Trickle down economics has not impacted? Why? A discussion !

Like to hear thoughts and perspectives…
—— Here is the discussion that ensued across whatsapp groups, including my arguments..not identifying people since the purpose is paramount…
Lack of Trickle down in economy in India is the cause of the current poor India.

Had India employed Trickle down from 60s, 70s at least we would have much less inequality.

India unfortunately created super rich through nexus with corrupt largely congress governments. Reducing of taxes for rich and wealthy is rarely used in India (so that side of trickle down is not really applicable). Economic benefits to wealthy or large businesses by way of cheap land or tax holidays has resulted in IT sector to bloom (IT strength of which this entire group is beneficiary is an outcome of Trickle down). Gurgaon as a city, Bangalore expansion, industrial districts like Baddi are all an outcome of trickle down by way of job creation and increasing local regional prosperity

What is missing is the impact to last mile rural community or farmers / our trickle down economy started far too late and is too localised.

Damn corrupt politicians and their businessmen cronies.

I think India needs to go Bottom up for rural and trickle down for urban middle class
I would rather say every political party at the helm focusses only on their immediate constituency that benefits their coffers !!

Also there are issues that actually ‘choosoes’ everything that the bottom half has, to benefit the rich constituency (benefactors of the political party)

So the pic may need another suction pump that transfers natural resources from the lower glasses to the top one 
Financial systems conveniently ignore cost of production of a natural resource.

When one acquires a natural asset from indigenous population, we conveniently pay them just cost of distribution

And claim exponential profit 

What’s wrong with that? One may ask…

Fair valuation of natural assets will make it out of reach for many.

For instance, Bandwidth in India is under priced and that has created tremendous value.

If you look at the map of India the harsh reality is that the coal rich areas are the ones with poorest access to electricity, which is a key catalyst for development. That’s what is wrong. At a larger level, this is the exploitation that has been happening in large parts of Africa, especially Sub Saharan Africa.

Building the cost of natural resources into the pricing will not help get rid of those inequalities. Will it?

We may also argue that those inequalities would become worse.

Then ….Not sure how you work that out. If they are entitled to be compensated for the resources on that land others will pay the true cost! We have a bad habit of branding any payout to the poor as subsidies and to the rich as incentives or investments.

Buy, distributing the gains from the natural resources is different from pricing.

Let us imagine a world where water is charged according to actual cost. Rational Economics will surely help with resources being utilized more optimally.

But making those resources available to the bottom of the pyramid especially in remote areas will be become challenging esp if you take into account the true cost.

Then perhaps, If we had priced water closer to what it cost, we would not be facing the water crisis we are today! Or for that matter any of the other environmental disasters! Our consumption serves not our need but greed!

We lost water… Atleast try to save the “air” 
Differential pricing – like domestic and commerical electricity or gas – don’t price personal consumption.

Many solutions are possible, but blinding oneself to cost isn’t one of them…

There is merit in all these arguments..

But the key thing is that it will cost a lot more than the current case. In the short run it will be painful for those at the bottom.

But then, cost is incurred whether one books it or not.

If booked it’s paid in money.

If not booked it’s paid in quality of life or life span.

I would rather we pay in money, than life

Don’t charge the bottom of pyramid. Don’t charge the personal consumption of rich.

But at least charge cost of production when natural resource is used  commercially


As I said earlier there is the question of pricing and then there is the question of equitably distributing the gains.

Neither of which is a prerequisite to recognize a cost
Fair point.

But if costing is done as a theoretical exercise without an impact on final pricing then it may lead to suboptimal results.

and ignoring it entirely doesn’t have consequences

Most of heavily subsidized activities like an IIM or IIT education for that matter any higher education in India has reasonable idea of costs.

Fair point.

So what we perhaps are saying is then don’t ignore the costing. And that should be an important consideration in the final pricing which should also be equitable.

Is this what we are saying?

All we are saying is book the cost – we’re incurring it anyway

At least we can be honest with children – tell them we’ve consumed even their children’s inheritance, instead of making tall claims about “building their future” 

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