Her name is Rio and she dances in the sand Just like that river twisting through a dusty land Duran Duran
In my post Aquanomics?, I invited you to wade with me into the swamp that is the current state of the American economy. Well, I’d sure like to be able to say that the water was fine, so let’s dive in again, but that might be somewhat less than accurate. And I certainly don’t want to throw a wet rag on anyone’s belief that everything that you read on the internet is 100% true, so let’s just go with “Hey, I like to swim, and if the water is filled with leeches, I’ll just have to deal with it,” and leave it at that. (Economic leeches? Say it ain’t so.)
This time, I thought I would really go off the deep end, and drown in a subject that almost everyone agrees is all wet. Yes, I’m talking about trickle-down economics. In my earlier post, I said that didn’t claim to possess any mastery of grand economic theory, and that hasn’t changed. But nor do I believe that I have forgotten all of the simple facts of life that relate to how things work in the natural world. So let’s start with that.
High in the Rockies of Southern Colorado (Canby Mountain, to be precise), the winter snows melt, and cold water trickles down the slope. These drops join with other ex-snowflakes to form small streams, which combine with other rivulets and soon become what is known as the Rio Grande. (For any readers who happen to be too xenophobic to have learned a few words of simple Spanish, the words “rio grande” literally translate as “river large,” or in normal English syntax, “big river.” But then, those people have no idea what “xenophobic” means, so why do I bother to explain?) For 1,896 miles, this water flows out of Colorado, through New Mexico, between the state of Texas and the nation of Mexico, until it reaches the Gulf Coast somewhere between Brownsville and Matamoros.
Except that it doesn’t. On average, 80% of the natural water in the Rio Grande never makes it to the Gulf of Mexico. In fact, the flow sometimes becomes so small that someone could walk into the United States from Mexico while keeping his feet, not to mention his back, dry. (Talk about a xenophobe’s nightmare!) So what happens to all of that water that was in the Big River? Where did it go? Did it soak into the ground? Did it just evaporate?
Simple Fact of Life: Water doesn’t trickle beyond the point where someone drinks it.
The reason that so little water reaches the mouth of the Rio Grande is that long before it gets there, most of it is used by people along the way. The melted snow from the Rocky Mountains has turned a naturally dusty part of North America into an area of abundant agricultural production. Of course, there is a price for that. The folks downstream can’t water their lawns. There’s never enough of anything for everybody to have everything they want.
So, how does this relate to supply side economics? I know what you’re thinking. Those upstream farmers who use the water are a perfect metaphor for the evil banksters and corporate greed-heads who take all of the wealth for themselves, with no regard for the plight of the thirsty masses downstream. Sure, I see your point, dead wrong though it may be. It seems to me that the farmers represent (and in fact often are) small businesses who go out and get what wealth they can, and use it to create new wealth, to the ultimate benefit of everyone. Even a nicely watered lawn is not a good place to starve. There is no good place to be hungry, which we all would be if not for the farmers.
But, you say, that doesn’t quench the thirst of the people camped next to the dry river bed. No, it doesn’t. For those poor individuals, I can offer only one simple piece of advice. Move upstream. If there is no water where you are, you need to go to where the water is. If it really bothers you that the farmers are using all the water, then you use it before it gets to them. Please, just use it wisely. But the whole point of this is: if you wait for the water to trickle down to the desert you are sitting in, you will be thirsty; if you wait for the wealth to trickle down to the sidewalk you’re occupying, or the couch where you sit with your Playstation, you will be poor. If you want more than you have, then you need to go get it. Simple fact of life.
Now, where do the banks and big businesses fit into this Waterworld? I think that they are best represented by the dams that I see on my frequent drives along the Columbia (a truly “Grande”) River. These massive structures control vast amounts of water, just as the banks control vast amounts of money. So, why are those dams there? What do they do? For one thing, the water stored behind them creates large lakes, which are a boon to local sportsmen. Sort of like the banks create large pools of cash, a boon to local bankers. But those are side effects, not the real purpose. What the dams do that is useful is to allow the water to pass through them. That does several things. First, it generates a huge amount of clean, low-cost electricity. Second, by allowing water to flow into and out of locks, rivers that contain natural areas of rapids become navigable waterways. In fact, because of those dams and locks, immense quantities of goods can be transported at low cost in large barges on the Columbia/Snake Rivers from the Pacific Ocean all the way to Lewiston, Idaho. And, of course, dams can help to keep the water flowing downriver at a more or less constant rate, lessening the chances for flooding. But for all these functions, the water does no good when gathered behind the dam, just as money does no good when sitting in a bank vault. Water only creates wealth when it is allowed to pass through the dam, and into the river. Money only creates wealth when it is allowed to pass through the bank, and into the economy.
Getting wrinkled. Time to dry off.