Yesterday an angry Governor Bobby Jindal emerged from a meeting with President Obama to describe the President's economic approach as "the minimum wage economy." Many Republicans are impatient with the notion of focusing the economy on raising the standard of living for those at the bottom of the end of the spectrum. They argue that by focusing on incentives and tax breaks for the top earners, we enable them to spend more, ultimately stimulating the entire economic picture. The idea seems relatively reasonable but also very familiar.
The discussion got us to thinking and wanting to understand the origins of the economics behind Jindal's idea. You may remember the term "trickle down theory," think perhaps of Reganomics or Ross Perrot referring to it in 1992 as "Voodoo economics." Actually the origin is much older. During the Depression humorist Will Rogers said, "money was all appropriated for the top in hopes that it would trickle down to the needy." But even Rogers was describing an older economic theory
Economist John Kenneth Galbraith has noted the existence of a popular idea in the 1890s called "horse and sparrow" theory; "If you feed the horse enough oats, some will pass through to the road for the sparrows." Horse and sparrow economics, according to Galbraith, was a factor in causing the Panic of 1896, a devastating economic depression. But actually the idea is even older than that.
Under another name the principle is called, laissez-faire (French for "let us be.") It originated with a discussion between a Finance Minister in France and a group of merchants in 1651. Asked what the government could do to help the merchants, the minister was told "let us alone." With the Enlightenment and the beginning of the United States, the idea was carried here. The important economist Adam Smith described the idea of an "invisible hand" operating in the economy, which some historians see as a connection to "lassiez-faire."
As we think of France and economic theory, perhaps another quote comes to mind, traditionally ascribed to Marie Antionette. "Qu'ils mangent de la brioche" or "let them eat cake."