Supply-side VS. Keynesian economics

[OCinBuffalo]

That's just an incredibly stupid question. Massive spending didn't usher in squat. The end of the war, people going back to work with a sense of stablility, along with the government relaxint it's tight interventionist policies and the REDUCTION of the monetary expansionism you credit with this prosperity is precisely what led to it.

 

An economy is the net production of all goods and serices in a society. How does blowing up **** and passing around printed paper fiat money grow that? F-tard.

Not to mention the historical fact that every industrialized country's factories were bombed to hell and gone at the end of WWII but ours.

 

I am convinced that while this created the boom in the 50s and early 60s, it also created the LBJ/Jimmy Hoffa sensibility that taxing the hell out of corporations and individuals is OK. After all we are America, and we can "afford" the taxes, since "we make so much money". It also created the notion that paying uneducated, low-skilled people, whose skills are not transferable to another job and who therefore can't get a similar job if they are laid off, $70k+ a year for life, because they are "entitled", is a good idea.

 

They got away with it when we were the only game in town. Now, it simply doesn't make sense.

[drnykterstein]

No he wasn't. As we have heard a thousand million times, he was a Neo-con.

I bet he was no true Scotsman either. I can never get past even the first sentence in anything you post without hitting piles of bull ****.

 

Supply-side economics is a school of macroeconomic thought that argues that economic growth can be most effectively created by lowering barriers for people to produce (supply) goods and services, such as adjusting income tax and capital gains tax rates, and by allowing greater flexibility by reducing regulation. Consumers will then benefit from a greater supply of goods and services at lower prices.

 

-Bush lowered taxes (Economic Growth and Tax Relief Reconciliation Act of 2001)

-Bush cut the capital gains tax (Jobs and Growth Tax Relief Reconciliation Act of 2003)

-Bush strongly favored and pushed financial deregulation

-Bush gave us all an $800 Tax rebate (can you get more supply side than this?)

 

What more could the guy do to support Supply-Side Economic policies than he already did?

[DC Tom]

...low-skilled people, whose skills are not transferable to another job...

 

You want to maybe think about that statement a little?

[OCinBuffalo]

I bet he was no true Scotsman either. I can never get past even the first sentence in anything you post without hitting piles of bull ****.

 

 

 

-Bush lowered taxes (Economic Growth and Tax Relief Reconciliation Act of 2001)

-Bush cut the capital gains tax (Jobs and Growth Tax Relief Reconciliation Act of 2003)

-Bush strongly favored and pushed financial deregulation

-Bush gave us all an $800 Tax rebate (can you get more supply side than this?)

 

What more could the guy do to support Supply-Side Economic policies than he already did?

Ah yes, the cherry picked argument, we are all quite familiar with it.

 

How about the fact that Bush, and I know it's difficult for you to get this because you are a prole at heart, wasn't the only factor in government during his time as President? You'd like to blame Bush solely, because that's what the party tells you to think, but Congress is also to blame. We aren't a dictatorship, and the fact that taxes got cut, and a few regulations modified doesn't offset the ridiculous spending that went on, by both Democrats and Republicans. I am talking massive spending in addition to the wars.

 

There's nothing "supply side" about that. Spending on earmarks, or prescription drug plans, does not retrain the workforce nor does it cause more goods/services to be produced. If you knew economics you would know that.

 

For example, Reagan massive increase in defense spending not only targeted the building of weapons, but it also targeted the training of soldiers, etc. Those soldiers got out of the army with instantly transferable skills that were in demand. So, increasing the skill set of the labor force is a supply side, not Keynesian, policy. In contrast, rather than increasing the skill set of a worker, Keynesian policy hires that worker to work for the government, or a contractor of the government, without doing anything to improve the skill of the worker. The labor pool doesn't get better, thus creating more economic opportunity that can be leveraged. Instead, the labor pool only gets smaller, thereby forcing business to pay more for skill sets they need.

