The tickle in the middle moral economic theory!

It is not the trickle down theory nor is it the trickle up. This is all about making the economy morally equal for everyone, giving the small to medium companies the same opportunities as the large corporations.

It’s about better sharing the wealth and still respecting the ambitions of all. It is all about building an economy on the majority rather then the elite minority.

The trickle down theory is a failure.

Over the last 20 years, the trickle down theory has clearly failed. Most major governments have embraced the trickle down theory by reducing taxes on major corporations and providing them subsidies in many different forms. Corporations have never made such high profits  (see article “The corporate tax myth!”) and are hording money in higher percentages then ever before. At present, US companies are hording over 1.7 trillions dollars).  There are many different explanations for this and valid reasons for this hording, but it clearly shows that money is not trickling down.  Further more, in 2013, it was estimated that the world 300 richest people have as much wealth as the poorest 3 billion.  The wealth distribution gap is getting bigger each year.  The Trickle down effect really does not work.

No data on the Trickle up theory

The trickle up effect is an economic theory based stimulating the lower to middle classes through tax cuts and subsidies. The idea being that the benefits will gradually pass on to the large corporations. It is difficult to analyse this theory as there is no real data on it’s success or failure. No one has really tried it.

The tickle in the middle economic theory

The tickle in the middle economic theory is based on providing more freedom in the economy and aligning the playing rules on ethical standards.

 Here under are some examples of the regulations and standards that should be set.

1)   Taxation for all companies should be the same. There should only be one rule and it should be simple.  There should be one single tax on corporate profit. All other taxes and subsidies should be discarded.  The tax should be based on the profit generated in country rather then at the headquarters.  It is morally right to tax on region of activity rather then taxation residence.

2)   Companies should be able to fix the end user price. At present a company cannot set it’s own end user price if it uses distribution channels. This directly favours large distribution channels as they buy in quantities and can afford to provide very cheap pricing. Smaller companies are incapable of competing. This is morally incorrect and thus must be rectified. It is also absurd that a company who has developed and produced a product cannot determine the end user price, nor it’s distribution policy. This is giving back freedom to the owner of it's product.

3)   The concept of bulk discount must be reviewed. It is morally wrong to assume that purchasing large quantities should be associated with much bigger discounts. I can imagine that there are benefits in buying in bulk and thus provide more discount, but now-days we are talking about 20 to 30% more discount. This places all small to medium size companies in an uncompetitive situation and forces unnecessary risk taking. However we must remember that those taking a risk must be rewarded.  So a right balance must be found.

4)   The accountancy and legal loads on companies must be reduced. The volume of work required to abide with regulations is huge and thus biased to the companies with the resources. This must be simplified.

5)   A CEO who has bankrupted a company has few legal or financial issues (unless it is proven to be through careless management). However an entrepreneur who has risked his house and personal savings to keep employees in a job and all it’s creditors paid, faces discredit, financial ruin and many other nasty repercussions. This is morally wrong, and we need to offer a safety net for those who have put everything on the line in an attempt to create wealth.  Just this safety net will give more people confidence to start something and will thus boost the economy.

6)   Money that is not actively contributing to the economy (in the financial market) or that is horded should be taxed at a higher rate. Unless it is individual savings that has been build up and thus already taxed. Money that is not actively contributing to the economy should incur a higher taxation stimulating investments in production and services rather then the financial market. There is no moral reason why shareholders should benefit from lower taxation.

Just these activities will ensure that the importance of shareholder value is revalued forcing companies to invest in long term strategies and re-invest in it’s workforce and projects.

Stimulate the economy and build it on morally acceptable grounds.

There is more that can be done to stimulate the economy. Here under you will find some furtherexample

1)   With the increased taxation gains from corporate profits, governments should reduce the burden of taxation on the people generating wealth. This means taxations rates on salaries should be reduced to the minimum possible and ensure that the burden is shared fairly with progressive rates.  The idea of taxing hard work is grotesque in the first place, but a necessary evil to keep a country going. As such it should be as low as possible and money that has been achieved through hard worked should not be taxed twice through the taxation of savings.

2)   Education should be free for all. A country can only be competitive in our globalized environment by having a highly skilled work force. Even factory workers need education and training to ensure quality and efficiency. So education at all levels should be accessible to all without crippling students with high debts.  Education and research are the start of the economy and the burgeoning of ideas that lead to economic advance. Universities, tech colleges and apprenticeship are the seedbeds of our economy and as such should directly be linked to our corporate world through mutual scientific developments, hiring processes, training developments, and many other mutual activities. It should be the corporate world that finances big portions of the educational costs as they are the ones who will ultimately benefit.

3)   The only way to build a moral economy is to enforce the rule that each generation should leave the planet in a better state then the one preceding it.  At present, due to predatory capitalism and excessive greed we are leaving our planet and natural resources depleted for the future generation with the hope that they will fix it. This is wrong. The focus of our society, economy and way of life should be based on repairing our planet and enhancing quality of life. Both activities are totally compatible if we focus on building a morally fair economy based on economic enhancement through technological innovation. 

4)   It is morally abject that the super rich can lobby governments to achieve their objectives and change the rules. Party financing must be curbed and no political party or political leader must be subject to corporate temptations and pressure. 

Basically build up the middle class 

Above are just some ideas on how to tickle the middle classes, through building an ethical future proof society based on a free moral economy. There are many many more simple ideas that can fit into this picture to enhance and simplify it. It is all so simple and we all benefit. 

PS - The picture of Marilyn was used just to test the theory that sexy images sell. 

Date created: 15/10/2015       Date modified: 02/09/2021
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