eli5: Trickle up economy
In: Economics
“Trickle down” economics was theorized to work by giving wealthy individuals tax breaks, who would then invest their wealth into new businesses and companies, creating new jobs and more wealth. In this method, wealth would be given to the top and would “trickle down” to the average person.
“Trickle up” economics, as a reversal of that mindset, proposed focusing tax breaks and benefits on the average person. The average person would then spend more money on goods and services. The businesses that provided these goods and services would then earn more money for their owners. Therefore, wealth being provided to the bottom would “trickle upwards” through various businesses to the pockets of the wealthy.
Both ideas propose that their methodology is the best way to improve everyone’s lives, only differing in the method.
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