For something like 30 years, we have been hearing about trickle-down economics, in which we lower taxes and other burdens on the wealthy, these wealthy individuals invest in the economy, and the benefits of those investments “trickle down” to the middle and lower class. That may well be what happens when the burdens are lowered on the wealthy but, as we all know, the wealthiest in the U.S. are gaining ground on everyone else and have been for a long time. This is not a critique of trickle-down economics per se. There are other things going on, including a transition of value from labor to capital as a result of technological progress, that are driving the gains of the wealthiest right now.
I would like to propose another approach that I call “trickle-up economics” in which we lower taxes and other burdens on the lower and middle class, we invest in educating their children (and them), we make sure they have the skills to get good jobs in the economy of the future, and we make sure they have access to things like good transportation, safe neighborhoods, healthy food, quality healthcare services, etc. that are required for them to be fully functioning citizens in our society.
If we do all of that, we will have a stronger workforce and a more entrepreneurial and innovative society, and that will drive wealth creation in the U.S. that will “trickle up” to the wealthiest people in the US.
The American dream has always been about opportunity. You start out with nothing and, through hard work and a good body and mind, you make it and lead yourself and your family to a better life. That, by the way, is the story of the Gotham Gal and me. We arrived in NYC in 1983 with not a penny to our names. Nada. Nothing. I am not even sure how we came up with the security deposit for our first apartment. But we had good educations and had secured good jobs. And we worked for everything we have. We made it.
I am so optimistic about the United States and our economic prospects. I am optimistic about our people. I just want to see us invest in our people. All of them. Because I am sure if we do that, the benefits will trickle up throughout society.
Fred Wilson is co-founder of venture capital firm Union Square Ventures, and has been an early backer of such companies as Twitter, Tumblr, Zynga and Kickstarter. This post originally appeared on his blog.