‘Trickle Down Economics’ Nothing More Than Label Used to Smear Capitalism: Economist

US dollar notes are photographed in Buenos Aires, on June 23, 2022. (Luis Robayo/AFP via Getty Images)

The term “trickle-down economics” is nothing more than a label used by opponents of capitalism to disparage free markets, according to economist John Humphreys.

Humphreys, the chief economist at the Australian Taxpayers Alliance, said despite the term being widely used, it was nowhere to be found in economics studies.

“People who argue for free-market capitalism don’t actually use the term,” he told The Epoch Times in an email. “The left uses loaded language in order to ‘poison the well’ against their opponents, and thereby avoid honest policy debates.”

He said historical evidence showed that free market capitalism is the only sustainable way to bring millions out of poverty, and reducing barriers and regulations is the only way to drive productivity and wage growth.

“If forced to debate on the evidence or theory, then the left struggle—so instead they rely on dishonest strawman arguments, and cheap emotional manipulation.”

The economist also points out another deliberate misrepresentation of capitalism and that it was a zero-sum game between classes in society.

“The standard assumption among the left (including many in the media) is that some people can only benefit if other people lose. That’s why they often frame policy debates through the lens of how money is being redistributed.”

In fact, in The Epoch Times editorial series, The Spectre of Communism, Marxist theory portrays society as a constant struggle between supposed classes, whether that’s between men and women, teachers and students, different ethnic groups, and in the economic sphere—bosses and workers.

“Marx’s theory of exploitation divides people into two opposing classes: the bourgeoisie with capital and the proletariat without. But, in fact, class mobility has increased rapidly since industrialised societies came to the fore,” the series states.

“The degree of class mobility in the first half of the nineteenth century was similar to that in the 1970s in both the United Kingdom and the United States.”

Attempts to Reform Economy Met With Resistance

Meanwhile, recent attempts by the United Kingdom’s Truss government to cut taxes have been met with a wave of criticism from media and political commentators.

Further, there have been ongoing attempts to pressure the current Australian Labor government to abandon already-legislated tax cuts set to come in 2024-25, with the Australian Council of Social Services calling them “unconscionable.”

Cassandra Goldie, CEO of the Council, said tax cuts for upper-middle income earners would not benefit those living in poverty.

Yet the Stage Three Tax Cuts legislated under the previous Liberal-National Coalition government simplifies the tax rate for those earning between $45,000 to $200,000—a segment predominantly made up of middle-income families.

Humphreys has previously supported the tax cuts saying these reforms can help spur economic growth. He also added that the reality of capitalist societies is that “everybody involved” in everyday business transactions benefits.

“That is why they voluntarily agree to the trade in the first place. By reducing barriers to trade (lower taxes and less regulation), there are more opportunities for more people to find more ways to cooperate with each other, creating more win-win exchanges, which is the engine of economic growth.”