Supply Side Economics

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The essence of supply side economics is that increased production will create increased demand. The reasoning behind this theory is that the cost of production, labor expense, creates the consumers for the products. As more people are employed to produce, more money is circulated to middle and lower income levels. When international borders are removed and production labor is engaged outside of the economy of the country of origin, all the benefits of supply side economics goes to the country that provides the production labor. With the globalization of the free market, do we need to examine new economic models to fit a new landscape?

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Supply side economics has never worked. It was a theory which was disproven 25 years ago.

According to Supply Side economics, if the actual marginal tax rate is to the left of its optimal level, the government should decrease it. True or False

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hahaha carlos??? im here asking the same thing

Whenever cons say that supply side economics works, they point to numbers showing the economy and tax revenue growing. What they don't show you is that the economy grows even faster when keynesian Democrats run the country. ============================== HERE'S WHAT I DID: I got the real GDP stats from the Bureau of Economic Analyses. I took the percent increase over 4 year intervals. I then ranked them from best to worst. Out of (((18))) 4 year intervals, the supply siders Reagan and Bush Jr ranked 8th, 12th, and 16th. 1 FDR (44')74.69% 2 FDR (36')34.62% 3 LBJ (68')21.81% 4 TRUMAN (52')21.00% 5 JFK (64')19.86% 6 FDR (40')19.32% 7 CLINTON (00')17.87% 8 REAGAN (88')15.98% 9 CARTER (80')13.67% 10 CLINTON (96')13.53% 11 IKE(56')13.45% 12 REAGAN (84')12.63% 13 NIXON (72')12.38% 14 IKE (60')10.91% 15 FORD (76')10.62% 16 BUSH JR (04')9.03% 17 BUSH SR (92')8.81% 18 TRUMAN (48')-9.04% http://www.bea.gov/national/xls/gdplev.xls

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it's not better. everytime we get too involved with that laissez-faire train wreck, something bad happens (1907, 1929, 1987, 2007)

what are the countries or governments that implemented the supply-side economics and realised great success.

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The Wikipedia article on this topic is quite good, read that. But in short... The term was coined by an economist named Wanninski in the 1970s, and it refers to the idea of maximizing the incentive to produce, trusting that the demand will arise to meet the supply. The key things that the true "supply-siders" advocated for was minimization of taxes and government spending (especially on welfare policies, those are "demand-side"), and a gold standard for currency. The most famous examples of governments that explicitly perused "supply-side" policies are the United States under Regan, and the United Kingdom under Thatcher. But in a broader sense, the neoliberal policies that have been forced onto most of the world by the IMF and other institutions are also a form of supply-side economics. Few countries have realized success from these kinds of policies for more then a few years at best--thats why supply-side has also come to be known as "voodoo economics". It worked OK for the US, in terms of a narrowly defined goal of economic growth--that doesn't mean people are doing well, and eventually recession set in anyway. Chile sustained growth for a long time through supply-side strategies, but I can't help but add that this was under a brutal military dictatorship that murdered thousands of its own citizens and piled the bodies in the streets. Is that success? I'm not a fan.

What is the basic premise behind supply side economics? Will tax cuts in fact encourage investment in plant and equipment and create employment and simulate the economy. Would it be better to increase demand through government spending and put the money directly into the hands of consumers as the economy is driven by consumer spending?

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Depending on your political persuation Kinsian Economics worked in the 80s. We still aren't paying in the upper brackets the obscene amount of percentage of taxes in the 50s-70s. The economy boomed and interest rates and the prime lending rates all recovered after Reagan took the stagnant economy from Carter. "We will always have to live with inflation" Or not Jimmy? Where people get upset is when they look and say spending was out of control. Well yes to some extent Since 1950 we have never had a true balanced budget even the Clinton years the supposed balance was based on rosy predictions of future growth and spending limits reaching far after he left office but by 1998 the economy was shrinking, It always does in like 12 year increments. The president can only pass the bills not actually spend the money. The congress spends. They create the bills that the president signs and the Democrats owned the Congress from the 40s to 1994. The GOP passed a balanced budget and passed a line item veto to empower Clinton and then the courts threw it out. That would give the president ultimate control over pork spending. Too bad it is gone. It is a fact that I will spend the money I have mainly the lower class is not investing. Therefore spending on the bottom sends money into the system. Business grows and companies can hire more people. It has been proven. The trick was in the 90s the economy was booming with a bunch of greedy cheaters and they abused the economy and businesses were shut down and people lost loads in the fake stock market. Big business needs limits and coverage by laws to ensure they do not abuse this power. Now in the 80s we saw an increase and recovery of some manufacturing but then the 90s saw the service industry booming and manufacturing go down. Less because of taxes but more due to the economy of the world opening in poorer countries allowing the development of business in poorer nations and the export of many jobs. Heck Japan is saving money building cars here and Ford saves money building in Mexico. Which is worse? Anyway the increase in money back to taxpayers helped build the recovery in 03 and the economy is doing well now. I know I appreciate the extra few hundred I get every year and hope I don't pay more now as a result of the new takeover. But jobs shift every decade. We don't make cars for 25 dollars an hour now but was that really good or not? Maybe for individuals in short terms but not for Ford and the unions with shops closing, I lived through the 80s and people were happy and jobs were better and the economy boomed. Those darn Democrats didn't want to stop spending in the 80s LOL That is how Reagan got his cuts! They are all in bed anyways.