Supply-Side Economics

[whell]

Originally Posted by Rajoo

Show me where in the article there is a 'slanted' definition of supply-side economics. From the article:

Yep, it's right there in the part that you highlighted. It's also right there in the portion of the article Finn posted.

Supply-side economics is about one thing, and one thing only: encouraging the conversion of capital by making the cost of converting capital to goods and services less expensive. That's it. That's all. There's nothing in supply-side theory that addresses spending because that's a political/governmental/policy decision.

As soon as someone writes commentary like this: "an economic philosophy that claimed to allow Republicans to cut taxes, maintain popular social programs, robustly fund defense and balance the budget", then you know the writer is, at least, embellishing or at most, lying to you. Connecting supply-side theory to government spending is simply an attempt to discredit a theory that liberals hate because:

1) It doesn't comport with the Gospel according to John Maynard Keynes.
2) It's not a solution that relies on government spending or other myriad Federal interventions to work.

Remember that in the 1970's and early 1980's, high unemployment, high inflation, slumping economic growth, an oil embargo, a war coming to an end, and rising competition from foreign manufacturers. By the time 1980 came along, we had tried everything else already. Nixon tried wage and price controls. It failed. Ford tried to get everyone to wear Whip Inflation Now (WIN) buttons (what a joke that was). Remember Obama's "stimulus" bill? Yep, Carter tried that with the Economic Stimulus Appropriations Act, which lowered unemployment by increasing the Civil Service workforce. That never really worked, and just as the Carter bunch was getting ready to try again, the US embassy in Tehran was attacked.

So, by the time Reagan showed up, a lot of the Keynesian stuff had already been tried and hadn't had any real impact. That's where supply-side came in. It was a relatively new theory, and it was probably the right tool for the economic problems at that time.

Originally Posted by Rajoo

Isn't this what Reagan adopted and began the era of deficit funding of government, except he called it Trickle Down Economics. IIRC, Bush1 called it Voodoo economics. Then Bush2 and Trump adopted this Voodoo economics and more tax cuts for the wealthy ensued and deficits soared.

There is no such thing as "Trickle Down Economics". That is a term that was first uttered by David Stockman and then co-opted by Reagan's political detractors to criticize Reagan's application of supply-side theory.

Here's the thing:

1) economic theory isn't about politics. It becomes political when its application is espoused by a political figure.
2) economic theory is like a tool in your toolbox. A single economic theory doesn't fit every economic challenge, just like you're not going to pull a screwdriver out of your toolbox to drive in a nail.
3) Keynesian economic principles failed to combat the challenges faced by Nixon and Carter. They were the wrong tool for those challenges.
4) Supply-side is a tool that, to great extent, supports getting government tax and regulatory burdens out of the way and letting the free market "do its thing". It was probably the right tool for the challenges that existed by the time Reagan took office.
5) Just like Keynes' ideas, supply-side theory isn't always going to be the right tool for the job.
6) Due to how the theories work (and this is probably way over-simplified, but here goes), you'll find Keynesians on the political left because the left hates/fears the free market and would rather have an activist gov't at the center of economic policy. Supply-side advocates are generally on the right because of the appeal of a less activist government and free market principles. This is where/how these economic theories generally get politicized.
7) This is exactly how we fail to get out of our own way sometimes. The political climate has become so polarized that even economic theories get politicized. It's like politicizing a screwdriver or a hammer, but that's where we are.

By the way, there's nothing new about any of this. JFK was thwarted by his own party when he proposed, as a way to get the economy moving again following a recession in 1958, a package of corporate and individual tax cuts. The Repubs and conservative Dem wouldn't agree to tax cuts w/o budget cuts. In reference to his tax cut proposals actually increasing government revenue, it was Kennedy that pushed back at his critics who wanted budget cuts by stating: "A rising tide lifts all boats."

[finnbow]

Originally Posted by whell

I thought you weren't responding to my posts anymore 'cuz I made you all mad? Did you forget?

Look at the link. It tells you where the article is posted. If it was posted in the "opinion", it would be visible in the link. Example: one of the latest from your girl Jennifer Rubin:

https://www.washingtonpost.com/opinions/2022/11/08/biden-trump-2024-election/

I thought you never read the Washington Post and would rather read a book about the Everglades.

