Bottom up economics

Robert Reich explains the differences between McCain and Obama on the economy.

McCain (and the Republicans and the Tories) believes in 'top down economics'. Top down economics holds that you should give generous tax breaks to the rich, so that they will work harder and invest more, leading to more growth and more jobs. You should also give tax breaks to large corporations, reduce their payroll costs, and impose fewer regulations on them, so they can compete more successfully in global commerce and create more jobs. The best way to reduce energy costs for ordinary people is to lower taxes on oil companies and give them more land to drill on. And fourthly, the best way to deal with the crisis in credit markets is to insure large Wall Street investment banks against losses.

But in a global economy, very few of the benefits of helping people at the top pass down to ordinary consumers.

Obama prefers bottom-up economics. This says that the growth of the economy depends largely on the productivity of its workers. They are rooted here, while global capital and large American-based global corporations are not. Workers' productivity depends mainly on their education, their health, and the infrastructure that connects them together. Good jobs will be created not because taxes or wages or regulatory costs are low (there will always be many places around the world where taxes, wages, and regulatory costs are lower) but because the productivity of workers is high. The answer to higher energy costs is found in creativity and inventiveness in generating non-oil and non-carbon fuels and new means of energy conservation. Finally, in order to avoid a recession or worse, it's necessary to improve the financial security of ordinary people.