View Full Version : Supply side economics has failed 100% of the time.
Paris
11-02-2008, 02:02 PM
^^Yes, you're right. I confused my terminology.
I've yet to see anyplace where Supply side economics has been successful in promoting economic growth over the long term.
The Phillips Curve, although overly simplistic IMO, seems to have been a proven model for economic growth.
Ook, I was hoping you could point me toward an example (even a small example of a single community) of successful supply side economics over the long term. It would be interesting to look at what works and what doesn't work for future planning.
Deogol
11-02-2008, 02:42 PM
I'm curious how you have benefited. I guess that is kind of a personal question, and I don't know your income level or occupation. I suppose if you work as a collection agent or pawn shop owner or check cashing/payday loans or own tow trucks specializing in repossession, then the crazy economy has been quite beneficial to you.
Short sellers have done very well until they were frozen out, so my guess is that you are not currently working in the financial sector or real estate.
If the majority of your income comes from sources that can be claimed as capitol gains instead of earned income, I can also see how the reduction of those taxes can be very profitable.
So, as a result to your reduced tax burden, did you increase the salaries of your employees or otherwise create more wealth in the community leading to long term growth overall? That is the theory why supply side economics is supposed to be beneficial to societies and economies, job and wealth creation from the top. I'm assuming you now offer your employees more benefits such as sick leave and vacation pay, better health benefits and possibly even continuing education benefits so that they can assist in the growth of your business, right?
Unfortunately, the vast majority of business owners put their extra money from tax cuts into their pockets. I believe that is because although the theory that businesses and employers would have more money to reinvest into their employees, there is the pervasive attitude that education and training is somehow not the responsibility of the employer. We have also gotten away from thinking that the employer is responsible for caring for his/her employees well being to increase productivity and loyalty to the employer. That is why very few employers offer sick days, vacation pay, medical and dental insurance and some don't even offer raises for good performance.
And there is the dichotomy between the perception that somehow the employer need only look after his/her business and the government is responsible for the workers. This is obviously a recipe for disaster creating an elite management or upper class and a permanent lower class. That is why the wealthy had to pay so much in taxes in the first place; they didn't take proper care of their employees.
We've been faking wealth for the past 30 years or so. We first made up the shortfall in wages and benefits by women entering the workplace in record numbers in the late 70's- early 80's. Once that wasn't enough to keep up with the demands of raising a middle class family, then we started using credit to keep afloat. Then we started working longer and harder and giving up "perks" like vacations and health care. Wal Mart entered the American landscape just in time to offer crazy cheap items to those struggling to keep even. We all know what Wal Mart has done to the small independent business owner. It has been a downward spiral since then and there is no bottom in sight.
Man.
I feel faint.
I agree with you.
The main problem with supply side is that it is being supplied to a smaller and smaller group of people.
There are plenty of unfunded ideas out there - some of which might be incredible and revolutionary in fixing some problems.
But if one is not connected to the controllers of the money - you are fucked.
That said - there was a great deal of supply of money lent out for homes and the like - but it was illiquid and didn't really do much for society in general.
Burn up one's credit cards trying to create an asset? Maybe. But that money is very expensive and very short term.
For all this "supply side" economics - I don't see how the supply gets to the masses. It seems the only way money gets trickled down is in expensive and illiquid debt.
Some people DID have some equity in their homes. They did the stupid thing and rolled around in the mud of greed.
Perhaps Americans are to stupid or uneducated to make supply side work. "Hey - instead of creating something - lets spend it!"
Melonie
11-03-2008, 04:33 AM
in regard to the GDP ranking of various countries, you'll find that three of the top 5 countries ... Luxembourg, Iceland and Switzerland ... have achieved their high GDP via 'vampirism'. Their main economic engine is international banking / tax havens, which has taken a huge hit lately BTW. The other two have achieved their high GDP via commodity production and sales. Further down the list, Ireland has achieved its high GDP by offering itself as a corporate tax haven.
My point here is that every country with a GDP higher than Americas as achieved that higher GDP by either commodity production and sales (which America chooses not to do ... and will soon likely do even less) or by offering tax haven status to attract money away from America and other high tax countries ! While the first is arguably sustainable in the short term, the latter is directly proportional to both A. tax enforcement by America and other high tax countries, and B. the GDP of of America and other high tax countries.
Eric Stoner
11-03-2008, 09:05 AM
1. Denmark- High taxes, high wages, dynamic economic growth. (http://www.usatoday.com/money/world/2007-03-06-denmark-usat_N.htm)
2. Our employment figures are skewed. We only count those that are receiving unemployment benefits in our unemployment statistics. I know quite a few people that are out of work and have run out of benefits. Or those who were self employed (like strippers) who don't qualify for benefits in the first place. If I had to take a stab in the dark, I'd be willing to bet that the unemployed or underemployed figures are actually closer to 20%.
Denmark has had good economic growth and record low unemployment . They have a small, relatively homogenous population with a much more communal; less individualistic society than ours i.e. things like time with family are much more important to the average Dane than financial or individual success. They have a larger National tax burden BUT do not pay state & local taxes as we do.
And I hate to do this but facts are facts; the Rasmussen Government; recently re-elected to a third term, CUT TAXES ! They also had the tightest immigration policy of any country in the E.U. i.e. they don't import poor people.
Please stop making up your own statistics. There are two types of employment measures used in the U.S. : the "Payroll survey" and the Household Survey which measures total family employment ("Mom" or "Dad" might be working while the other is idle ) and the Payroll survey does not measure casual and part time employment as does the Household Survey.
Eric Stoner
11-03-2008, 09:09 AM
Here is a list of countries with the highest per-capita GDP:
http://www.nationmaster.com/graph/eco_gdp_percap-economy-gdp-nominal-per-capita
Here's a list of countries that pay the most taxes as a percent of GDP:
http://www.ctj.org/pdf/oecd07.pdf
Notice how all of the countries with per-capita GDP's higher than the US pay more taxes, with the exception of Qatar, which gets most of its revenue from oil.
Were you trying to prove or disprove MY POINT ? Did you READ your own links ?
Who has the fastest growing economy in Europe ? Ireland by far. Who has the lowest taxes ? Ireland.
Btw, most of those European countries have low defense budgets and few if any state or local taxes. We have a larger defense budget and plenty of state and local taxes.
Well, how about the fiscal & monetary policies of:
Kennedy & Dillon, Thatcher & Lawson, or Reagan & Volcker?
I realize that their benefits have been oversold, but you can make a case that all three instances pulled their respective economies out of serious recessions. While Maggie and Nigel were two birds of a feather, I think it's telling that the two US examples had a Republican and a Democrat working together in creating policy.