Talk:Supply-side economics

Neutral Point of View: Reaganomics

It doesn't seem very encyclopedic. Words like smokescreen and the like are frequently used. Gillesp (talk) 02:34, 4 May 2014 (UTC)

Article too focused on arguing

This article needs an overhaul throughout because it lacks a clear description of the supply side proposal. It seems so focused on trying to argue against supply side perspectives that it constantly interrupts itself before it can really lay out the concepts.

After reading the whole article I remain confused about what supply side economics IS, mainly getting the message that whatever it is, it's rejected by many/most.

Some people in the talk sections below have tried to express this, I think, and are met with an echo of the page itself, a responder arguing against supply side economics instead of making an effort to better inform about what it is. Crcarlin (talk) 15:53, 14 April 2013 (UTC)

Geographical bias

As far as I was aware, supply side economics is not something that only applies to the United States, yet the opening paragraphs make it seem like the article is discussing American fiscal policy rather than the concept of supply side economics as a whole. Can someone fix this? — Preceding unsigned comment added by 2.27.51.226 (talk) 16:40, 25 January 2012 (UTC)

A layman's view of this article's deficiencies

Pluviosilla (talk) 16:45, 28 October 2008 (UTC)

I am not an economist, but I am deeply interested in economics; I have been reading The Economist magazine assiduously since 1978, and I want to offer an opinion.

Supply-side economics was never more than an economic heuristic that was intended to communicate republican tax policy in simple terms that the public could understand. It was not an economic system like Keynesianism or Monetarism, so attempts to refute the rigor of supply-side economics are out of place here. It would be like trying to refute "deficit spending" as a legitimate policy tool. Sometimes deficit spending is good policy, sometimes it isn't. And even the very best economic policy tools are routinely used by politicians at precisely the wrong moment for all the wrong reasons.

The thrust of this article is to *refute* supply side economics as an economic theory, and I argue that this approach is flawed. Thus the Wikipedia representative who defended the article as reflecting the majority report among academic economists is missing the point. Supply-side economics could not possibly be true, if you extrapolated tax cuts to 100%. Obviously, at some point, reducing taxes will make revenues go *down*. Supply-siders simply argue that some tax reductions under certain circumstances make revenues go up, and I would be surprised if any serious economist, even Paul Krugman, would refute that.

If the author of this article really wanted to broach the substance of the economic issues, then to be fair he would have had to broaden the scope of the discussion to examine the effect of tax policy, more generally speaking, on tax revenues. For instance, he should have included some material on comparative economics. What has been the effect on tax revenues of tax reform in Russian and the Baltic republics? Revenues have clearly increased in all of these countries under a flat tax regime, because of dynamics very similar to those Laffer was describing. When you quote the criticisms that Paul Krugman made of supply side economics, is it possible that you are not aware that Krugman was engaged in a polemic with a specific set of people in a specific context? I defy you to find any quotation by Krugman or anyone of his stature that denies that tax revenues have increased in Eastern European nations due to effects of what could be roughly called "supply-side" reforms.

Several people have criticized the lopsided use that the author makes of academic authorities. His selection of authorities clearly is lopsided, but I don't think this is the most egregious flaw in his use of quotations. He does something much worse: he subtlely and indirectly misrepresents the very people he quotes. So even when he quotes correctly, his quotes are deeply tendentious in that they invite the reader to make false inferences.

In particular, when the author wants to refute supply-side ideas, he adduces quotations that are critical and suggests that consensus opinion is dismissive of supply-side ideas. But when he makes reference to ideas that most economists embrace but he is uncomfortable with, he circumvents his references with qualifying expressions which imply the ideas are controversial.

For instance, about free trade and the law of comparative advantage, which *does* reflect consensus opinion among probably 98% of all economists, including Paul Krugman, he says, "Crucial to the operation of supply-side theory is the expansion of free trade and free movement of capital. It is argued that free capital movement, in addition to the classical reasoning of comparative advantage, frequently allows an economic expansion."

