A rising tide lifts all boats
The aphorism "a rising tide lifts all boats" is associated with the idea that improvements in the general economy will benefit all participants in that economy, and that economic policy, particularly government economic policy, should therefore focus on the general macroeconomic environment first and foremost. The phrase is commonly attributed to John F Kennedy, who used it in a 1963 speech to combat criticisms that a dam project he was inaugurating was a pork barrel project. However the phrase has been used more commonly to defend tax cuts and other policies where the initial beneficiaries are high income earners.
In his memoir Counselor: A Life At The Edge Of History, Kennedy's speechwriter Ted Sorensen reveals that the phrase was not one of his or the president's own fashioning. It was in his first year working for Kennedy (during JFK's tenure in the Senate), when Mr. Sorensen was trying to tackle economic problems in New England, that he happened upon the phrase. He writes that he noticed that "the regional chamber of commerce, the New England Council, had a thoughtful slogan: 'A rising tide lifts all the boats.'" From then on, JFK would borrow the slogan often. Sorensen highlights this as an example of quotes mistakenly attributed to President Kennedy.
The expression also applies to free-market policies, in that comparative-advantage production and subsequent trade would theoretically increase incomes for all participating entities. It is said to be a favorite proverb of former U.S. Treasury Secretary Robert Rubin. However, Gene Sperling, Bill Clinton's former economic advisor, has opined that, in the absence of appropriate policies 'the rising tide will lift some boats, but others will run aground'.
The substantive aspect of the statement is that economic growth which raises the GDP of the entire economy will also raise the incomes of all of the individuals within the economy. However, not all industries track the overall economy, and the creative destruction process of capitalism requires inefficient industries to yield to more efficient industries. For the aphorism to be strictly true, one would never expect to see a 'going out of business' sign during a rising economy. There are many examples in economic history in which an increase in GDP per capita did not raise the incomes of large groups of individuals in the society. According to the US Census, the real per-capita GDP in the United States increased by 71% between 1980 and 2006, but median household income increased by less than 20%. Between 1960 and 1980, the top 1% in the United States took home less than 10% of all U.S. income. In 2006, the best paid 1% took home 20.3%.
And it is usually forgotten when using the analogy that generally a rising tide lifts all boats by the same amount.
- "Speech by Mr. Lemass". Dáil debates, Vol 208. Office of the Houses of the Oireachtas. 15 April 1964. Retrieved 2008-08-13.
- John F. Kennedy (October 3, 1963). "Remarks in Heber Springs, Arkansas, at the Dedication of Grers Ferry Dam.". The American Presidency Project. Retrieved 2007-04-07.
- Gene Sperling (December 18, 2005). "How to Refloat These Boats". Washington Post. p. Page B03. Retrieved 2007-04-07..
- Thomas E. Nugent (July 28, 2006). "A Rising Tide...In More Ways than One:The wisdom of the JFK-Reagan-Bush tax-cut model". National Review Online. Archived from the original on 30 April 2007. Retrieved 2007-04-07.
- Sorensen, Ted. "Counselor: A Life at the Edge of History." New York: HarperCollins Publishers, 2008. Print. Page 227.
- Bai, Matt (2007-06-10). "John Edwards - Money - Economics - Poverty - Presidential Elections of 2008 - New York Times". The New York Times. Retrieved 2010-04-23.
- Crane, David (2006-09-03). "TheStar.com | Business | Rising trade, abundance should benefit all". The Star (Toronto). Retrieved 2010-04-23.
- Gudrais,E."Unequal America",Harvard Magazine,July, 2008.
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- Hines, James R., Hilary W. Hoynes, and Alan B. Krueger. "Another Look at Whether a Rising Tide Lifts All Boats", National Bureau of Economic Research: NBER Working Paper No. 8412, August 2001.