Tuesday, May 3, 2016

FDR on trickle-down economics

(Franklin Roosevelt, photo courtesy of the Library of Congress Prints and Photographs Division.)

In 1932, Franklin Roosevelt said "there are two theories of prosperity and of well-being: The first theory is that if we make the rich richer, somehow they will let a part of their prosperity trickle down to the rest of us."

He then explained the second theory: "if we make the average of mankind comfortable and secure, their prosperity will rise upward..."

Next, he described what was wrong with the first theory--trickle-down economics--by quoting from various Christian groups and leaders of the day: 

"the wealthy are overpaid in sharp contrast with the underpaid masses of the people. The concentration of wealth carries with it a dangerous concentration of power. It leads to conflict and violence... Economists now call attention to the fact that the present distribution of wealth and income, which is so unbrotherly in the light of Christian ethics, is also unscientific in that it does not furnish purchasing power to the masses to balance consumption and production in our machine age."

"It is patent in our days that not alone is wealth accumulated, but immense power and despotic economic domination are concentrated in the hands of a few... This concentration of power has led to a three-fold struggle for domination: First, there is the struggle for dictatorship in the economic sphere itself; then the fierce battle to acquire control of the Government, so that its resources and authority may be abused in the economic struggle, and, finally, the clash between the Governments themselves." (World War II, of course, would soon begin - a war provoked, in part, by poverty, unemployment, and mass income & wealth inequality. 60 million people died in that conflict, perhaps more.)

"We talk of the stabilization of business. What we need is the stabilization of human justice and happiness and the permanent employment of economic policies which will enable us to preserve the essential human values of life amid all the changing aspects of the economic order... We so easily forget. Once the cry of so-called prosperity is heard in the land, we all become so stampeded by the spirit of the god Mammon, that we cannot serve the dictates of social conscience..."

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