Has Obama’s theory of ‘bottom-up economics’ ever actually worked?

AEI ^ | 6-25-12 | James Pethokoukis

[Dysart]

Great catch by Hot Air’s Erika Johnsen of President Obama elaborating on his economic philosophy:

He told his audience Republicans, including presumptive presidential nominee Mitt Romney, “believe that we should go back to the top-down economics of the last decade.”

“They figure that if we simply eliminate regulations and cut taxes by trillions of dollars, then the market will solve all of our problems,” Obama said.

“They argue that if we help corporations and wealthy investors maximize their profits by whatever means necessary — whether through layoffs or outsourcing or union-busting — that it will automatically translate into jobs and prosperity that benefit all of us. …

“We don’t need more top-down economics,” he said. “What we need is some middle class-out economics, some bottom-up economics.”

Johnsen helpfully points out that the president somehow misses the point that his soft command-and-control economics is itself “top-down economics.” Government mandates, subsidies, and regulation are all examples of Washington trying to direct the economy from above. There’s nothing “bottom-up” about Big Government colluding with Big Business and Big Finance to create a false crony capitalist prosperity for the well-connected, rent-seeking class.

[Dysart]

[EagleUSA]

“They figure that if we simply eliminate regulations and cut taxes by trillions of dollars, then the market will solve all of our problems,” Obama said. “They argue that if we help corporations and wealthy investors maximize their profits by whatever means necessary — whether through layoffs or outsourcing or union-busting — that it will automatically translate into jobs...”

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Hey, sounds like Obama is finally acknowledging (without realizing it, of course) that the 200 years of capitalism in America has worked....he can take the idea back to Kenya with him in January....

[Truth is a Weapon]

This really is 1984 Orwell stuff. Down is up. Bottom is top. How do they get off coming out with a definition of “Top Down” which is nonsense? Allowing everyone more freedom to make economic choices is “Top Down”? Good Lord, help us.

[fhayek]

Let's have a bottom up economy. Let's have the workers in charge of setting their own wages. Let's see how well that would work...

[Red Badger]

Just watch GM and Chrysler over the next few years.........if they last that long..........

[plain talk]

Conservative approach to economics IS bottoms up. If government (top down) gets out of the way and allows more resources in the hands of end-users and business owners (at the bottom) then they will spend money and hire people.

[Red Badger]

The Twentieth Century Motor Company in Atlas Shrugged is a prime example............

[wolfman23601]

It needs to be looked at as freedom vs control, not bottom-up vs. top down.

I can think of an example where bottom-up worked. Serfs in medieval England were under control of their lords. The lords told them when to work, what to grow, and who to sell their products to. After the plague, King Edward III allowed for free tenants. Free tenants paid their rents and their taxes, but could work when they wanted, grow what they wanted, and sell to who they wanted and amass as much wealth as they could as long as their rent and taxes were paid. Certainly a bottom-up economic policy by King Edward III that led to an economic boom.

There are also plenty of examples where top-down economics doesn’t work that we see everyday. Large chemical and energy companies write the legislation, rules and regulations for the government to rubberstamp. This helps to raise the barriers of entry, making it too expensive to breed new competition into the market. Consumers pay more, but the top stays on top, even though they may sell less. This is an example of a top-down policy that hasn’t worked.

This is why we need to focus on freedom vs control. Not all proposals for the “little guy” are bad if they loosen the shackles and foster competition, just as not every proposal for “the rich” is good if it makes for a less competitive market. I cannot, however, think of a scenerio where more control or less freedom has worked in economics.

[wolfman23601]

Exactly.

[Third Person]

Obama is the queen of the bottom up theory.

[chuckee]

Obama is expressing a leftist Alice in Wonderland Keynesian version of bottom up economics which is the antithesis of the traditional conservative economist’s definition of bottom up market driven economics.
True bottom up economics has the free market govern the course of individual business decisions.A core principle of free market economics is that small businesses grow and become big businesses when they are responsive to the realities of the free marketplace. Top down economics, the USSR being an extreme example,centrally plans the economy from the top down and regulates business and markets to suit their national political and collective needs without regard to the global marketplace. Businesses and markets controlled from above are artificial and cannot grow or survive long term in a globally competitive marketplace. Solyndra with the central government supporting it on a political whim without regard to the reality of the marketplace is the perfect example.Obama is a top down leftist

[Dead Corpse]

Missing the point. It all depends on what you are actually trying to do.

If you are trying to dismantle a Capitalist system and destroy our Republic to instead set up a Marxist system with you at the top?

Then yeah, his "system" works just fine. :-|

[Dysart]

Businesses and markets controlled from above are artificial and cannot grow or survive long term in a globally competitive marketplace.

You just described our health care delivery and third party payor environment. And not just Medicare and Medicaid administered plans, either; because typically private insurers/payors/administrators follow public standards of care and fee schedules sooner or later. So, the top-down artificial market conditions metastasize across the the industry and, of course, ultimately adversely impact "beneficiaries" in diminished quality of care. HC Providers slash costs and services in an attempt to stay solvent in a nearly impossible economic environment, driven not by free mkt principles but bureaucratic edicts, ideology, and synthetic fiscal pressures from on high. We need look no further than here for answers to the original question! Been there. Done that.

[Dysart]

Large chemical and energy companies write the legislation, rules and regulations for the government to rubberstamp. This helps to raise the barriers of entry, making it too expensive to breed new competition into the market. Consumers pay more, but the top stays on top, even though they may sell less. This is an example of a top-down policy that hasn’t worked.

It's the same in health care. Others with knowledge of other leading industries would testify the same way. It's how business gets done in D.C.