A rising tide lifts all boats
Encyclopedia
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 attributed to John F Kennedy, who used it in a 1963 speech to combat criticisms that a dam project he was inaugurating was a pork barrel
project. However the phrase has been used more commonly to defend tax cuts and other policies where the initial beneficiaries are high income earners.
In Ted Sorensen
’s memoir, Counselor: A Life At The Edge Of History, he reveals that the phrase was not one of his or the president’s own fashioning. It was in his first year working for Kennedy (during JFK’s tenure in the Senate), when Mr. Sorensen was trying to tackle economic problems in New England, that he happened upon the phrase. He writes that he noticed that “the regional chamber of commerce, the New England Council, had a thoughtful slogan: ‘A rising tide lifts all the boats.’” From then on, JFK would borrow the slogan often. Sorensen highlights this as an example of quotes mistakenly attributed to President Kennedy.
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 said to be a favorite proverb of former U.S. Treasury Secretary
Robert Rubin
. However, Gene Sperling
, Bill Clinton
’s former economic advisor, has opined that, in the absence of appropriate policies 'the rising tide will lift some boats, but others will run aground'.
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 are 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%. Between 1960 and 1980, the top 1% in the United States took home less than 10% of all U.S. income. In 2006, the best paid 1% took home 20.3%.
Aphorism
An aphorism is an original thought, spoken or written in a laconic and memorable form.The term was first used in the Aphorisms of Hippocrates...
"a rising tide lifts all boats" is associated with the idea that improvements in the general economy
Economic system
An economic system is the combination of the various agencies, entities that provide the economic structure that defines the social community. These agencies are joined by lines of trade and exchange along which goods, money etc. are continuously flowing. An example of such a system for a closed...
will benefit all participants in that economy, and that economic policy, particularly government economic policy, should therefore focus on the general macroeconomic
Macroeconomics
Macroeconomics is a branch of economics dealing with the performance, structure, behavior, and decision-making of the whole economy. This includes a national, regional, or global economy...
environment first and foremost. The phrase is attributed to John F Kennedy, who used it in a 1963 speech to combat criticisms that a dam project he was inaugurating was a pork barrel
Pork barrel
Pork barrel is a derogatory term referring to appropriation of government spending for localized projects secured solely or primarily to bring money to a representative's district...
project. However the phrase has been used more commonly to defend tax cuts and other policies where the initial beneficiaries are high income earners.
In Ted Sorensen
Ted Sorensen
Theodore Chaikin "Ted" Sorensen was an American presidential advisor, lawyer and writer, best known as President John F. Kennedy’s special counsel, adviser and legendary speechwriter. President Kennedy once called him his “intellectual blood bank.”-Early life:Sorensen was born in Nebraska, the son...
’s memoir, Counselor: A Life At The Edge Of History, he reveals that the phrase was not one of his or the president’s own fashioning. It was in his first year working for Kennedy (during JFK’s tenure in the Senate), when Mr. Sorensen was trying to tackle economic problems in New England, that he happened upon the phrase. He writes that he noticed that “the regional chamber of commerce, the New England Council, had a thoughtful slogan: ‘A rising tide lifts all the boats.’” From then on, JFK would borrow the slogan often. Sorensen highlights this as an example of quotes mistakenly attributed to President Kennedy.
The expression also applies to free-market
Free market
A free market is a competitive market where prices are determined by supply and demand. However, the term is also commonly used for markets in which economic intervention and regulation by the state is limited to tax collection, and enforcement of private ownership and contracts...
policies, in that comparative-advantage
Comparative advantage
In economics, the law of comparative advantage says that two countries will both gain from trade if, in the absence of trade, they have different relative costs for producing the same goods...
production and subsequent trade would theoretically increase incomes for all participating entities. It is said to be a favorite proverb of former U.S. Treasury Secretary
United States Secretary of the Treasury
The Secretary of the Treasury of the United States is the head of the United States Department of the Treasury, which is concerned with financial and monetary matters, and, until 2003, also with some issues of national security and defense. This position in the Federal Government of the United...
Robert Rubin
Robert Rubin
Robert Edward Rubin served as the 70th United States Secretary of the Treasury during both the first and second Clinton administrations. Before his government service, he spent 26 years at Goldman Sachs eventually serving as a member of the Board, and Co-Chairman from 1990-1992...
. However, Gene Sperling
Gene Sperling
Gene B. Sperling is an American lawyer and political figure, currently serving as a Counselor to Treasury Secretary Tim Geithner. He is also on the staff of the Council on Foreign Relations, where he serves as Senior Fellow for Economic Policy and Director of the Center on Universal Education. He...
, Bill Clinton
Bill Clinton
William Jefferson "Bill" Clinton is an American politician who served as the 42nd President of the United States from 1993 to 2001. Inaugurated at age 46, he was the third-youngest president. He took office at the end of the Cold War, and was the first president of the baby boomer generation...
’s former economic advisor, has opined that, in the absence of appropriate policies 'the rising tide will lift some boats, but others will run aground'.
The substantive aspect of the statement is that economic growth which raises the GDP
Gross domestic product
Gross domestic product refers to the market value of all final goods and services produced within a country in a given period. GDP per capita is often considered an indicator of a country's standard of living....
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
Creative destruction
Creative destruction is a term originally derived from Marxist economic theory which refers to the linked processes of the accumulation and annihilation of wealth under capitalism. These processes were first described in The Communist Manifesto and were expanded in Marx's Grundrisse and "Volume...
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 are 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%. Between 1960 and 1980, the top 1% in the United States took home less than 10% of all U.S. income. In 2006, the best paid 1% took home 20.3%.
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.