If you have never heard about Trickle Down Economics in the real world economy I’ll give a quick summary. It was a term coined in the 1950s and basically describes the idea that tax breaks on the top 10% would increase economic activity and wealth would “Trickle Down” to the lower classes. The money saved by the rich would be used to invest in and startup companies that would create jobs and overall benefit everyone in the economy. It was popularized amongst Republicans with the Reagan administration in the 80s and most recently with the Bush administration in the 2000s.
There is much debate between whether or not Trickle Down Economics actually works in the real world with many economists claiming that the raise in the wealth gap between the rich and the poor is primarily due to the tax breaks to the rich. It seems that in practice, during times of economic stress the rich held onto money, avoided investing it into businesses and put it into safe bets like treasury notes and bonds. There was no incentive for the rich to risk their money because the risk/reward payout was not good enough, this is where Steemit changes everything.
Unlike in the real world economy, Steemit encourages you to upvote or invest in other users because not only do you get a portion of their reward, but you risk nothing in the process. There is no risk of losing your own money by upvoting and enriching other user’s content. The developers created the incentive that was missing in the real world economy for the rich to invest in other users. In addition users will desire to use every means possible to gain Steem Power because it pays interest over time, this making a passive income possible. The idea of curating content without having to create it and still making money incentivizes whales to actively find good content and upvote it. This also allows wealth to be created much faster on the side of the content creating dolphin/minnows than it does on the side of the whale. If a whale upvotes 10 posts to 100 dollars each hypothetically they would only receive 250 in curation rewards while the content creators receive 750.
This system inherently will create a middle class of dolphins over time, who will also start to curate minnows and the money will start to spread. By providing simple incentives for the whales to actually invest in other users, like Steemit has done, actually makes the Trickle Down economic theory possible. I will do a post at a later time when I have more data, but if you look at wealth distribution within the Steemit ranks you can see that steem power is becoming more distributed everyday and the main beneficiaries are dolphins and minnows creating content. Whales are actually losing their hold on the majority of the wealth because they are bringing more and more users up to a middle class on a daily level. Sure there will always be a wealth gap, but that’s because the system also rewards those who invest in it long term.
I believe Trickle Down Steeminomics exists and as time goes by we will see the effect it has on the user base and the system as a whole. It is going to take time, but like I said just look at the distribution of wealth and you can see how it changes daily. In addition once users aren’t getting the types of interest on Steem Power they are today, we will start to see a more active curation community because people will want to make up that lost interest growth. The Steemit we see now will be drastically different than the Steemit in 6 months and I truly believe that it will be for the better. I think we have many things to look forward to in Steemit, but in my opinion perhaps a strong middle class dolphin and minnow community is the most important.
-Calaber24p
I think that we are already seeing this happen. After the fourth of July, a whole new class of dolphins suddenly sprung into existence...
As for me, I am still more of a salmon, or possibly tuna...
Yeah definitely and its only going to continue. My goal is to become a catfish. I always liked the whiskers :)
Is there a table where one can look up what he is? :-)
If you're a salmon or a tuna, then what am I? D:
I still believe that after more experience in the community here, a minnow that grows into a tilapia may start to feel the self confidence that comes with being able to positively affect content that they care about, instead of just voting for content that has already gathered a lot of Steem Dollars. If this starts to happen for a lot of people -- that is a good thing. It could mean a stronger "middle class" on this site.
Yeah I definitely believe that there will be growth not only in funds but in community spirit that will drive the site. If we take people on reddit for example, they post comment and vote on memes and other things partly because there is a sense of community on the site.
Yeah I think part of the natural transformation of the site may be that more and more people will be just commenting because that's what they do -- and then that natural behavior gets rewarded, which is really a cool thing. Some folks have written posts about how one of their comments got $1,000 SD and it was just an off-hand comment that they kinda forgot they left.
I think you nailed it with the community spirit. There are multiple reasons for every fish in the sea to be doing its part. Great work once again, I even put a link to this one on my latest post. You've got a great attitude and insight. Did you ever get that gooseberry girl? Or have you found something better to do with your time? ;) Keep up the good work!
It definitely exists. People start with 0 and then build up from there. Nice term btw ("Trickle Down Steeminomics")
More like it will enrich the writing class so
Congratulations, is a great post!
Do you like it?:
My God STEEM
I strongly believed in this, from the very first moment. It's invigorating...
It's all about to come for some, others may yet have to wait and prove their worth.
I hope one day I can grow up big and strong and help out the little guys too!
Thanks @calaber24p
Trickle down economics makes a lot of sense.
Thanks for pointing the topic out
It does work somewhat, if the rich are investing in the economy of their nation-state but in today's global economic reality we see more evidence that they are investing with only maximum profit in mind.
Yeah I think the research is split, but many agree that it didnt have the intended effect during the recession recovery period. Many things could have factored into that though other than the theory because it was a "black swan" of sorts and something we weren't expecting.
Absolutely untrue and misleading. The fact is, steem power is beomcing more consolidated, not less.
Look at this chart https://steemd.com/distribution watch as the wealth moves down from legendary. Check it daily and graph it. Thats what im doing.
i have been checking it... though not for very long... im curious what your graph looks like.
As per the whitepaper, for every 1 unit of wealth distributed as rewards, 9 units go to SP holders.
So in your example, while of the 1000 dollars rewards, 750 would indeed go to content creators and only 250 to whales, at the same time 9000 dollars worth of wealth would also be generated and distributed to SP holders (mostly whales by definition).
So the way I understand the model, for every 1 dollar that 'trickles down', 9 dollars go to the richest.
Isn't that so?
Time will tell...
Users need to grow up and Steemit will grow up with us. Less plagiarism more unique content. Well, although I did not say anything new. Everything depends on the people. However, as always. Look forward.
It is a very interesting point of view but where does the money come from? Steemit is making a bet that people will trust it and trust builds value. But if value is created by whales, SP gains value over time, everyone earns money, the monetary mass augments, nice. But what then, isn't there a risk that SBD value plummets to oblivion and the whole system follows? Just wondering what's your take on it?
That scenario is a possibility, but the idea is that speculation on the currency and getting new people into the system is what will keep the value steady as far as I know. That was my take on it anyway
Thanks for your answer, I'm not here to be a party pooper but I've always been a skeptic, I love Steemit and the idead therein but still a skeptic about eveything deep down, I can't help it.
That's the definition of a Ponzi Scheme. The only hope Steem has of procuring value is if the money invested into people writing is invested into actual infrastructure. Given the Bitcoin whales have been defending and enriching their sovereignty for almost a decade now, I seriously doubt anyone involved in Steemit has the capacity to be the champion you need. The whales are too busy overpaying to get girls to join the party. I dunno...
We'll see :D I think in six months/1 year we'll have a good idea about how this is all going
to be honest trickle down or trickle up I have no idea what steems is about lol
You might be on to something here and the cups analogy is a great way to explain it. I tend to agree although I still see whales getting too much SP in comparison if you really intend to enrich the middle class.
Cool idea, but good voting (which enriches Steem) costs time. The rich must spend time to invest. Bad voting could make Steem fail, thus losing money. Attention Economics.
Wonderful piece! Upvoted, shared on FB & Reddit as well :-)
Yes. A good base forming but also a lot finding their way (such as myself lol) or trying to offer a lot of lies. It still grows and everyone will find more power over time with contribution.
Thanks for posting this, it gave me hope and good idea of how everything work on steemit.