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I don't have comment on the legacy of supply-side economics and and how successful e.g. Reagan's economic policy was, but it looks to me like we have more of a

• ohazi 5y ago
  The "supply side" of "supply side economics" is a red herring. The theory has less to do with what actually affects the supply of goods at any given time and more with the theory that lowering taxes and decreasing regulation always necessarily results in more supply and lower prices even when it clearly doesn't. The theory ignores everything else that affects supply and only focuses on complaining about taxes and regulation.
• elliekelly 5y ago
  That’s not quite what “supply-side economics” means. From Wikipedia[1] > Supply-side economics is a macroeconomic theory that postulates economic growth can be most effectively fostered by lowering taxes, decreasing regulation, and allowing free trade. According to supply-side economics, consumers will benefit from greater supplies of goods and services at lower prices, and employment will increase. Cf. Demand-side economics[2]: > Demand-side economics is a term used to describe the position that economic growth and full employment are most effectively created by high demand for products and services. According to demand-side economics, output is determined by effective demand. High consumer spending leads to business expansion, resulting in greater employment opportunities. Higher levels of employment create a multiplier effect that further stimulates aggregate demand, leading to greater economic growth. > Proponents of demand-side economics argue that tax breaks for the wealthy produce little, if any, economic benefit because most of the additional money is not spent on goods or services but is reinvested in an economy with low demand (which makes speculative bubbles likely). Instead, they argue increased governmental spending will help to grow the economy by spurring additional employment opportunities. They cite the lessons of the Great Depression of the 1930s as evidence that increased governmental spending spurs growth. [1]https://en.m.wikipedia.org/wiki/Supply-side_economics https://en.m.wikipedia.org/wiki/Supply-side_economics [2]https://en.m.wikipedia.org/wiki/Demand-side_economics https://en.m.wikipedia.org/wiki/Demand-side_economics
  • imtringued 5y ago
    Supply side economics works if everyone is poor and there isn't enough stuff for everyone, the assumption is that the supply side can never be saturated and there is always excess demand (think of a hedonic treadmill). It works fine in developing countries with a young population. As soon as you have a developed nation with an aging population where everyone is scrambling to save for their own retirement, you get the exact opposite problem. People are deferring spending, which means deferring incomes, which means deferring jobs which means unemployment. There is lots of money available to invest into businesses, in fact, people are investing too much, interest rates fall through the floor. Low interest rates allow unproductive companies to stay alive and when the long term debt cycle ends they all die at once. That's not good for your retirement. When you expect to retire in 10 years, you want your savings to actually be able to buy things, by making sure there are people in the future willing to work for your money. That's why you invest your savings, to make sure companies exist that sell stuff to you in the future, but how are those companies supposed to survive the 10 years until you retire, if you never buy anything?
  • mindslight 5y ago
    One has to love these fake dichotomies where both "sides" suck. Where's the school of thought advocating for demand commensurate with what people can actually use, and that aims to require only as much labor as required to fulfill that? Probably not getting any phone calls from the economic schemers in Washington.
• joe-collins 5y ago
  While this might be a tangent to your larger point, I personally struggle when arguing about housing in California, in particular. Yes, supply might be low and more aggressive construction could do wonders for more affordable pricing, I have no disagreement with that. (And as a low-income retail worker in SoCal, I would certainly welcome that relief!) But at the same time, I see basic limits in our water supply, and less absolute constraints in the crowding around a handful of urban hubs, and wonder if more housing is truly a good idea, or if we might already be near the practical limits on capacity for the geography/hydrology and geometry we're working with.
  • clairity 5y ago
    we're not anywhere close to the natural limits, as we have plenty of technology and policy we could implement yet around resources like clean water, air, energy, and even space. the primary reason we don't is cost, both for externalities and for the remedies themselves. the 50-year plan for LA (the city) from about 50 years ago was projecting something like 7-8 million residents being housed here by now with basically the same current infrastructure. instead, we've only grown from 3 to 4 million in that time, largely because of various restrictions on development (zoning, prop 13, etc.). note that LA city is ~470 sq mi, in contrast to NYC which is twice the population and ~300 sq mi.
• coliveira 5y ago
  In fact the problems of supply that you mention are a demonstration of the failure of supply side economics. The whole theory is based on the idea that if you give fiscal incentives to the supply side, you will have more supply. But what we see in reality is that more fiscal benefits were provided and the industries are not responding, according to the examples you gave. Another example is the healthcare and Pharma industry: more incentives should result in more competition and lowered costs, but exactly the opposite is happening: consolidation and higher costs.