I think that supply-side, trickle-down "economics" is more voodoo than legitimate economic theory. I believe it is an excuse to enrich the already entitled by adopting a top-down approach, rather than a demonstrably more inclusive bottom-up approach. And as I had occasionally quoted Galbraith in these forums regarding his views on supply-side economics, "After feeding oats to the horses, one should not gaze too closely at what trickles down to the sparrows." And so, I'd like to know what you think.
Ain't it, though. Galbraith had a little nugget in that regard as well: "Under capitalism, man exploits man. Under communism, it's just the opposite."
You somehow imply that the rich people would spend a large portion of their money. However we see rich actually continuing to horde wealth and increase their value. If the rich spent the same % of their money as your average american would (i suppose it would be more then they made, but even if it was only 80% or so), then you would see trickle down economics have some real word implications
Economics is psychology, therefore it is not an empirically based science. The fact that money is a defined quantifiable unit gives it the veneer of science. There are some definite tendencies though such as too much cash= inflation, but that's not a scientific law. Supply side is as good as most anything else then, one thing is for sure: the Laffer curve is a logical necessity and not eally revolutionary. There must lie some tax rate between 0 and 100% that maximizes government revenue, it's almost trivial. The problem with liberalism (basically economics and law based entirely on someone's personal idea of justice) is that there are certain psychological truisms that they ignore, such as that incentives matter. You cannot change tax rate and government redistribution without changing economic incentives. I laugh at the demos who say they will work harder if you raise their taxes, raise them to 95% then, see how hard they work.
I don't believe in supply side economics theory. However, all economics policies are based on demand side only...........they ignore the amount and quality of resources. And resources are the key to long term economic growth.
2 Major problems with the laffer curve: 1) He assumes that at 0% tax rate the government gets no revenue (which is obviously true) but also at 100% tax rate the government receives no revenue. (This is not true, the Soviet Union had more or less 100% tax rates and the government still had revenue) Conservatives usually use the laffer curve to claim that they should lower taxes from their current rates, when there is no evidence that lower the tax rates from where we are would actually increase government revenue.. That leads me to #2 and most important 2) Why in the world would anyone want a government to maximize its revenue?? I think this is why you don't here about it much, Democrats know its a defunct theory and maximizing government revenue goes againist everything Republicans claim they are for. We currently have huge deficits, no one is claiming now that lowering taxes would help us lower the deficit, which is exactly what Reagan and "Supply-siders" claim would happen. Although it is true that at some point between 0-100% tax rate the government would maximize revenue, there is more to the laffer curve than that. 5yr