[whell]

Originally Posted by donquixote99

So your argument is that if it's not in the opinion section, it's supposed to be hard news. Either typical overly-categorical conservative thinking, or a stupid point that you know is stupid, but you're a troll so stupid is a feature for you. Either way, it is perspective, it is labeled perspective, and your objection is ridiculous.

Not responding to your dumbfuckery is simply my considered and rational policy. I'm free to make exceptions as I may wish. But I still think you are playing a stupid game while the Republic burns, so don't expect many exceptions.

Yeah, I kinda thought that the purpose of a newspaper was to deliver news. And yes, historically to demarcate the difference between news and editorial commentary, there's this thing called the Opinion section so that the presentation of news and opinion are clearly differentiated. That's why, for example, newspaper articles are written in the third person point of view, making the author a dispassionate narrator.

But I guess I'm too much a dumbf@ck and don't look at the presentation of news from such an enlightened viewpoint as you.

"Perspective" is neither opinion nor news. It's a blending of the two. As I see it, it's a cute way to repackage the news and salt it with opinion....much as it is presented in the article in question.

[whell]

Originally Posted by finnbow

I thought you never read the Washington Post and would rather read a book about the Everglades.

This is true, but sometimes I have to wade into the swamp to illustrate a point. It's painful, but it's a service I gladly provide just for my friends here on the forum.

[Pio1980]

Tinkle down tax reduction economics is basically corporate welfare for the wealthy on the backs of actual tax payers who carry the load.
Republicans don't actually care about debt on their watch, but will cut taxes on the backs of those that benefit from them when they can.
That's the cycle, paint Dem's tax-and-spend bandits who rob the makers to feed the takers, never mind the "takers" provide the labor for the "makers".
Oversimplistic, perhaps, but connecting the dots with a straight line makes following the money simple.

[finnbow]

Originally Posted by whell

Yep, it's right there in the part that you highlighted. It's also right there in the portion of the article Finn posted.

Supply-side economics is about one thing, and one thing only: encouraging the conversion of capital by making the cost of converting capital to goods and services less expensive. That's it. That's all. There's nothing in supply-side theory that addresses spending because that's a political/governmental/policy decision.

As soon as someone writes commentary like this: "an economic philosophy that claimed to allow Republicans to cut taxes, maintain popular social programs, robustly fund defense and balance the budget", then you know the writer is, at least, embellishing or at most, lying to you. Connecting supply-side theory to government spending is simply an attempt to discredit a theory that liberals hate because:

1) It doesn't comport with the Gospel according to John Maynard Keynes.
2) It's not a solution that relies on government spending or other myriad Federal interventions to work.

Remember that in the 1970's and early 1980's, high unemployment, high inflation, slumping economic growth, an oil embargo, a war coming to an end, and rising competition from foreign manufacturers. By the time 1980 came along, we had tried everything else already. Nixon tried wage and price controls. It failed. Ford tried to get everyone to wear Whip Inflation Now (WIN) buttons (what a joke that was). Remember Obama's "stimulus" bill? Yep, Carter tried that with the Economic Stimulus Appropriations Act, which lowered unemployment by increasing the Civil Service workforce. That never really worked, and just as the Carter bunch was getting ready to try again, the US embassy in Tehran was attacked.

So, by the time Reagan showed up, a lot of the Keynesian stuff had already been tried and hadn't had any real impact. That's where supply-side came in. It was a relatively new theory, and it was probably the right tool for the economic problems at that time.



There is no such thing as "Trickle Down Economics". That is a term that was first uttered by David Stockman and then co-opted by Reagan's political detractors to criticize Reagan's application of supply-side theory.