Notice the use of passive voice, "It is argued ...". Economists disagree about almost everything, but noone except Marxists and Nazis deny the importance of the law of comparative advantage. Economists might assign different levels of importance to free trade, but it is very rare indeed to find a professional economist who disputes that free trade is good for most people, most of the time. Paul Krugman and several other leading economists made news very recently by questioning some of the benefits of globalization for blue collar workers, but what was most newsworthy was that all of these economists, including democrats like Krugman, have a track record of supporting free trade (which is based on comparative advantage) for years, and if they criticize it now, their criticisms are hedged all about with qualifications and NOBODY recommends trade protection as a solution. But from this article, you would almost think that supply-side economics is disreputable with professional economists precisely because it adheres to the discredited "classical reasoning of comparative advantage." If so, then Paul Krugman is a classical economist, and who knows, maybe even a crypto supply-sider!!!

Finally, the author makes selective quotations alleging that republican tax policy is nothing but an attempt to relieve the tax burden of high earners. Why does he think this is an appropriate venue for imputing motives behind the tax policies of one of the two major political parties? Would the Wiki editors think it is appropriate to insert a sentence like, "Democrats mounted a campaign to expand government assistance to the elderly. Many economists speculate that this was in an attempt to buy votes." Does the second sentence belong in an encyclopedia article? One of the key characteristics of political religion is the dynamic of competing stigmatizations, where each side tries to portray the other as being venally motivated. Please.

The article has a defensive tone that makes it unclear who the intended audience is. Is he talking to the readership of an encyclopedia or is he trying to make points in a bar or a college bull session? In my humble opinion, the entire article should be deleted.

Pluviosilla (talk) 16:45, 28 October 2008 (UTC)

You've got lots of stuff there. First, remember that WP is user-edited. If you feel the article needs improving, then improve it. (I suggest starting slow, to get used to how things work, and be ready to have your edits undone and argued here.) The article's been around for a long time and has many authors.

A second point of more substance, Krugman's work significantly undercuts the importance of comparative advantage brief explanation. In spite of that, he and most economists mostly support free trade. Of the economists who support free trade in goods & services, many are more hesitant about free flow of investment capital. CRETOG8(t/c) 19:55, 28 October 2008 (UTC)

I —Preceding unsigned comment added by 68.206.206.228 (talk) 15:39, 5 November 2008 (UTC)

I agree wholeheartedly with Pluviosilla.

Let me reference what has motivated me to participate here: The new book "The End Of Prosperity" by Laffer, et.al.

My concern as a non-economist patriot is that it is crucial to educate, SOMEHOW, the voting public in basic economics. However, this article is a case in point. The whole area is predominated by myriad views, myriad underlying agendas, intellectual competition, bickering, and jealousy; in other words, a Tower of Babel. How on earth is this country going to come together without some intellectual consensus and resolution on this subject?

A crucial problem in this country is the naïveté and outright simple-mindedness of 90% of the electorate about how the economy works. That is, in turn, due to a profound failure of the education system in this country regarding that area of knowledge. I can remember when I was a senior engineering student in college, after having developed a fascination for political philosophy and economics that I stumbled across a sophomore economics text-book. As I thumbed through it, I encountered two facing pages – the left side was a treatment of socialism, and the right side was about capitalism, presented in such a way that the average college sophomore would perceive it all as eminently fair and balanced. The gist of the presentation was that each was equally valid, and this was accomplished with some of the most outrageous claims of the “benefits” of socialism. Having recently come through the period when we had “hide-under-your-desk” drills to help us survive a nuclear attack by the Soviet Union, I was outraged.

It is undeniably true that the left has dominated all levels of the field of education in this country since the 1930’s. Furthermore, it is fair to say that the left in this country is immensely indoctrinated to socialist ideas, starting with welfare-state-ism.

