From: prabhak@giga.cs.umn.edu (Satya Prabhakar)
Subject: TRICKLE-DOWN: Let us thank the conservatives!
Organization: University of Minnesota, Minneapolis, CSci dept.
Date: Mon, 23 Nov 1992 18:31:40 GMT

TRICKLE-DOWN: Let us thank the conservatives!

In the wake of a disastrous November when the Republican lease on the
most prestigious address in the world was forcibly terminated, the 
Republicans took out the framed portrait of Ronald Reagan from the 
attic, dusted if off and hung it in the foyer of their homes. They compare 
him to visionless George and wax nostalgic about this conservative cult-hero. 
Which ain't much of a compliment to Reagan. Or his trickle-down dream to 
prosperity.

The convincing Democratic victory has validated Clinton and Gore's 
tirade against the trickle-down theory. How heartless it is. And unfair. 
The L-word is now passe, ladies and gentlemen, add the T-word to your 
vocabulary. Trickle-down, the very word inspires revulsion.

But, wait a minute!

Closer inspection of the Reagan era brings home some valuable
lessons for many developing countries such as India. Reagan rode into
the White House with the rallying cry of deregulation, vowing to
loosen the noose around the business. He further claimed that if we
make life easy for the businessmen (who are typically rich), they will
invest and create jobs for the rest and boost the economy. The best
any government can do is to get out of the way of enterprising men and
women who can create fortunes. Government is not equipped to create
wealth, people ought to do that and the government should faciliate
such creation, or, in the least, get out of the damn way. Blame Reagan
and Bush for all other evils, but give them credit for creating an
epidemic of hope, relief, vision and uplift. (It is not fair to tag
the budget deficit to the trickle-down economic theory and bring the
whole edifice down by virtue of this unfortunate temporal association. 
The budget deficit need not have happened under the reign of trickle-down.
And let us not confuse the issue by bringing in the social agenda of the
conservatives. They are two independent topics.)
 
India, for example, lags behind not because its people are illiterate, 
not because it has 800 million of them and not because it is somehow
condemned to be congentially third-worldish. To establish a causal link 
between any of these to its dismal state of affairs is to miss the whole 
point. 

The only factor that has caused all this distress we see in India today 
is this: for nearly half a century the government thought it knew best.

The government, unflinching in its misplaced confidence in itself,
assumed that if it were to control everything it surveys, it can achieve
the global optimum and the maximum good for the most people. And some
of this was fueled by this principle: when you control, you have power
and power is a nice thing to have. So, politicians tried and succeeded
in holding on to power. And they did it by coddling the poor in the
lap of government and spoon-feeding them. The poor kept them in power, not
aware how they are wrecking themselves and their future immeasurably.
They created a venomous web of licenses, quotas and permits and built
mile-high protective walls. Fettered by this vexatious tax and license 
policy, many potential entrepreneurs gave in. While politicians, armed
with the power they vested in themselves, rampaged the country with
gorgon flourish, the country limped along. Iron-clad regimentation
was the price of bleak prosperity.

Trickle-down will work for India and for many other countries. It has
already started working for India under teh aegis of its new PM, Rao. 
A prime example is civil aviation: just six months after the state monopoly
was dimantled, close to 6 airlines are now flying, employing hundreds if 
not thousands. 

Trickle-down.  Sure if makes the rich richer, but it will give jobs to the 
poor.  But the way to see it is that it is the payoff to the enterprising 
for risking their wealth and creating prosperity.

Trickle-down. Yo, it does your country good!

(And let us thank conservatives for this valuable lesson.)

Satya Prabhakar
(Honeywell, Minneapolis)