Bottom-Up Economics 101

The Pillars of Bottom-Up Economics (Adapted from the Voter Education Project)

Kenyans have listened bemused as politicians have struggled to expound upon the bottom-up economic argument of the “Hustler Nation” that has recently gained momentum. Explanations have varied from whimsical descriptions of a Kawanjiku’s utopia wads of cash are carted in gunias from the Central Bank to markets, to outright communism where the dynasties are robbed bone-dry to pay boda bodas and mama mbogas. The naysayers sensing, they are losing the debate, claim it is devolution hence a foregone conclusion. Kenya’s rib cracking Twittersphere is trending memes of people and animals alike bent over with their bottoms up!

Bottom-up economics is a development philosophy that considers what people need to thrive, and businesses to exist. For citizens to succeed, they need affordable healthcare, high-quality education, investment in research, accessible infrastructure, livable communities, and guaranteed safety nets. It follows that businesses thrive when communities prosper.

The first pillar of this economic philosophy is the obligation of government to make Basic Public Investments (BPI). BPI include infrastructure that enables transit, provides utility services, facilitates communication and supports trade. It includes developing affordable healthcare and social security systems. Investments are also required in basic education, vocational training, universities and research institutions to develop a skilled workforce.

The second pillar is to “value all workers” by setting a minimum wage, ensuring equal pay for equal work and protecting workers rights. These ensure that citizens can afford their basic living expenses. Government must control for inflation to maintain a low cost, high standard of living.

The third pillar is economic diversification which hedges risk while expanding higher-value sectors like financial services, precision agriculture, high-tech manufacturing and technology. Moreover, free market principles allow for these sectors to grow unhinged while access to credit enables business expansion.

The last pillar is to create a fair system in which rules apply equally for the wealthy, the middle-class and low-income communities as they do for large or small businesses alike. All citizens are equal under the law, public resources are disbursed equitably, and taxes are applied proportionately. Entitlement means every citizen has the irreducible minimums like food security, access to clean water and affordable housing.

If sustained this will build a strong middle-class who grow the economy from the bottom (of the economic pyramid) up providing a broader base for tax revenue and reducing poverty. Better known as “trickle-up” economics, shared prosperity permeates upwards. In contrast, “top-down” economics assumes the excesses of the wealthy few will someway drip downwards.

Consequently, a virtuous cycle develops where higher wages stimulate consumer spending, enhances credit access and result in larger profits for both small-to-medium enterprises and corporations. Business expansion means job growth. Fair regulation in the system means workers and consumers are protected from exploitation. Surplus tax revenue in the reserves means government can stimulate or cushion the economy when there are shocks like natural disasters or global economic crises. Accountability means revenue loss through corruption is minimized. Simply stated, bottom-up economics focuses on people first, businesses as a dependency and economic growth as a consequence.

All this considered, the obvious question to ask is if bottom-up economics can raise the standards of living in Kenya. The answer depends on what direction you look to for inspiration. The instinct of governments to over tax for social spending has produced welfare states in Europe while in America, free-market capitalism has resulted in massive wealth disparities between the haves and have-nots. Communist experiments in the East that were supposed to create egalitarian societies instead led to the rise of corrupt oligarchies. The Asian Tigers emerged from top heavy dictatorial regimes, while a deluge of oil wealth entrenched autocratic monarchies in the Middle East with fragile economies to boot. Latin American countries caught between divergent ideologies were overrun by narco-States. Canada, Japan and the Scandinavian bloc on the contrary stand out as prime examples of robust bottom-up economies.

Undoubtedly, the mandate of the next government will be to nurture a path to progress that will ensure the Kenyan Dream of shared prosperity is achievable for the common mwanainchi. We must articulate clearly how it will work to ensure common purpose as we move Kenya forward.

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Nathan Wangusi

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