I believe that if a careful analysis of the American electorate were to be made, we would discover that the left is populated predominantly by individuals who have never participated in “capitalism”; i.e., people who have never started and/or run a successful business and learned the realities of “making payroll” every month, who have never been successful enough to become a member of the investment class, and who have no concept of the theory of money. Given that lack of insight from the left, and assuming that most of us have been exposed to the Christian concept of charity, we should be patient with those in our country who think a) there’s an infinite money supply somewhere, and b) the government should merely give money to the poor and bring them into the middle class. That's how we’d prove we’re a caring society, nobody would be wanting for the bare necessities in life, and we would all live happily ever after.

Whenever anyone tries to argue with that point of view without first making a successful attempt to create an awareness of just how an economy actually works, it precipitates hatred from the left. That results in accusations that the right is merely selfish, greedy and cruel, and, by God, DESERVES to have whatever wealth it has accumulated to be expropriated for others because it doesn't DESERVE to keep it and spend it as each sees fit.

You guys need go back to ground zero and get your act together. This nation and the world need it.

I would really like to see authoritative works like “Beyond Prosperity” become popular and appear on the best seller list. It (so far as I’ve read) has done an incredible job of, step by step, revealing economic realities that have been demonstrated over and over with our economy. If we could just get our electorate interested in and familiarized with the realities of economics, we might succeed in becoming One Nation again.

Sschale (talk) 16:56, 5 November 2008 (UTC)

Sschale, welcome. Like Pluviosilla, I encourage you to find specific points of this article which can be improved, with the same caveats about going slow and expecting argument. You make a lot of points, but you risk getting into a broad discussion not clearly related to this article. Check out Wikipedia:Talk_page and guidelines, and make sure this doesn't become a discussion forum. CRETOG8(t/c) 17:27, 5 November 2008 (UTC)

The Forgotten Interest Rate

It is widely known that raising and lowering the interst rate has a strong impact on economic activity. Yet, most discussions surrounding the impact of US tax cuts on economic activity fail to mention that those periods of economic growth which followed US tax cuts under both Reagan and Bush were accompanied by strong cuts in interest rates. If the increase in the tax base is largely the result of lowering interest rates, then the tax cuts have done nothing more than to cut tax revenue. —Preceding unsigned comment added by 72.152.83.127 (talk) 14:34, 31 October 2008 (UTC)

This article is laughably biased

It doesn't even accurately describe the theories it's trying to discredit. Reagan always called for spending cuts. He did not believe in running deficits, and he did not believe the tax cuts would COMPLETELY pay for themselves. He wanted to cut spending, but could not because he didn't have control of Congress.—Preceding unsigned comment added by 67.142.130.17 (talk • contribs) 08:27, November 13, 2008 UTC

(It must be wonderful to claim to know the mind of a master politician such as Reagan. Reagan had enough votes to be veto-proof so he could have vetoed the budget until Congress passed a balance budget. He was first and foremost a politician not an economist. He was also practical and knew the benefits of government spending having lived through the '30's so he never fully believed his own campaign rhetoric.). The notion the 'supply' creates its own 'demand' is incredulous. If that were the case then where is the demand for the millions of unsold American cars that people don't want to buy? It is and will always be, 'demand' creates 'supply'. Keep taxes low on lower and middle class and they will vote with their dollars for the products and indusrties that meet demands. Government spends for the future in infrastructure (US jobs) and public research that spins off private industry such as the transistor, microprocessor, computer, and internet. Supplyside economics did not produce those jobs... it was Keynesian economics.)—Preceding unsigned comment added by 67.162.147.39 (talk • contribs) 17:19, November 20, 2008 UTC

It must be wonderful to start a paragraph with "It must be wonderful to claim to know...", and then follow it with claims to know. I've never made such an idiotic argument, and never will, so I can never know the pleasure.

