I'm going to make a bold statement here. It's something that has seemed obvious to me for a long time, but looking at the currents of economic theory and the dominant economic model in the world today (i.e. neolibealism) it seems to be far less obvious than I had thought. I'm going to call it Jeremy Trombley's Economic Principle No. 1. It's likely the only economic principle I'll ever declare, but it's so fundamental, in my opinion, that it's the only economic principle anyone ever needs to understand in order to create a balanced economic system.
So, without further ado, here it is...get your pens and pencils ready because this is it!
Jeremy Trombley's Economic Principle No. 1
Wealth may "trickle down", but it fucking FLOWS upward!
I can't wait to write my textbook! :)
Doesn't that seem obvious to you? I mean, how much simpler can it get? If you give $1000 to the wealthiest person in the U.S., what's going to happen to that money? It's going to go into a bank account or an investment portfolio and merely add to the monetary value of that individual's assets. On the other hand, if you give that same $1000 to the poorest person in the U.S. and allow them to spend it on anything they want to - whether it's a car, rent, bills, drugs, alcohol, or whatever - what happens then? That $1000 is going to pass through hundreds, even thousands, of different hands as it makes its way toward the top of the wealth ladder - as the people above are always trying (and succeeding) to grab money from those below them. What's more, on its way up that $1000 is enriching every person that it comes in contact with. Every person who touches one of those dollars is a little better off than they were before. So, in effect, that $1000 becomes tens, hundreds, or thousands of thousands of dollars! Not only that, but every transaction that that money goes through is going to generate tax revenue for the city, state and the country which can be used to further enrich the nation as a whole if used properly.
Unfortunately, I don't have concrete data to back up these claims - it would be interesting to get, though. It would be a fairly simple study of the flow of money, but as far as I know, no-one has conducted such a study yet. However, despite this lack of data, I feel quite confident in espounding my principle and the resulting economic theory.
The central idea is that there has to be some redistributive structure built into any economic system. Without such a structure, wealth becomes concentrated and concentrations of wealth create an unhealthy and unstable economy. In tribal groups, redistribution occurs through the economy of gift giving and through prestige granted through generosity. More complex societies, such as cheifdoms and proto-states funnel wealth through a centralized redistributive structure - namely the chief or the emperor.
Laissez-Faire Capitalism lacks any such redistributive structure - theoretically relying on the "invisible hand" of the market to distribute wealth efficiently. Realistically (because true Laissez-Faire Capitalism has never and can never exist), in a modern nation state it is the responsibility of the government to provide for the redistribution of wealth through taxation and the funding of public projects that benefit everyone. What's happened recently, as a result of the dominance of neoliberal economic theory (which is essentially a revival of the concept of Laissez-Faire Capitalism), is the creation of a corporate welfare economy. Instead of using tax revenue to provide for the public good, the government has directed that money toward enriching corporate entities in the skewed notion that this will in turn benefit everyone. However, knowing Jeremy Trombley's Economic Principle No. 1 we can see that this is not the case - it may benefit some people, mostly those at the very top of the economic ladder, but certainly not everyone.
In my opinion, since we live in a nation state and taxes are our primary form of wealth redistribution, all tax money should go to benefit First and Foremost those at the very bottom of our economic system. This will, in turn, benefit everyone above as the money makes its way up the ladder.