To many Demand side and Supply side economics sound like some sort of abstract economic terms with little or no reference points in the real world.
Here is a quick post in which I’m trying to explain why one works and the other does not.
Picture yourself in 1943. The government wishes to help with the next big advance in science and technology, to that end they are considering two proposals.
1) Tax companies and redistribute the money to every citizen with the strict instructions that the money has to be spent on the greatest invention of the twentieth century
Of course as you know the transistor was not yet invented, not in production state anyway, ( there was a German patent awarded but it was far from becoming a reality) so no matter how much money you gave people to buy one and no matter how much they demanded it there would be no transistor, there would be no “greatest invention of the twentieth century” . You could literally dump the contents of Fort Knox on someone’s doorstep and tell them to go out and demand to buy a “transistor” and of course they couldn’t do it. Further becasue the taxes took money form companies these would have to reduce their R&D budgets thus making transistors even more of a fantasy.
2) In the same effort to bring about the advance of science, the government would instead give huge tax breaks to companies that are focusing on R&D thus enabling them to allocate more resources to scientific research and discovery. Sure enough by 1947 Bell Labs discovers the potential of the transistor and by 1954 Texas Instruments produces the first silicon transistor.
The worldwide jobs and economic growth derived from the invention of the transistor cannot be underestimated.
Stimulating the economy by letting those who can invent and innovate and produce products results in unparalleled growth while the opposite results in the same kind of economic collapse that has has sunk all the unfortunate nations that embraced demand side economics.
well I for one don’t feel sorry for them. The prior administrations gave corporations all these tax breaks for development, and they developed alright, OVERSEAS. That is why you see other countries school scores, production etc. going up while ours in the us is going down. But I guess cons would rather discuss Sharpton’s hair or Jessie’s infidelity to his wife?
You’re the one discussing Sharpton’s hair and Jessie’s infidelity to his wife