--OBloodyHell (talk) 04:16, 1 December 2009 (UTC)

"Supply creates it's own demand" is an incomplete summation of supply side economics, but works in many instances. It's a macroeconomic concept and therefore, in your example, you would need to look at the car industry long term as opposed to one cherry picked point. If it were possible to produce cars for $1,000 each, I suspect the volume would be higher than it is now. Supply-side economics attempts to allow people to produce more goods at cheaper prices. What's so hard to understand about that? 38.96.15.64 (talk) 22:11, 7 June 2011 (UTC)

Even the first paragraph makes me suspicious where it uses the deceptive euphemism of "adjusting" where it really means "reducing". Also, the word "your" that immediately follows is ungrammatical. —Preceding unsigned comment added by 68.223.154.18 (talk) 16:16, 7 October 2009 (UTC)

Rising Tide Lifts All Boats

The article incorrectly attributes this to "the Reagan Administration"

Missed it by 20 years - it was JFK. SEE Wikipedia entry on RTLAB:

http://en.wikipedia.org/wiki/A_rising_tide_lifts_all_boats[1] —Preceding unsigned comment added by BoerumHillJo (talk • contribs) 01:55, 12 January 2009 (UTC)

After reading several econ WP articles including Keynesian, I was stunned how opponents of this particular theory seem highly motivated to marginalize it as much as possible. Rather than fully presenting a coherent explanation of the theory and its virtues before exposing its flaws (as is typical with articles on controversial topics), the opponents seem intent on sprinkling counterpoints like land mines throughout the entire text. The theory isn't developed fully enough for me to understand before the attacks start, leaving me to believe that the article presents only a weak straw man. I don't have confidence in what is presented here, so I will seek enlightenment elsewhere. I want to hear both sides, but this is no way to do it. It's a shame when WP articles devolve like this. It only hurts WP as a whole. —Preceding unsigned comment added by 71.198.209.35 (talk) 08:36, 9 February 2009 (UTC)

Tax

Most of supply-side economics is not about increasing tax revenues. It's about unemployment, economic growth, and inflation. The Laffer curve is incidental (and/or long term) and this article concentrates far too much on it. Larklight (talk) 12:58, 9 February 2009 (UTC)

What's So Hard About Reorganizing?

Why don't we just have two articles (or two sections within a single article)?

One part could discuss supply-side economic theory, whereas the other part could discuss applications of supply-side economics and the outcomes of those applications.

That way, we could have the *facts* about supply-side economic theory (who said what, and the thought processes behind what was said) in one bloc, then we could have the *facts* about applications of supply-side economics (who did what, and the outcomes of those doings) in another.

It's not the responsiblity of Wikipedia to prove or disprove any theories. It is the responsibility of Wikipedia to provide the information pertaining to those theories.

If the information is properly and accurately presented, then the reader will be able to absorb and process the information and judge the effectiveness of the theory themselves. —Preceding unsigned comment added by 74.137.25.150 (talk) 04:36, 26 March 2009 (UTC)

--Monetarist Economics vs. Supply Side Economics--

This section is ridiculous. Ronald Reagan was a clear supply sider, but he was also a monetarist. The two are not mutually exclusive, and this section should be removed. —Preceding unsigned comment added by 70.177.246.46 (talk) 19:54, 29 March 2009 (UTC)

Reaganomics

I need some help with this topic as I am have some difficulty in economics is there anyone that can assist. Please?? —Preceding unsigned comment added by 162.119.68.249 (talk) 17:00, 9 May 2009 (UTC)

This is the place to discuss improvements to the Supply-side economics article. If you have questions about economics, one place to ask them is Wikipedia's Reference Desk. Tempshill (talk) 17:00, 8 June 2009 (UTC)

What empirical evidence exists?

