From the bottom up or the top down?

Watching the debate last night, viewers were reminded once again of McCain's "hero", Ronald Reagan. Ok, whatever, John! Doesn't Reaganomics equal trickle-down economic theory? The theory that if those at the top's wallets are full, money will naturally spill out from them to the rest of the population. Trickle down economy theory is the opposite of the ground-up approach, in which the economy is stimulated from the lower levels of the economy (ie The small business owner rather than the top corporate executive) and that from there more jobs are created and, most importantly, more stability and better competition is created.

Trickle down economics has proven itself to not work. Why? Because money does not just trickle down from the pockets of greedy top level corporate executives. If the CEO of a giant corporation gets receives a $50,000 bonus, do all of that company's employees also get a bonus? No. Are all the workers receiving wages and benefits anywhere near that of top or even mid-level executives? Of course not! Now, bring in out-sourcing. If there has ever been evidence of corporate America's greed, this is it. Now we've got corporate execs. still raking in multi-million dollar paychecks, and the "excess" is tricking down to...India? Bangladesh? While outsourcing has been a great opportunity for developing nations and corporations to make more money, what about the rest of us, still looking upwards in search of a few bucks trickling our way.

Even when we look internationally, we see that trickle down does not work. Large international money lenders like the IMF, the World Bank and the US have proven this. While the World Bank has actually done some good for developing countries, the large loans made to these countries (expected to be paid back AND with interest) are usually just used to pay off debt these nations owe to other countries! It doesn't solve any problem, and if anything, just makes the situation worse for that country. In many instances, a receiving country may have access to food and health aid, but once a large loan is made to that country, the aid is discontinued. Since the loans are usually used to pay off other debt, the money is in and out of the country without a single cent trickling down, and the people who need it are now also stripped of the aid they were depending on to survive. A number of years ago, a substantial amount of money was loaned to Nigeria in order to fight AIDS. When all was said and done, only 10% of that money could be accounted for. This is another obstacle to seeing any money trickle down...on it's way down it often gets stuck in the pockets of corrupt leaders, which the developing world is full of.

So what does work? In the past few decades, a new phenomenon has sprouted all over the developing world and has proven to actually work for the people who need it the most. It's called micro-lending, micro-credit or micro-finance, depending on which you think sounds best. Micro-lending involves the setting up of small lending banks in rural parts of developing countries and gives very modest loans to the citizens of these rural areas. With these loans, villagers can begin a business of their own--opening a general store or making clothes to sell to tourists or fixing shoes. Eventually, if they are successful in their business, they pay off the loan, generate a substantial income and ultimately are able to employ other villagers and stimulate the entire economy of the village. This way, instead of waiting for the government to come bail them out, rural people are generating their own economy and, most importantly, generating their own economic independence. The one thing any nation needs to have before anything else is a stable economy. No one is going to care or fight for anything else if they can't feed, clothe and shelter themselves and their families. Once a nation's citizens can do all of these things and have become economically independent, they can then begin demanding other things, like democracy and stability in other areas of their country.

Now, how do we apply this to home, and why haven't we yet? Sure, America isn't a developing country, but I think that it has been proven by now that capitalism is not the only answer. It has had it's hey-day and we are all paying for it now. Maybe we should take a lesson from the micro-lenders and take our economy out of the hands of greedy and corrupt corporate executives and put it back into the hands of small businesses. Maybe it's time to focus on generating our economy on a more local level, stimulating dollars on a community by community basis, creating new and local jobs all over the country, rather than putting all of our eggs in one giant corporate basket.