A rising tide lifts all boats
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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. It is associated with John F. Kennedy, who coined the expression when faced with criticism that his tax cuts would benefit mostly wealthy individuals. 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 a favorite proverb of former Treasury Secretary Robert Rubin.
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. There is, of course, criticism of this statement, as there many examples in economic history (including but not limited to recent American economic history) in which an increase in GDP per capita did not raise the incomes of large groups of individuals in the society.
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[edit] External links
- 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.
