Trickle-up effect

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The trickle-up effect or fountain effect is an economic theory used to describe the flow of wealth from the poor to the affluent; it is opposite to the trickle-down effect.

Relationship to the trickle-down effect[edit]

Proponents of the trickle-down effect believe that a free market, which is uninhibited by heavy taxation and other forms of government controls, will cause an increase in wealth for society as a whole, part of which will "trickle down" from the affluent to the less wealthy, making the latter group better off. In this model, relative poverty may increase, but proponents state that this is a moot point because absolute poverty decreases. Opponents to this theory may point out that a large gap in the distribution of wealth can lead to a similarly large gap in power and influence, thus making this economic model undesirable. The trickle-down effect is usually used to describe a process by which benefits to the wealthy "trickle down" to benefits for the poor. The trickle-up effect, in a corollary to this, states that benefiting the poor directly (for example through micro loans) will boost the productivity of society as a whole and thus those benefits will, in effect, "trickle up" to benefits for the wealthy.[1]

References[edit]

  1. ^ Degnbol-Martinussen, John; Poul Engberg-Pedersen (2003). Aid. Zed Books. p. 21. ISBN 978-1-84277-039-9. Retrieved 2008-10-11. 

See also[edit]