When the Deputy President of the republic of Kenya Dr. William Ruto said the political conversation will change people thought it was a joke. Now everyone is talking about the bottom-up economic model and very few understand it. If they cared to listen to what the Deputy President has been saying and watching what he has been doing, they would not struggle to understand the concept.
Bottom-up economics requires government to put deliberate effort of the demand side of the economy rather than the supply side as has been the case. Bottom-up is government refusing to give money big players and instead investing in small players such boda bodas, mama mbogas, small scale traders, Juakali artisan etc, as long as it’s not freebies – which become socialism. Bottom-up is government not bailing out Kenya Airways at more than 20 Billion annually. This 20 billion should instead go to the hustlers. It will grow the economy and benefit many Kenyans at a lower level rather than going to hands of a few Kenyans leasing overpriced aircrafts to a company.
Bottom up in simple terms means, I have a job/business, I have immediate needs, I buy things and supports people who sell things and do not horde money. Every shilling I spend is multiplied and stimulates the economy immediately by creating demand which in turn creates jobs.
Trickle down is actually a reference to Supply-side economics, whereas bottom up is more aligned with Demand-side. Bottom-up can also be said to at micro economic level while trickle down can be said to start at the macroeconomics level.
The current model of trickle down holds that to sustain economic growth, the government should focus on rewarding suppliers / producers. This means things like lower taxes on businesses and investors, fewer regulations for big companies etc. This model tries to put money in the hands of employers, investors and the wealthy in general. The idea is that companies will invest more and create more jobs. This has not always been the case; most companies use the money to pay dividends or buy share backs or invest the excess capital in other countries. Consumption will also reduce as most consumers are not the rich but the middle class and the people at the bottom of the pyramid. Trickle down economy have contributed a large amount of income equality in the society.
The hustler model or the bottom-up economics on the other hand, avers that economic growth is best attained by ensuring that people at the bottom of the economic pyramid and the middle class have the wherewithal to maintain significant levels of demand. Bottom up economic model puts money in the hands of the poor and middle class who are under economic stress and spend most of the money on immediate needs which stimulates the economy.
Equity Bank model – banking on the un-bankable is good example of Bottom Up economics. Equity had a deliberate effort focused exclusively on Kenya’s economically marginalized citizens, the so-called “unbanked” population, who had historically been excluded from formal sources of capital, such as banks, building societies and other regulated financial institutions. Equity Bank is Kenya’s second-largest bank and has more than 14 million customers. The bank is the leading inclusive bank in Africa. Its main customer segments are unbanked individuals, micro enterprises and SMEs – those typically described as being at the “bottom of the pyramid”.
The Bottom here refers to the people at bottom of the pyramid – the poor people. The conventional top down is thrown money at big corporations; big projects and give tax incentive to big companies then hope that benefits will trickle down. Bottom-up believes that really poor people can turn around their fortunes if given leverage.
How do you empower these people at the bottom of Kenya society? The typical slum dweller, the small scale farmers, hawkers, shoe shiners, many jobless people, etc.
The first of course is empower these people to realize they can turn around their lives – this is what Bottom-Up/ Hustler Nation has already achieved – because there is now conscious that focus need to be the forgotten.
U.S. president Franklin D. Roosevelt used the term in his April 7, 1932 radio address, The Forgotten Man, in which he said:
“These unhappy times call for the building of plans that rest upon the forgotten, the unorganized but the indispensable units of economic power . . . that build from the bottom up and not from the top down that put their faith once more in the forgotten man at the bottom of the economic pyramid.”Franklin D. Roosevelt – April 7, 1932
Will Rogers had to say this when he coined the term ‘Trickle down Economics’: “The money was all appropriated for the top in hopes that it would trickle down to the needy. Mr. Hoover was an engineer. He knew that water trickled down. Put it uphill and let it go and it will reach the driest little spot. But he didn’t know that money trickled up. Give it to the people at the bottom and the people at the top will have it before night anyhow. But it will at least have passed through the poor fellow’s hands.”Will Rogers – 4 December 1932