Supply-side trickle-down economics has not taken the world to Eldorado. And if the Virgin Islands is to fulfil its potential as a hive of social and economic prosperity, then it will only do so by lifting up poor and working people.
Today, capitalism is viewed as the great social and economic panacea, especially in United States-led western society. However, as the Covid-19 pandemic continues to knife its way through the global community, trickle-down is swiftly becoming viewed as a failure. If the world is to step out of this pandemic any time soon, it will take society as a whole — rich and poor — working with governments.
Rebuilding pandemic-riven society has taken huge government intervention in the form of stimulus. And that stimulus has been offered to both rich and poor. Giving stimulus to the rich is viewed as a valid effort to generate economic activity, as business is viewed as a primary generator of prosperity.
But it is consumption, not production, that drives consumer demand. Consumers are the beginning and ending of economic activity. Cash in the pockets of the poor and working people is what drives an economy over and above cash in the bank for the wealthy and powerful.
The US has moved to the left since the election of President Joe Biden. Mr. Biden has promised to invest in the working man and in blue-collar manufacturing as the way to a stronger and more prosperous society. The president has further stated that he will spend trillions on a type of New Deal. This will be infrastructure spending targeted at the working classes. Mr. Biden is right in his assertions.
On the other hand, former US President Donald Trump and his right-wing, white supremacist culture brought the US to global ignominy. And a look at modern political history clearly reveals that right-wing governments frequently end with economic recession and even war. It is centre-left governments — social democracies — that do the work that lifts countries to social and economic prosperity.
Why? The simple answer may be that cash in the pockets of poor and working people generates economic activity to a much greater degree than when all social and economic resources are monopolised by the one percent as is the case today, where a few hundred billionaires rule the world.
The last time the world witnessed a booming economy was in the Bill Clinton era. Since that time, deregulation and supply-side-driven wealth inequalities in the west have kept the majority of consumers in wage stagnation and even fear of the future.
Countries that purposefully work towards social equality fare better in life indices from longevity to happiness and the possession of better quality social and public services.
Investing in the people brings economic growth that is sustainable long term by ensuring accessible quality health care and education at all levels; providing social welfare; and investing in a sustainable environment and in infrastructure that benefits all of a country’s people.
Strong societies are compassionate, equal and fair. The western idea of survival of the fittest as the ticket to prosperity has actually been a misnomer. Strong and prosperous societies are those that lift up the whole population and not just the tiny percentage at the top.
In the VI
For the Virgin Islands, the leaders who focus on the bottom of the social pyramid, ensuring the economy works for the poor and downtrodden and not just the elite, will succeed politically and economically over leaders who believe that rubbing shoulders with elites and billionaires is their gateway to the kingdom.
The road to Eldorado does not run through multibillion-dollar corporations. It runs through a fair and just society that invests in the most vulnerable of its residents, and that respects the dignities and welfare of every citizen — not just the wealthy, privileged and powerful.
Connect with Mr. Igwe on Facebook and Twitter.