Ok, we have all heard of the "trickle down" economic theory. The theory that if you give tax breaks to the richest sectors of the economy, they'll make business expansions, hire new employees, and benefits will trickle down to the lower sectors of the economy. Regan tried this, and it did not work. The problem is that when the richest sectors of the economy get more money, they have more of a tendancy to keep their money in savings, or spend it on luxury goods. This keeps money where it is, or makes it go stagnant. I think it is high time that someone showed a new model of income distribution. So here's my "rise to top" theory of economics.
When those in the lower-middle sector of the economy recieve more money, they have three tendancies
1. Save the money
This does make the money go stagnant, but their incentive to save is not as high as those in the highest sectors of the economy, so not as much money will be subject to stagnation
2. Spend the money on consumer goods
This causes the money to rise up. When you spend money on consumer goods, it goes to merchandisers and manufacturers. So, in theory, they could now make expansions and create new jobs like the "trickle down" theorists wanted in the first place.
3. Spend money on education.
This perhaps causes the best overall effect on the economy in the long run. When people become more educated, they become more skilled and increase the human capital of the nation. This benefits everyone because there will (eventually) be more of everything for everyone.
I welcome feedback and critisism. Especially if you are very knowledgeable about economics.
When those in the lower-middle sector of the economy recieve more money, they have three tendancies
1. Save the money
This does make the money go stagnant, but their incentive to save is not as high as those in the highest sectors of the economy, so not as much money will be subject to stagnation
2. Spend the money on consumer goods
This causes the money to rise up. When you spend money on consumer goods, it goes to merchandisers and manufacturers. So, in theory, they could now make expansions and create new jobs like the "trickle down" theorists wanted in the first place.
3. Spend money on education.
This perhaps causes the best overall effect on the economy in the long run. When people become more educated, they become more skilled and increase the human capital of the nation. This benefits everyone because there will (eventually) be more of everything for everyone.
I welcome feedback and critisism. Especially if you are very knowledgeable about economics.