Question

"Money must serve, not rule!" declared Pope Francis in his mission statement, in which he denounced the rich-poor gap, the excesses of the wealthy, and the "unproven and naive" nature of trickle-down economic theories. Do you agree or disagree? What are possible solutions to this inequality?

Answer 1

Trickle - down economics states that benefits that are provided to the wealthy trickle down to everyone else . As for example tax cuts on business , capital gains , high income groups etc . It is assumed that these tax cuts will be used to expand production and growth which will generate more employment and income for the poor . It is a kind of free capitalism . But multiple times it has been proven that this theory does not work in reality . It affects the supply side and not the demand side . Tax cuts for the rich and high income earners may also result in more speculative consumption or more investment in property etc . It seldom increases production or employment . Rather such tax cuts widens the poverty gap . Possible solutions to inequality would setting up of public sector units , government poverty alleviation programmes , progressive tax on income etc .