A questioner at the Reference Desk asked the simple question: What empirical evidence, if any, supports the principles of supply-side and trickle-down economics? This article doesn't answer the question squarely; it has a great deal of talk about theory, but glosses over all of the observations that led to all the theory. There is some (disputed) evidence in the "Reaganomics" section — but I think the article would be greatly improved by a specific discussion of what events are taken to be evidence (disputed or not). Tempshill (talk) 16:59, 8 June 2009 (UTC)

Historical Origins

First sentence of the section: "Supply-side economics developed during the 1970s in response to the failure of Keynesian economic policy, and in particular the failure of demand management to stabilize Western economies during the stagflation of the 1970s, in the wake of the oil crisis in 1973.[6]"

I had know idea that it is a complete, straight-up fact that Keynesian economic policy is a failure! And here we are, in a world where economics has become a hard science like physics, and a bunch of jerk economists are recommending Keynesian economic policy to full us!

No, I'm just kidding--all in fun. Anyway, that seems like a bit of a generalization; surely it is more of a "response to Keynesian economic policy" than it is a response to the "failure" (as if it were an absolute, universally agreed upon fact among mainstream economists) of it. I do not have access to the book that is cited, so could someone check that? It seems a bit strange to me, seeing that this book is a textbook and all, that they would declare it a "failure" when that is by no means a definitive fact (of course, nothing in macroeconomic policy theories is a definitive fact).Treefingers1206 (talk) 22:20, 31 August 2010 (UTC)

Still laughably biased?

The entire fiscal policy of this article is still riddled with personal bias and looks more like as Reagan roast than an educational overview. I see no real talk has gone on this talk page recently. Is this section still under review as it needs a hardcore cleanup. The criticism portions spill far outside the "Criticism" section and there is a plethora of grammatical errors, leading me to believe a supply-side economics critic edited it while very, very angry. Furthermore, anyone coming here to look for encyclopedic knowledge of supply-side economics will find very little and will leave with misinformation about both the economic theory and the Reagan regime, which only partially applied supply-side economics during its reign. Much of what is here instead needs to be moved to the trickle-down economics article. —Preceding unsigned comment added by 75.148.5.169 (talk) 18:31, 14 October 2010 (UTC)

There is no evidence that this economic ideology has worked to improved government tax revenue. Even Friedman admits it would not do so. Perhaps it is republicans which are biased against reality, most Europeans recognize it correctly as a flawed ideology, so on average the unbiased description will contain legitimate criticism, just as you would criticize marxist economics. Ahahaha373 (talk) 18:37, 18 May 2012 (UTC)

Removed paragraph from lead

I have removed this paragraph from the lead:

There have been strong debates over the theory in America in past 30 years. In 2003, the Wall Street Journal declared the debate over the ability of supply-side economics to reduce taxes without cost has ended "with a whimper," after extensive modeling performed by the Congressional Budget Office (CBO) failed to support that possibility.

I think it is unduly negative considering that supply-side economists expect very few tax cuts to actually pay for themselves fully. This is already covered in the Criticism section anyway. –CWenger (talk) 22:25, 28 January 2011 (UTC)

Agreed that most economists do not expect tax cuts to pay for themselves. However, I added this paragraph because much of the discussion of taxes in the media and among everyday folks has the assumption that tax cuts DO pay for themselves. As wikipedia is widely used as an everyday resource it is very important that this fact be included in the summary. I have undone your deletion.Jytdog (talk) 12:26, 29 January 2011 (UTC)

I am fine with the paragraph as it has been rewritten. Thanks. –CWenger (talk) 16:31, 29 January 2011 (UTC)

Great! It is good to resolve something in a nice manner!

