Tell me how Supply Side Economics is supposed to work in an age of

[KlatooBNikto]

globalization and fast transfers of capital across national boundaries? When we the American taxpayers provide tax cuts to the wealthy to spur investment and their money finds its way into investment banks that promote investment of corporations like H-P overseas, how does the American taxpayers or our communities benefit?

Why is this obvious hole in the supply side doctrine not discussed in our business press?Except may be Lou Dobbs.

[ewagner]

1. Two theories

that haven't caught up with each other.....

IOW they may be mutually destructive of one another.....

[TahitiNut]

2. The Laffer Curve is a joke.

It presumes a closed system of laughable kindergarten simplicity and isn't even being used honestly at that.

[KlatooBNikto]

4. Is that why it is called the Laugher curve? Hahaha!

[applegrove]

3. I concur. Can anyone think of a good article on Supply Side Economics?

Supply Side economics (like any other tool created to make markets work better) can be used as a bait & switch (or switch & bait). For sure supply shocks will not be the norm as prices come down via competition. Well - that will be supply shocks in the other direction. So 'having created/creating so much more wealth with their Supply Side economics, shouldn't the citizens of a country be better at monitoring the 'transfer of wealth' and efficiency of that? Since it is international?

So we can decide how efficient it is - and monitor it continuously. I know McKinsey did a study on out-sourcing and it said that ¾ of the money lost by outsourcing makes its way back into the US. Fine. What goes where? How much do the wealthy get? The average middle class stock-holder? The working poor?

Once we see exactly how this is distributed, we can make the right ‘policy’ tools to make sure the benefits of “supply side” policy are distributed across the board. Call it "transparency" and start a whole government funded think tank to continuously monitor.

[applegrove]

6. I mean you can no more trust the Chicago Economists to monitor

their own theories as you can a pharmaceutical corporation. And yes - both result in million dead "if you get it wrong".

[K-W]

5. Supply side economics arent sound in any context. EOM

[applegrove]

7. Supply Side did fix hyper-inflation of the 1970s (the workers paid for

mistakes the military & Oil industry benefitted from). But it did solve the problem.

My question is that seeing as how the world markets are open - doesn't the Aggregate Supply curve not become aggregate? I mean the curve changes its shape so the assumptions in Supply Side have to be redone don't they?. Regress that!

[TahitiNut]

8. That wasn't "hyper-inflation."

When people carry cash in wheelbarrows and inflation is in triple digits it's hyper-inflation.

[applegrove]

11. sorry: my mistake what I meant was Stag-flation n/t

[TahitiNut]

16. Oh. Yeah. I always hated that term.

I envision someone furiously pumping air into a male deer. :silly:

[applegrove]

17. Wow - I never thought of it like that. No wonder they thought it was bad?

:puffpiece:

[Ladyhawk]

9. I admit to knowing very little about economics.

I paid enough attention in college just to pass the tests, but hated the subject so much I can't remember a thing, even though I got an A. (Why did I take it for CR/NC when I got an A?)

I have no interest in making lots of money. My ideal existence would be one of artistic endeavors and seeking oneness with nature. Those things don't bring in the little green slips of paper. I feel...maladjusted...in this society.

[KlatooBNikto]

10. I am close to retirement and thrived in a high pressure environment

for nearly forty years, built two medium sized corporations and have turned it over to one of my kids. As I get older, I have realized the value of things like the arts ( one of my children is the lead cellist of the symphony in our city).I have lost a lot of time in my pursuit of success and wealth and I hope to make up for that.Thanks.You have chosen a better path than I did.You won't regret it.

[quaker bill]

12. It never did work

During it's peak of popularity, it was not being used. The economic growth seen under Reagan was largely due to demand-side stimulus fueled by his enormous budget deficits.

[applegrove]

18. Then why do they still talk about it and call themselves "supply siders"?

Is it code for one more lovely gift out of Chicago? Surely having given us Supply Side Economics & Neocons ... surely they must be stopped!:shrug:

[Terry in Austin]

13. Supply side economics is crank economics

Paul Krugman's Peddling Prosperity is an accessible and highly informative read that goes into this "school" of economics. Highly recommended.

The story Krugman lays out begins when rightwing radical Robert Bartley took over the editorial page of the Wall Street Journal in 1972. Bartley was an advocate of crackpot "supply-side" economics.

Krugman continues: supply-siders came from journalism, congressional staffs and consulting firms. Most of them work for think tanks. They don't publish in professional economics journals, but rather semi-popular magazines like Public Interest. Bartley was a journalist; his right-hand man Jude Wanniski writes for the National Observer. Irving Kristol supports them -- he publishes Public Interest.

Bartley and Wanniski are aided by economists Arthur Laffer and Robert Mundell. Laffer is technically a professor, but tends to play to the crowd more than to the world of academic research. Mundell is recognized in international economics, but has an outsider's mind-set. He was at Chicago, ended up at Columbia. He hasn't written anything since 1970, and he's gone kind of derelict.

Krugman's bottom line: supply-siders are cranks, as defined in Martin Gardner's In the Name of Science. They tend to be isolated from the usual channels of discussion; they believe that their non-acceptance by the establishment represents stupidity, dishonesty, or both.

[Warpy]

15. Only because it's completely ignored the demand side

of the equation, and there's a good reason for that. During the 70s, when the oil shocks were causing double digit inflation, the Fed successfully blamed labor for inflation, using the classic rubric "too many dollars chasing too few goods." They completely discounted the role that external pressure had played, notably, the tenfold increase in the cost of energy, which caused a tenfold increase in all goods and services.

That's one reason wages have been held artificially low for so long, the fact that they missed what was right in front of their stupid faces and allowed labor to be blamed for OPEC's inflation.

Now we have a pipeline that is absolutely choked with goods, and people going into more and more debt to purchase these goods, since they are no longer being paid enough to do so. Increases in profit though increased productiviry (fewer hands doing more work for less money) have been skimmed off at the top and have not been shared with the working public.

The system is topheavy, and we all know what happens when that is allowed to persist. The whole thing is set to collapse, and will probably do so spectacularly.

[Telly Savalas]

19. G.H.W. Bush preferred the term "voodoo economics"

I second the Krugman recommendation, though.

[blm]

14. In an age where CHINA is doing most of the supplying?

China is rapidly becoming the number one buyer of America's debt. Thanks to Bush's economic policies.

Tell that to a Bushmoonie.