Back in the 1980s one of the political phrases that came into vogue was “supply-side economics.” It was demagogued by the left on two fronts. First, critics insinuated that only the rich got tax cuts; in reality, Kemp-Roth tax reduction was across-the-board. Second, they misrepresented the supply-side concept as “trickle-down economics” – wealth transfer to the rich intended to spur business activity that will “trickle down” to lower income brackets.
One problem with the slur is that it regards tax cuts as a subsidy, basically the same as funding stadiums with tax dollars. In reality, tax cuts are the opposite of wealth transfer. Quoting Rush Limbaugh from memory, “It ain’t yer [the government’s] money.” Another is that it equates supply with the rich. Many businesses are not run by the rich. There are rich people (e.g. Randi Weingarten) who may invest in producers but do not produce anything directly; their direct economic activity is limited to consumption and/or rent-seeking.
The greater problem is that the “trickle-down” canard treats tax policy as the only factor relevant to spurring or hindering supply. Even as a political novice who had yet to hear the name Thomas Sowell I was able to figure out that supply-side economics concerned all such factors, and that demand-side economics revolved around all obstacles to consumption. Taxation is an impediment to both. The other great factor that government must address is its own laws. Regulations prohibit some or all parties from entering certain industries, or (more relevant to this discussion) they impose compliance costs on producers.
Likewise, demand-side economics should also address all barriers to consumption and not just tax rates (or resort to subsidy). If some regulations can depress supply, what other regulations depress demand?
Milton Friedman; “If you put the federal government in charge of the Sahara Desert, in five years there’d be a shortage of sand.”
Companion from me. When you put the government in charge of selling recreational drugs, in five years (more like three) all the drug dealers are broke.
Since 2008: Treasury auction goes sideways? Reality about to assert itself with in the form of high rates? All you need is this one simple trick, just have the Fed take them for cheap.
If some regulations can depress supply, what other regulations depress demand?
The regime imposed a regulation requiring that the FAA hire people likely to prove incompetent as air traffic controllers. It further required that such people also be hired as pilots and no doubt other aviation related jobs I haven’t heard about.
End result and likely goal- people would have learned that flying on an American airline or to an American airport was unsafe. My guess is that the Trump administration will undo this damage before that actually happens but it’s the thought that counts.
Our globalist regime plainly hated that people could just buy a airline ticket and go wherever they wanted. So they came up with a scheme to end that- DEI hiring. Enough accidents not only would not only drastically decreased the demand for air travel it would have bankrupted and destroyed the American airline industry.
I could go on about DEI for a lot longer- the fate of Boeing comes to mind- but I won’t. Likely everyone reading this has their own stories on the topic, as do I.
As an aside, it just seems weird to me to be examining any proposed economic policy in any other context outside of the sheer malice the regime has had against the United States and the American people. Even when it reacts to events and arranges for countermeasures we find that what actually gets written into law produces effects that are diametrically opposed to its supposed intent. For example, the CHIPS act was reportedly intended to facilitate the production of semiconductors in the US- but also required the hiring of female construction workers who don’t exist.
End result, it made the situation worse. This is either deliberate malice or incompetence so thorough that it may as well be. This needs to end, obviously. We’ll see if Trump can get it done. Otherwise, we won’t need to worry about such things as the national tax policy because the nation won’t exist.