A rising tide lifts all boats

A rising tide lifts all boats

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. The phrase is said to have been coined by Seán Lemass, the Irish Taoiseach (Prime Minister) in 1959–1966.cite web |url=http://www.transport.ie/viewitem.asp?id=7015&lang=ENG&loc=1081
title=Speech by Martin Cullen TD, Minister for Transport at the South East 2020 Conference
date=24 June 2005|publisher=Department of Transport, Ireland] cite web|url=http://debates.oireachtas.ie/DDebate.aspx?F=SEN20051207.xml&Node=457
title=Speech by Mr. Callanan
work=Seanad Debates, Vol. 182, No. 4|date=7 December 2005
publisher=Office of the Houses of the Oireachtas] Lemass himself attributed the phrase to John F. Kennedy.cite web|accessdate=2008-08-13 |url=http://www.oireachtas-debates.gov.ie/D/0208/D.0208.196404150045.html |title=Speech by Mr. Lemass |work=Dáil debates, Vol 208 |date=15 April 1964 |publisher=Office of the Houses of the Oireachtas] Kennedy employed the expression to combat criticisms that his tax cuts would benefit mostly wealthy individuals.cite web|accessdate=2007-04-07
url=http://www.presidency.ucsb.edu/ws/index.php?pid=9455
title=Remarks in Heber Springs, Arkansas, at the Dedication of Greers Ferry Dam.
author=John F. Kennedy|date=October 3, 1963
publisher=The American Presidency Project] cite news|accessdate=2007-04-07
url=http://www.washingtonpost.com/wp-dyn/content/article/2005/12/17/AR2005121700028.html
title=How to Refloat These Boats
author=Gene Sperling
work=Washington Post |date=December 18, 2005 |page=Page B03] cite web|accessdate=2007-04-07
url=http://article.nationalreview.com/?q=ODFkZTRjNzVmODNiMGIzNmUzZWVjODE2MzA4YWU5ZWY=
title= A Rising Tide...In More Ways than One:The wisdom of the JFK-Reagan-Bush tax-cut model
author=Thomas E. Nugent
work=National Review Online |date=July 28, 2006 ]

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 U.S. 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. However, not all industries track the overall economy, and the creative destruction process of capitalism requires inefficient industries to yield to more efficient industries. For the aphorism to be strictly true, one would never expect to see a 'going out of business' sign during a rising economy. There many examples in economic history in which an increase in GDP per capita did not raise the incomes of large groups of individuals in the society. According to the US Census, the real per-capita GDP in the United States increased by 71% between 1980 and 2006, but median household income increased by less than 20% Fact|date=May 2008.

See also

* Keynesian economics
* Supply-side economics
* Trickle-down economics

References

External links

* Hines, James R., Hilary W. Hoynes, and Alan B. Krueger. [http://www.nber.org/papers/w8412 "Another Look at Whether a Rising Tide Lifts All Boats"] , National Bureau of Economic Research: NBER Working Paper No. 8412, August 2001.


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