And a smaller percentage of income is spent on things like food and clothes. By creating larger and larger organizational structures, you can more efficiently realize economies of scale. Large structures imply lots of money.

A shirt isn't just made in a small factory the next town over, it's made on the other side of the planet by a company with a million employees, then shipped in a global logistics network that's the result of hundreds of billions of dollars of infrastructure investment, and communications were probably handled by a communications network that's the result of hundreds of billions of dollars of infrastructure investment. The ship the shirt is delivered on won't be owned by a bunch of middle-class income earners but an incredibly rich corporation who can afford to finance and purchase massive ships, the crews that run them and the fuel that powers them.

The very few people who run the tiny portions of these massive industrial giants that delivery the $10 shirt to Walmart should make a lot of money. Somebody responsible for a corporation with a market cap in the billions of dollars shouldn't be pulling down $30/hr. Would it make sense for the store manager where the shirt is sold to make more? They're only responsible for 1 store, while the CEO might be responsible for thousands of stores in aggregate.

Trickle down economics is not just the idea that 1 rich person might hire more cleaning staff to keep their silver from tarnishing, but that they might run larger and more efficient organizations that made a $100 shirt into a $10 shirt. Meaning their cleaning staff can also clothe themselves more readily.

As much as I like the idea of my yard guy living a good and comfortable life, I also wouldn't swap him with my boss's position tomorrow. I know my boss can work a riding mower and a weedwacker, but I'm pretty sure my yard guy can't operate a multi-million dollar corporation. Moreover, every week I debate whether or not I should keep my yard guy, I can also operate a mower and a weedwacker. If he wants to go buy a vacation home someplace and triples his yard rates, he's going to lose me as a customer and end up poorer than before. So the value of what he is offering may only be enough for him to live the economic life he has...at the bottom of the trickle. This is an important market function. There's tons of yard guys in my area and I can switch to another one if I need to. Or if there isn't enough competition to push down prices I can always fall back and just do it on my own.

If my yard guy was smart, he'd go talk to my HOA about providing a neighborhood-wide service. We already overpay for our HOA services, if we added another $10-15 per month to it, nobody would really care, and our yards would service themselves. No more HOA letters about overgrown weeds or uncut lawns. And in my neighborhood, with several thousand housing units, my yard guy would be moving around a couple million dollars per year and he'd be a very rich man, employing quite a few not so rich men to work a riding mower and weedwacker. But he's not smart, and he doesn't do that, so he ends up in his station in life, trapped by the simple values of economics, yet benefiting from cheap food and cheap clothes.

Does trickle down economics work? Sure it does, to a point. There's also people who find themselves in positions of not just high responsibility, but high advantage, and they use that advantage unfairly. Figuring out what is fair and unfair is an important market function as well.

http://www.motherjones.com/blue-marble/2012/01/america-food-...