Here's the thing:

1) economic theory isn't about politics. It becomes political when its application is espoused by a political figure.
2) economic theory is like a tool in your toolbox. A single economic theory doesn't fit every economic challenge, just like you're not going to pull a screwdriver out of your toolbox to drive in a nail.
3) Keynesian economic principles failed to combat the challenges faced by Nixon and Carter. They were the wrong tool for those challenges.
4) Supply-side is a tool that, to great extent, supports getting government tax and regulatory burdens out of the way and letting the free market "do its thing". It was probably the right tool for the challenges that existed by the time Reagan took office.
5) Just like Keynes' ideas, supply-side theory isn't always going to be the right tool for the job.
6) Due to how the theories work (and this is probably way over-simplified, but here goes), you'll find Keynesians on the political left because the left hates/fears the free market and would rather have an activist gov't at the center of economic policy. Supply-side advocates are generally on the right because of the appeal of a less activist government and free market principles. This is where/how these economic theories generally get politicized.
7) This is exactly how we fail to get out of our own way sometimes. The political climate has become so polarized that even economic theories get politicized. It's like politicizing a screwdriver or a hammer, but that's where we are.

By the way, there's nothing new about any of this. JFK was thwarted by his own party when he proposed, as a way to get the economy moving again following a recession in 1958, a package of corporate and individual tax cuts. The Repubs and conservative Dem wouldn't agree to tax cuts w/o budget cuts. In reference to his tax cut proposals actually increasing government revenue, it was Kennedy that pushed back at his critics who wanted budget cuts by stating: "A rising tide lifts all boats."

Once again, the fundamental truism holds true - the longer-winded your response, the more incorrect you are. Supply-side economics is about nothing other than providing a rational to cut taxes regardless of prevailing economic conditions. Budget surplus? Cut taxes (Dubya). Budget deficit? Cut taxes (Reagan, Trump).

What's so disingenuous about the Laffer Curve is that neither Laffer nor any other SS disciple can provide values to either axis of the curve nor identify where we are on the curve. IOW, their arguments in favor of SS economics assume that we are always to the right of T* (the part of the curve where tax cuts will always result in increased revenue) on a (valueless) curve. Moreover, the curve assumes that there is a single tax rate than can be manipulated (i.e., income tax), irrespective of the impacts of increases/decreases in other taxes (sales, property, excise, inheritance, tariffs). It's nothing but simple-minded (and completely unfounded) rationale to support income tax cuts, regardless of economic conditions.

[Rajoo]

Originally Posted by whell

There is no such thing as "Trickle Down Economics". That is a term that was first uttered by David Stockman and then co-opted by Reagan's political detractors to criticize Reagan's application of supply-side theory.

Here's the thing:

You should have simply claimed this was a scam started by Grandpa Reagan.

The IMF Confirms That 'Trickle-Down' Economics Is, Indeed, a Joke
Like, an actual joke.


"Trickle-down" economics began as a joke. Seriously.

If there’s one person most often associated with the origins of of trickle-down economics, it’s President Ronald Reagan. Few people know, however, that the phrase was actually coined by American humorist Will Rogers, who mocked President Herbert Hoover’s Depression-era recovery efforts, saying that "money was all appropriated for the top in the hopes it would trickle down to the needy."

Rogers’ joke became economic dogma within two generations, thanks in large part to Reagan. At the center of Reagan’s economic doctrine was the idea that economic gains primarily benefiting the wealthy—investors, businesses, entrepreneurs, and the like—will "trickle-down" to poorer members of society, creating new opportunities for the economically disadvantaged to attain a better standard of living. Prosperity for the rich leads to prosperity for all, the logic goes, so let’s hurry up with those tax cuts already. The legacy of Reaganomics continues to shape modern debates over macroeconomic policy in the United States, from the Bush tax cuts of the mid-2000s to the deficit hawks waging war over the federal budget in Congress.

Now, nearly 80 years later, Rogers’ quip is getting the punchline it deserves: A devastating new report from the International Monetary Fund has declared the idea of "trickle-down" economics to be as much a joke as he'd imagined.
Increasing the income share to the bottom 20 percent of citizens by a mere one percent results in a 0.38 percentage point jump in GDP growth.

The IMF report, authored by five economists, presents a scathing rejection of the trickle-down approach, arguing that the monetary philosophy has been used as a justification for growing income inequality over the past several decades. "Income distribution matters for growth," they write. "Specifically, if the income share of the top 20 percent increases, then GDP growth actually declined over the medium term, suggesting that the benefits do not trickle down."

https://psmag.com/economics/trickle-...-indeed-a-joke

What Is Trickle-Down Economics?

