Does Supply Drive an Economy or Does Demand?
by
David Schlecht
We’ve discussed supply side economics many times on this blog and there are countless websites that compare the two economic models, Keynes vs Friedman. But this time I’m going to add a bit of history to the discussion. After all, if we can’t learn from our mistakes, we’re doomed to repeat them, and repeating them we are.
Supply Side Economics
Probably the best way to describe Supply Side Economics is Voodoo economics. This is the idea that if you give money to the rich, they will hire people and pay a good wage and the heavens will open and the angles will sing and leprechauns will dance. It’s also referred to as trickle-down economics.
In other words, people will run out and buy just because the stores are full.
Keynesian Economics
This is the old model of economics where demand drives the economy. In other words, when people have money they will buy.
Now this is obviously just broad strokes and there is a whole lot more involved in each of these models of economics. You may find yourself interested enough to learn economics and get into the nuts and bolts of these, but this is as technical as I plan to get.
Alright, so here’s the little bit of history I promised you. Neither of these perspectives of economics is new. Since the beginning of economic times, the concept of supply and demand has been the fundamental core of the study of economics.
However, back in the early days of America, the concept of unfettered free trade was the approach the government took and this freed up the companies to be as greedy and they could. This allowed America to become quite wealthy, or at least our wealthy became wealthy.
Of all the leading countries, we were becoming the most wealthy. This seemed to convince many people that if a little free is good, oh my gosh, totally free trade must be the be-all end-all of wealthy. So, in the late 1800s and early 1900s, America decided to pull all the plugs and let the rich get as rich as they wanted.
So by the 1920s we saw the roaring 20s when the wealthy were insane with their greed and wealth. At lease back then, they were smart enough to protect our industries through tariffs.
Then, the big crash.
Following the Great Depression, many economist admitted that the whole idea of completely unregulated greed was bad for America. At this time, Keynes came back to the idea that maybe really, demand drives the economy. This wasn’t the first time economics thought of this, but it was back in vogue.
Then, about 50 years ago, Friedman brought back the greed and supply side economics.
So, fast-forward to today and we’re all the rage back into supply-side economics and unfettered free trade. Of course, we’re also seeing the return of the economics of the Great Depression.
When will we learn from history? When we start exposing the idiots who keep pushing failed economic policies on us. When we eject the same people who got us in the First Republican Great Depression. The Republicans.
Unfettered Free Trade doesn’t work. All it does is impoverish a nation and make a handful of greedy people insanely rich.
Free trade doesn’t work.
Supply Side Economics don’t work. It’s a myth.
Voodoo Economics always brings disaster. Read your history.
Loading ...
Who Owns the Deficit
Thursday, July 21st, 2011Who Owns the Deficit
Dave Speck
So we hear the republican chanting over and over how the sky is falling if we don’t balance the budget, even if it means we have to take food out of the mouths of our elderly and sick and weak and poor. The world will end. Why all the noise?
The Republicans voted to raise the debt ceiling 18 times during Reagan’s administration. Got that? 18 times. During that time Reagan increased our nation’s deficit by three trillion dollars, more than all the previous presidents combined.
Where did all that money go? It went to tax breaks for the rich, mostly. That and to the military budget and his failed Star Wars program.
Then, along came Clinton and he balanced the budget and had a surplus that would have paid off the deficit in 10 years.
Where did all this money come from? Clinton ended “Welfare as we know it.” In other words, he stole it from the poor. He also raised taxes on the wealthy a couple percentage points.
Then, Bush added almost five trillion dollars to the deficit and the republican voted seven times to raise the debt ceiling.
Where did all that money go? Tax breaks for the rich and two illegal wars.
Then the economy crashed, as it always does when you lower taxes on the rich, and Bush pushed through another trillion dollars to the banker crooks.
Now, Obama wants to add a small fraction to the debt, less than 8%, and the Republicans are threatening to bring the entire country down unless we take more money from the poor.
Do you see any sort of pattern here? The republicans ran up almost all of the 10 trillion dollar debt and they don’t want to pay for it. They want the poor and the weak and the elderly and the sick to pay for their big party.
The republicans and the rich have been living large for the past 30 years at our expense and now they want you and me to pay for the bill.
What would you say about a political party that does this? What would you say about a party that is willing to crash our economy if they don’t get their way on everything? We’re in this mess because of the tax breaks to the rich and the republicans are saying they will destroy the country if we don’t give more tax breaks to the rich.
What party does big business own?
Tags: afghanistan, bush, corporate welfare, depression, iraq, redistribution, rich, taxes, wealth
Posted in Finance, Politics | 1 Comment »