Self-serving bias

Dan Hannon writes in the Washington Examiner,

A couple of years ago, Thomas Sowell tracked down the origin of the phrase "trickle down". It turns out to have been coined by FDR's speech writer, Samuel Rosenman, who attacked "the philosophy that had prevailed in Washington since 1921, that the object of government was to provide prosperity for those who lived and worked at the top of the economic pyramid, in the belief that prosperity would trickle down to the bottom of the heap and benefit all."

Then, as now, the notion was a left-wing fantasy. What actually happened in the Twenties under Calvin Coolidge, as Amity Schlaes showed in her biography, was that tax rates were cut in order to boost revenue. The taciturn old congregationalist had grasped the logic of the Laffer Curve avant la lettre. As a result of his rate reductions, the wealthiest Americans ended up contributing far more in both absolute and proportionate terms.

We free-marketeers believe, not in trickle-down, but in trickle-up. Capitalism, uniquely, rewards people who sell to the mass market. I am typing these words on a program that I bought from Bill Gates. My purchase enriched him, adding fractionally to his net wealth; and it also enriched me, making my life more convenient. Like most successful people, Bill Gates became rich by persuading lots of poorer people to buy something from him; in consequence, we are all better off.

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