malinvestments to form. The "bust" part of the cycle is a necessary process that liquidates all these bad investments and brings the market back to equilibrium. (Now we see the busting of the housing bubble etc etc.) These are necessary to clean the market from all these bad investments. Now, if you have the government coming in and bailing out all these failed institutions (Fannie and Freddie) it is just delaying the needed "bust" that the economy needs for getting back to market levels. Thus, instead of having a hard recession/depression now, the government just postponed the much needed recession/depression and actually will make the upcoming one worse than what it would've been if the government allowed all these liquidations to occur.
12. Economy in this country has been getting bad to worse and the worst is yet to come. Here are the reasons: a) Education in this country is a mess. Students do not want to learn(32+% highschool dropout rate), teachers do not know how to teach(unqualified math, science teachers), parents (busy with their own divorce lawsuit, unemployment, ...) even can resolve their own issues. b) Great America has 9.5+ trillion national deficit and we owes Communist China 1+ trillion debt c) We have higher and higher unemployment rate, yet big high tech companies can not find qualified workers d) We have on-going home foreclosure. Americans have lost more than 20+% of their home value and it is still getting worse e) All the financial institutes are all in a big mess and are not making any equity loans to majority Americans any more. f) Every American owes $7000+ credit card debt. g) We still have 2 wars that have lasted more than 5 years The list can go on and on and .... No matter who is elected, it will be tough to deal with such mess created by our government. But, if Obama is elected, he will push our nation's economy from recession into a great depression immediately by driving all the business out of this country when he starts to collect more taxes. As a result, our economy is to sink into a big black hole. People may not like to see or hear such reality, but it will become a reality this time next year if we have Obama in the White House. P.S. Allen Greenspan and Democrats are the ones to blame for today's American economy mess. Allen Greenspan made the interest rate for too low and too long and Democrats pushed for "Housing Affordibility" to the lower income people by encourging banks and financial institutes to provide mortgage to large number of borrowers who were not qualified for loans at their first place.