[I]f you asked critics what “Supply-Side Economics” is, most would say it’s a theory about tax revenues that says a lower rate of taxation often yields a higher tax-revenue haul. It's a foolish try.
More realistically, supply-side economics is a simple statement of reality: in order to consume we must produce first. Since consumption is what happens after production, the goal of economic policy should be to remove the barriers to production. . . .
Add Treasury secretary Janet Yellen to the list of supply-side critics who is wholly confused about what it is she’s criticizing. In a recent speech before the World Economic Forum, Yellen pointed to the Biden administration’s infrastructure proposals, child care, paid leave, and global warming initiatives as “Modern supply-side economics.” She said what?
I guess that's "modern" as in "absolutely nothing like what the term means." Way to make sterile arguments about definitions even crazier and more futile.
Come to think of it, though, the irrationality is hardly confined to economics. As a species we seem to combine irrationality with stupidity in staggering proportions. And yes, I have been spending too much time lately interacting with my fellow citizens as we gear up for the local election primary on March 1, why do you ask?
3 comments:
I knew a guy who was appointed to run a new-product venture in a division of a large company. He was irritated that he had an expense budget he had to stick to, in his view, it was all 'investment', which would be repaid many times over and should be capitalized like a new factory, rather than expensed as incurred.
The venture failed. If the costs had been expensed like he wanted, there would have been a big writeoff.
I'm reminded of this story by the proposed 'investments' (supply-side investments, even) from the Biden administration and such.
Yes, it is odd that when the government goes at if from supply side it is considered fine. It's only helping businesses function that is a problem.
They are not in the least worried about what that term or many others mean, or used to mean when they were coined. The goal is to make them incantations, so that they can be used instrumentally to scare or comfort people as needed. See also "racism."
Tex, I'm willing to stipulate the phrase "supply side economics" has two meanings, one much older than the other, and the older perhaps being more valid. Production precedes Consumption, sure. That's Say's Law. Couple hundred years old. But that's not controversial, much.
What is in dispute and denigrated by the term "supply siders" is the Laffer Curve of tax rates versus revenues. The curve is so theoretical we have no way to estimate the shape of the peak or even the number of peaks (if any greater than "1"). But SOMEWHERE there must be at least one peak, one inflection point, where the tax rates are so high that cheating the tax collectors and risking penalties is more sensible than simply paying the tax. To the left (honest / open market) side of that peak, rating tax rates increases tax revenues. To the right (black market / barter) side, increasing rates drive falling revenues.
It's an unprovable assumption or assertion that a taxing authority is setting rates on either side of the peak. But those who assume the present rates are too darned high are called "supply siders" for making the assumption that lowering rates not only raises tax revenues, but will divert effort from cheating to productive uses.
In Texas the problem is more that the property assessments are, IMO, too high and ummatched to tax-payer's ability to pay. Not that the rates are so high.
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