I agree! Wikipedia can be very frustrating sometimes... –CWenger (talk) 16:04, 30 January 2011 (UTC)

The Econoclasts by Brian Domitrovic

This article on supply side economics is inaccurate, unbalanced and unsatisfactory. It does not reflect well on Widipedia. It should be re-written by a scholar who knows the subject. Brian Domitrovic, the Harvard University economist who wrote The Econoclasts would be an excellent choice. — Preceding unsigned comment added by Martinweinstein (talk • contribs) 09:32, 28 February 2011 (UTC)

Not Harvard, but Sam Houston State University, which is so bad that it's unranked and has a 71% admissions acceptance rate. Jwray (talk) 02:04, 20 March 2011 (UTC)

Triple merger with Reaganomics and Trickle-down economics

I think it's a good idea because they're all the same subject. Second? Jwray (talk) 23:02, 19 March 2011 (UTC)

Possibly trickle-down economics. I'd argue against Reaganomics, though, because if you look at the page you will see this policy involved more than simply tax cuts, which is what supply-side economics primarily is. –CWenger (talk) 23:19, 19 March 2011 (UTC)

Supply Side Economics - Taxes, Deficits, and Debt

It is my understanding that the whole thrust of supply side economics is a cost of capital exercise. Meaning that the private sector realizes its cost of capital on an after tax basis. Capital financing in the private sector takes two forms - debt (bonds) and equity (stocks). Capital and taxes being two costs in the production of any good, lowering the after tax cost of capital leads to an increase in production for a given amount of demand - ie, firms compete for that demand.

The capital gains tax cuts of the Reagan era focused solely on the equity side of finance. Supply side economics applications in government policy is missing a key ingredient - a term structure device. A lot of private sector capital financing relies on the credit markets. Debt instruments are fixed term (One month to 30 years) by their very nature. And so, if the federal government wanted to lower the after tax cost of capital across a term structure, it would sell a term structure instrument.

This is why supply side economics has no foundations in macro-economic theory. There is no financial instrument that embodies that policy.

Instead what we have are inflation indexed bonds (introduced by Bob Rubin in 1997) that permit financial firms to speculate on the direction of commodities and drive inflation higher at their leisure. 24.3.100.36 (talk) 05:05, 30 March 2011 (UTC)

Opposition in the opener

Why is a CNBC reporter being so extensively quoted in the opener? To me, the opener reads like a planned refutation of the whole idea, as if it were universally accepted as being discredited. I'm not sure that's the case...InFairness (talk) 04:15, 13 August 2011 (UTC)

I consider myself a supply-sider and I don't find the quotes too negative. It seems like a pretty decent overview by mainstream economic thought. It would be preferable to find somebody more notable saying essentially the same thing, but it is acceptable as it stands in my opinion. However, for a bit of balance, since it is true that there is virtually nothing positive is said in the lead, maybe we could find somebody attributing the economic booms of the 1920s, 60s, and 80s to supply-side tax cuts of Coolidge, Kennedy, and Reagan, respectively. –CWenger (^ • @) 04:41, 13 August 2011 (UTC)

It didn't start out that way! Somebody didn't like the citation of the WSJ article indicating that "the debate was over" that cutting taxes could increase revenue and added a bunch of text to play down/discredit the quote. So there is overgrowth... you can see it in the history 5 August 2011 by 76.218.32.141. The citation of the WSJ article is useful in the lede as there is so much loose talk about raising revenue by cutting taxes, and as the lede indicates the real goal of supply side is not to increase govt revenue but rather to unleash economic growth. Jytdog (talk) 17:40, 13 August 2011 (UTC)

Bad Link Epidemic

http://www.highbeam.com/doc/1G1-20004037.html does not lead to the article mentioned, much like reference #10. Is it a dead link, or merely an advertisement for this highbeam service?

169.231.35.75 (talk) —Preceding undated comment added 04:08, 26 April 2012 (UTC).

Employment growth by top tax rate image

I've started a centralised discussion here regarding File:Employment growth by top tax rate.jpg, which is used in this article. Gabbe (talk) 09:59, 6 November 2012 (UTC)

Marx and Smith paragraph

This paragraph is stupid. The connotation is that supply side theory relates to the left (Marx) and the right (Smith), but since this isn't explicitly stated it comes of as a random collection of facts. — Preceding unsigned comment added by 192.12.184.6 (talk) 17:28, 27 November 2012 (UTC)