Trickle-down economics refers to any policy in which wealthy people and corporations receive tax cuts, stimulus, or deregulation in an effort to boost growth for the entire economy.

Also known as supply-side economics, trickle-down economics got its colloquial name from early twentieth-century humorist Will Rogers. Advocates believe it unfetters the free market to produce prosperity, while critics think of it as a cynical ploy to line the pockets of the rich while making empty promises to lower-income earners.

https://www.masterclass.com/articles...kW67ZhKc002swK

And since I am an equal opportunity guy.

There is No Such Thing as Trickle-Down Economics
The point is not to transfer wealth up and down but rather to create universal opportunity.

Critics of liberalism and the market economy have made a long-standing habit of inventing terms we would never use to describe ourselves. The most common of these is “neo-liberal” or “neo-liberalism,” which appears to mean whatever the critics wish it to mean to describe ideas they don’t like. To the extent the terms have clear definitions, they certainly don’t align with the actual views of defenders of markets and liberal society.

Trickle Down

Economists have never used that term to describe their views.

Another related term is “trickle-down economics.” People who argue for tax cuts, less government spending, and more freedom for people to produce and trade what they think is valuable are often accused of supporting something called “trickle-down economics.” It’s hard to pin down exactly what that term means, but it seems to be something like the following: “those free market folks believe that if you give tax cuts or subsidies to rich people, the wealth they acquire will (somehow) ‘trickle down’ to the poor.”

The problem with this term is that, as far as I know, no economist has ever used that term to describe their own views. Critics of the market should take up the challenge of finding an economist who argues something like “giving things to group A is a good idea because they will then trickle down to group B.” I submit they will fail in finding one because such a person does not exist. Plus, as Thomas Sowell has pointed out, the whole argument is silly: why not just give whatever the things are to group B directly and eliminate the middleman?

There’s no economic argument that claims that policies that themselves only benefit the wealthy directly will somehow “trickle down” to the poor. Transferring wealth to the rich, or even tax cuts that only apply to them, are not policies that are going to benefit the poor, or certainly not in any notable way. Defenders of markets are certainly not going to support direct transfers or subsidies to the rich in any case. That’s precisely the sort of crony capitalism that true liberals reject.

https://fee.org/articles/there-is-no...own-economics/

So in the end, Supply side economics is giving tax cuts to the rich and hope it trickles down to the poor. And if its anything like the Bush2 recovery plan, money simply vanishes. At least in the Canadian system, one has to actually provide employment to get the incentives, here in the US its simply a scam to buy private jest and vacation homes. Disclaimer: I had to pay off our second home with a 25 yr mortgage.

[whell]

Originally Posted by finnbow

Once again, the fundamental truism holds true - the longer-winded your response, the more incorrect you are. Supply-side economics is about nothing other than providing a rational to cut taxes regardless of prevailing economic conditions. Budget surplus? Cut taxes (Dubya). Budget deficit? Cut taxes (Reagan, Trump).

Thanks for proving my point. Supply-side theory is not political, as stated above. You can make it political if you wanna....and apparently you wanna.

[whell]

Originally Posted by Rajoo

So in the end, Supply side economics is giving tax cuts to the rich and hope it trickles down to the poor.

No, it's not. But I won't try to demonstrate otherwise. Sometimes folks just want to believe what they want to believe. I'll leave you with this, from a source with zero agenda other than to provide information:

https://www.encyclopedia.com/finance...ly-side-theory

In addition to tax cuts, supply side theory usually recommends that the government should decrease its regulation of business and provide other incentives for increases in production, such as tax breaks (amounts of money that can be deducted from the taxes owed to the government) for companies that invest in new equipment. Supply siders also often insist on the importance of free trade (the reduction or elimination of restrictions on goods imported from foreign countries) and the free movement of capital (the unhindered ability of money and other resources to move across borders), believing that restrictions on trade or capital movement negatively affect production.

[Rajoo]

Here is how supply side works in reality. Meta announces massive layoffs after companies like Twitter & Lyft and their stock price jumps up creating wealth for the investors. So if profits can be increased by reducing the workforce, how would Trickle Down actually ever trickle down? Give tax breaks to Meta so they will rehire these workers?