There is a version of “trickle-down economics" which does actually work – nearly every new invention starts out as a rich man's toy
The billionaires have been having fun – both Richard Branson and Jeff Bezos have gone up on their own ships to the edge of space.
We can regard this as just some fun as well, even if it is very expensive fun.
However, there is a version of “trickle-down economics" which does actually work – nearly every new invention starts out as a rich man's toy.
The genius of this odd mixture of capitalism and free markets is that the mixture then makes that toy cheap and so useful for the rest of us.
This really has happened with nearly every technology that we know of.
The bicycle, of all things, was originally a sporting tool for rich gentlemen. It became everyman's transport only some decades later.
It was being made in quantities that made it cheap, but also after certain of the problems on the originals had been ironed out, like having iron wheels, not rubber, no brakes, and so on.
As I might have mentioned here before the first mobile phones arrived in my native UK in the early 1980s.
The handsets themselves cost about the price of a decent second hand car – or a really bad new one.
Airtime was £1 an hour in 1980s money – about the hourly wage in a low end job. As we all know they're markedly cheaper than that now.
Plus, of course, they're computers with screens and internet, not just voice handsets.
Rich man's toy to globally ubiquitous necessity in only 30 years – that's pretty good trickle down.
I'm not the first person to have noted this nor is it the first time I have.
The reason for the repetition is simply because it is in fact true.
Technological advance so often does depend upon rich men and their toys.
This is the version of trickle-down economics that does work.
There is another meaning to the phrase that if we just leave the rich to be rich then that prosperity will trickle down to all of us over time.
The thing about that is that no one does seriously propose that as a policy – it's an insult instead. Or a piece of rhetoric meant to refute the basics of free market economics.
We can also put this into a more historic story.
We actually know the date upon which Queen Elizabeth I of England got her first pair of knitted stockings. It was an event that meant so much to even her that it was recorded in her diary.
The rich then did have them.
It took the Industrial Revolution to make them cheap enough that those who worked in the factories also had such a pair of stockings.
This is also what is happening in those RMG factories that are making Bangladesh rich right now.
Everyone's being made richer as is normally true of voluntary exchange. The buyers of the cheap t-shirts are able to have a selection of t-shirts precisely because they are cheap.
Those who are making them are gaining a higher income than they would outside the factories.
Plus, obviously, some of that income can be and probably is upon those cheap t-shirts.
Clothing used to be so expensive in England, compared to incomes, that we still retain the phrase “Sunday Best.”
Meaning the one set of clothes that was somewhat new and which was to be worn on that holy and religious day of the week.
For the rest of the week there was just the one other set of clothing – usually what had been the Sunday best a few years before.
It's also possible to trace clothing poverty through the collarless shirts which are all the rage these days and come out of those RMG factories in such quantity. 40 years ago they would not have sold.
For it was a sign of wealth and taste then to have a short with a collar.
Why? Because before that shirts were made with a detachable collar. So that one could have a new collar for the day and still wear the old shirt.
Not just shirts were expensive but so was laundry.
It's only after the memory of having to have changeable collars faded that the fashion for what we call “Grandad shirts” could come back.
That's all something of a digression from space rockets but the underlying truth is in each story.
New items, women's stockings to trips into space, mobile telephones and men's shirt fashions, start with the rich, as toys or even as markers of conspicuous consumption.
The form of trickle-down economics that works is that this mixture of capitalism and markets then makes those toys cheap and thus available to all.
Quite whether we all want trips into space so that we can throw up in zero G for 10 minutes is another matter – there's no proof that every rich man's toy is desirable to us all.
History does tell us though that if those games and pleasures are in any manner viable or more generally desirable then they do filter down to us over time.
The author is a senior fellow at the Adam Smith Institute in London