Why Supply Side Economics Wonât Solve the Current Economic Malaise There is currently a debate regarding the appropriate policy response to the current economic situation. The arguments can be broken down along two lines â supply side and Keynesian. While supply side economics may be appropriate in some situations, they are completely inappropriate for the current problems we face. As the above data indicate, supply side policies are not needed in the current environment. Businesses have ample cash on their balance sheets and yet are still not hiring people. Neither businesses nor individuals are overtaxed; in fact, taxes as a percent of GDP are near their lowest in over 60 years. And finally, there is no evidence that regulation is in fact the job killer many tout it to be. There may be a time when supply side economics will be an appropriate policy response. But now is not such a time. http://www.ritholtz.com/blog/2011/0...mics-wont-solve-the-current-economic-malaise/
"republican solutions will not solve our economic problems" You're probably right. Obama has fucked things up so bad, nothing can save us.
I thought it was Reagan and Bush who quadrupled the national debt and Bush 2 who doubled it and left Obama with a trillion dollar deficit,2 wars, numerous new federal agencies,an economic depression,a new medicare program etc
here was the first cogent reply in the comments section. --- Taxes are incredibly low? For whom? The 47% who do not pay income tax? Well you should have asked me and I would tell you a different story. My property tax bill has increased $4000 in 8 years. My sales tax rate has increased 20%. And, at every turn it seems my state government is asking for more money and at every turn the national Democratic party is preaching higher taxes. And how about the cost of things that matter most? Energy prices: higher. College tuition: more expensive. Health care costs: more expensive. Food prices: more expensive. The economy is failing precisely because the political elite believe they have the power to fix it. So they devalue the currency, bail out failed banks, throw money away on fraudulent âgreenâ jobs, raise the cost on companies of actually employing people and keep paying people not to work. When so much money is wasted on failed efforts would you expect the economy to flourish? Would you? --- 1. the graphs the author showed to support his idea that taxes were low were most likely very duplicitous. Income taxes as a percent of gdp? Of course they go down when so many are out of work. That is an obvious situation when 48% of the country is not paying income tax. 2. Finally the companies are accumulating cash for multiple reasons. Right now they do not believe it is a good time to invest. Given the clowns running the govt... can you blame them.
When Bush took office, the national debt was $5.73 trillion. When he left 8 years later, it was $10.7 trillion. In less than 3 years under Obama the national debt is at $14.7 trillion. Your point?
When Bush left he didnt just leave,he left with a trillion dollar deficit,2 wars to pay for,medicare drugs to pay for, numerous new federal agencies to pay for and an economic depression Obama didn't come into office with a balanced budget and turn it into a trillion dollar deficit with numerous obligations to continue paying for
two more comments worth reading from the article on ritzholts' site DeDude Says: September 17th, 2011 at 8:01 am Supply side policies are beneficial when there is a supply problem. If prices are high because there is a lack of product and a lack of investment capital to fund the increase in production (to meet demand), then supply side policies can be effective in increasing economic activity. There is no data to support the idea that we have such a problem now or that we have had it for decades. Our policies since Reagan has send huge amounts of capital to corporations and the rich investor class and all data seem to suggest that if anything they have such an excess of capital that it is creating problems. Demand side policies are beneficial when there is a shortage of demand. All data seems to suggest that we have a severe excess of capacity in our economy and more demand is needed for the economy to operate at full capacity. The cost to GDP of 10 million people wanting but unable to find jobs, is about $1 trillion per year of lost GDP. The specific demand side policy that is most effective and whether to conduct it in credit or by taxing away some of that excess capital from the rich and corporations is another debate. The idea that all the problems can somehow be solved with no pain by some magic policy âpillâ is absurd and immature thinking. A large chunk of the economic growth since Reagan has been the result of debt based spending. The consumer class has not had much income growth since that time so the increased consumption was based on increased debt/decreased savings. A lot of wasteful military spending increases was also done by increasing public debt. We are getting closer to the point where increased debt will not be able to contribute to growth and we have to find other models for sustainable growth or face a slow painful decline. m111ark Says: September 17th, 2011 at 8:08 am Seems weâve got a lot of power hitters here who couldnât field a ball thrown by a 6 year old. Debt-money destroys. Debt-free money prospers. âUntil you change the way money works you change nothing.â I first heard this, without completely understanding it, from Michael Ruppert, so I give him credit here as he is the first person I know of to use that specific phrase. Those of you who chance to read this may not understand it either; but itâs fundamental to our economic predicament. Thatâs the issue, the critical human rights issue of the 21st. century, first heard by me from Damon Vrabel. Iâve given you all you need to begin your own understanding of what we face. Who will follow up?