The Trickle

 

Much of the debate surrounding free enterprise seems to come to whether or not trickle down economics works or not.

To assess the notion of trickledown economics versus more static economic strategies, one can review the example of the time it took to have PC’s and high bandwidth access to the internet all become quite available to a large percentage of the public.  Since the PC was first marketed in the 70’s or so, it took over 30 years for the scale to grow and the cost to reduce to the point where this was considered a commodity.  

 

Clearly the notion of the cost of various things dropping over time to a low value did take time.  The cost of a transistor now is virtually zero, and that progression took over 30 years.  With the cost approaching zero, companies like Intel have achieved great things.   As Hard Drive storage also asymptotically ran towards zero companies like Google were enabled.    This also took close to 40 to 50 years from the time of the first manufactured integrated circuit.   This is in an arena which is highly free market.  In the general economy, there are some pockets that are more regulated and less appreciative of innovation.  Even with this general condition, the percentage of GDP spent on food dropped from 17% to 5% today.    The cost of lowering distribution and analyzing markets and needs in a more productive fashion did accelerate this cost reduction no doubt. 

 

So what is the time constant of progression whereby the increase in GDP is reflected in the enhanced living standards?  If the answer were based upon more competitive market sectors, one could surmise that all are much better off now then say in the ‘60’s.  Clearly this is the case.   The 99% in this country are the 1%'ers elsewhere. 

 

The entire issue is that there should be more trickle down of wealth than whatever occurs today.   The question could be rephrased to be:  at what rate could incomes at the low end increase and what are the forces or processes to improve or restrict this outcome?

 

Clearly in our times, skills matter and skills need to continue to be increased.  Public educational system performance is a negative in this regard.   If healthcare was more competitive and provided at a lower cost, this would have a two-fold effect upon salaries:  first, the take home pay would be larger by a considerable amount over time; and second, the cost of healthcare would be less.   Having more free enterprise would increase the trickle down in absolute terms.   The naysayers do not want to believe the basic reasons for our country to have the wealth to consider doing the things we do.   

 

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