The Gospel of Supply Side Jesus

wendybeth · 06-05-2006, 12:29 PM

From Wikipedia:

Supply-side economics is a school of macroeconomic thought which emphasizes the "supply" part of "supply and demand". The central concept of supply-side economics is Say's Law: "supply creates its own demand", or the idea that one must produce before one has the means to buy. In evaluating public policy, supply-side economics is more concerned with the extent to which a reform will change producer incentives, rather than how it may stimulate demand. This emphasis represents a fundamental difference between classical, supply-side economics and Keynesian or demand side economics.
Supply-side economics was popularized in the 1970s by Robert Mundell, Arthur Laffer, and Jude Wanniski. The term was coined by Wanniski in 1975. In 1978 Jude Wanniski published The Way the World Works in which he laid out the central thesis of supply-side economics and detailed the failure of high tax-rate, "progressive" income tax systems and U.S. monetary policy under Keynesians in the 1970s. Wanninski advocated lower tax rates and a return to some kind of gold standard, à la the 1944-1971 Bretton Woods System.
In 1983, economist Victor Canto, a disciple of Arthur Laffer, published The Foundations of Supply-Side Economics. This theory focuses on the effects of marginal tax rates on the incentive to work and save, which affect the growth of the "supply side" or what Keynesians call potential output. While the latter focus on changes in the rate of supply-side growth in the long run, the "new" supply-siders often promised short-term results.
Supply-side economics is often conflated with trickle down economics.

The article also mentions Al Franken's cartoon, which started this thread.

Alex · 06-05-2006, 02:02 PM

Unfortunately, as a political football supply side economics has come to mean simply 'tax cuts' and the idea that some tax cuts can spur further economic growth which will still produce similar or higher tax revenues than without the tax
cuts.

Which is an idea with some (but limited) merit but which over time has come to be the idea that cutting any tax by any size will have the same impact. This is nonsense.

06-05-2006, 12:29 PM	#1
wendybeth Nevermind Join Date: Jan 2005 Posts: 7,847	From Wikipedia: Supply-side economics is a school of macroeconomic thought which emphasizes the "supply" part of "supply and demand". The central concept of supply-side economics is Say's Law: "supply creates its own demand", or the idea that one must produce before one has the means to buy. In evaluating public policy, supply-side economics is more concerned with the extent to which a reform will change producer incentives, rather than how it may stimulate demand. This emphasis represents a fundamental difference between classical, supply-side economics and Keynesian or demand side economics. Supply-side economics was popularized in the 1970s by Robert Mundell, Arthur Laffer, and Jude Wanniski. The term was coined by Wanniski in 1975. In 1978 Jude Wanniski published The Way the World Works in which he laid out the central thesis of supply-side economics and detailed the failure of high tax-rate, "progressive" income tax systems and U.S. monetary policy under Keynesians in the 1970s. Wanninski advocated lower tax rates and a return to some kind of gold standard, à la the 1944-1971 Bretton Woods System. In 1983, economist Victor Canto, a disciple of Arthur Laffer, published The Foundations of Supply-Side Economics. This theory focuses on the effects of marginal tax rates on the incentive to work and save, which affect the growth of the "supply side" or what Keynesians call potential output. While the latter focus on changes in the rate of supply-side growth in the long run, the "new" supply-siders often promised short-term results. Supply-side economics is often conflated with trickle down economics. The article also mentions Al Franken's cartoon, which started this thread. __________________
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06-05-2006, 02:02 PM	#2
Alex . Join Date: Feb 2005 Posts: 13,354	Unfortunately, as a political football supply side economics has come to mean simply 'tax cuts' and the idea that some tax cuts can spur further economic growth which will still produce similar or higher tax revenues than without the tax cuts. Which is an idea with some (but limited) merit but which over time has come to be the idea that cutting any tax by any size will have the same impact. This is nonsense.
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