One of my friends instigated me to write a blog on what causes inequitable distribution of national resources and growing gap between rich and poor. He thinks that “Trickle Down Economics” is one of the reason for growing disparity. Let me confess upfront that I am neither an economist nor an expert of American history, economics and sociology. However would like to give it a try.

Now the question is do the “Trickle Down Economics” is the cause of American woes?

Trickle Down Economics is used to describe the American policy where by government gave tax sops to entrepreneurs to create new jobs. Some also say that it is reincarnation of “Horse and Sparrow Theory” of 1890s. The Government think tank thought that if more money is dispensed to Rich some will definitely trickle down which will help fellow Americans. A big chunk of Americans believe that this policy has done more harm than good as majority of wealth has been accumulated in few pockets. This is debatable but for the time being let me agree with grudgers.  Let me also share that almost similar policies are there in India as well.

I think one of the biggest problems of any developing country is to keep the unemployment level at the lowest. Non utilization of available human resource for long time may lead to many problems which has potential to risk stabilization of the country.

Now the question is how to engage people and create earning opportunity for masses?
Every country has two basic resources namely a) Land mass and resources underneath and b) Human Resources. Under democracy Land mass and resources underneath are managed by elected government for the benefit of the people.

Human resources are the most difficult aspect of governance. It is government’s responsibility to create  conducive environment for improvement in living standards of its citizens. This is possible only by improving GDP and creating new employment opportunities for its citizens depending upon their skills and capabilities. Government always has an option to create government owned institutions and provide employment opportunity as preferred by communists. But this model has already failed and does not require any elaboration.

Other option is encourage people to create such institutions which can provide employment. Encouraging entrepreneurship is a tough task and government has to offer incentives. No one will like to plunge into business and take risk if he/she is not allowed to make more money. Over the period of time this policy has helped in creation of jobs. It does not mean that government has given complete free hand. They are also doing their bit to ensure proper wages etc. by means of act and regulations.

After successful implementation of more than 4 decades a new problem as arises now. Entrepreneurs have milked the tax sops given by government and accumulated vast wealth. Gap between rich and poor has also increased many folds. But at the same time we can not overlook the fact that average living standards of average American is much better than people in other countries. Same trends are now visible in India as well. Average living standards of employed citizen is improving and it is much better than what it used to be 20 years before.

A big share credit of growth of Indian IT industries goes to government policy of tax sops. It is government’s responsibility to provide some protection to a emerging industry. I am sure, in absence of various benefits given by government, a lot many industries would fail to survive.

To address the problem of wealth accumulation, Indian Govt has also enacted a new law which forces companies to spend 2% of their profit on social issues. In India the bigger problem is non- enforcement of minimum wages, evasion of taxes, and distribution of country’s resources to individuals on throw away prices and nexus among Babus, Politicians and Corporate to allow individuals to indulge in corrupt practices.
Finally, Rich and Poor, these two classes will  continue to exist in capitalist economy and government of the day has to ensure that overall living standards of poor is not stagnant and everyone gets the equal opportunity to try to jump into the domain of Rich.

Power cannot be compared with trickle down economy. Ultimately power is always with people. Had this not been the case, AAP would not have seen light of the day. The important aspect is how an elected leader makes best use of power given to him by the people for the betterment of people. I believe that no organisation political, commercial or spiritual can ever survive without a leader. Leader is not a manager to read the files and sign it. Leader shows the vision and people follow him.

People are following Modi because he is the Leader and need of the hour.