 

I will stop there, and let's see if you can comprehend any of this. See, I don't need wiki to do my thinking for me. I will continue if you show any signs of understanding.

 

You want to maybe think about that statement a little?

How many auto workers that get laid off tomorrow...can go make $70k a year at another job?

 

I did my additional thinking, time for you to do yours.

[drnykterstein]

Ah yes, the cherry picked argument, we are all quite familiar with it.

 

How about the fact that Bush, and I know it's difficult for you to get this because you are a prole at heart, wasn't the only factor in government during his time as President? You'd like to blame Bush solely, because that's what the party tells you to think, but Congress is also to blame. We aren't a dictatorship, and the fact that taxes got cut, and a few regulations modified doesn't offset the ridiculous spending that went on, by both Democrats and Republicans. I am talking massive spending in addition to the wars.

 

There's nothing "supply side" about that. Spending on earmarks, or prescription drug plans, does not retrain the workforce nor does it cause more goods/services to be produced. If you knew economics you would know that.

 

For example, Reagan massive increase in defense spending not only targeted the building of weapons, but it also targeted the training of soldiers, etc. Those soldiers got out of the army with instantly transferable skills that were in demand. So, increasing the skill set of the labor force is a supply side, not Keynesian, policy. In contrast, rather than increasing the skill set of a worker, Keynesian policy hires that worker to work for the government, or a contractor of the government, without doing anything to improve the skill of the worker. The labor pool doesn't get better, thus creating more economic opportunity that can be leveraged. Instead, the labor pool only gets smaller, thereby forcing business to pay more for skill sets they need.

I could be reasonable an accept portions of this as true. However I do wonder what the point of being reasonable with a nutcase like you is. Would you ever agree to a statement such as this...

 

How about the fact that Obama, and I know it's difficult for you to get this because you are a prole at heart, wasn't the only factor in government during his time as President? You'd like to blame Obama solely, because that's what the party tells you to think, but Congress is also to blame.

[IDBillzFan]

...the Bush tax cuts is suppose to add $200 Billion to the national debt for 2011, the tax cuts for the "wealthy" make up $40 Billion out of the $200 Billion. So please, don't embarrass yourselves any further with this argument that it's the tax cuts for the "wealthy" that is the major cost of the Bush Tax cuts, which only make up 20% of the tax cuts.

That's an amazing statistic. Not questioning it, but where did you get that info? Its just the kind of thing I would LOVE to point out to some of my California friends.

[Magox]

You hit on a concept most liberals (and I suppose conservatives for that matter) don't understand about the "supply side" philosophy. The relationship between tax rate and tax revenue isn't linear but rather a bell curve, or in this case the Laffer Curve.

 

http://en.wikipedia.org/wiki/Laffer_curve

 

*Wiki links are not endorsed for accuracy of opinion and are simply provided to bring familiarity.

I happen to understand the Laffer curve very well, and that is why I stated

Tax cuts do promote more growth but they also can add to deficits as well.

 

I suggest you go back and read again that link you provided. It is quite clear you don't fully understand the concept of the Laffer Curve. The Laffer Curve does not state that all tax cuts are paid for, hence the curve. It also argues that if you tax too much, revenues go down. At some point too much or too little taxation adds to the federal budget. It's a fact that the Bush Tax cuts fits the bill as too little taxation in regards to adding to the deficit.

 

 

 

That's an amazing statistic. Not questioning it, but where did you get that info? Its just the kind of thing I would LOVE to point out to some of my California friends.

From the CBO

 

The nonpartisan Congressional Budget Office predicts continuing all measures will add nearly $4 trillion to the debt in ten years. Tax breaks for the wealthy would account for less than a quarter of that figure, about $700 billion.

 

Lawmakers are talking about a one-year extension of all Bush tax cuts, which would add approximately $200 billion to the debt in 2011. Tax breaks for the wealthy would account for about $40 billion of that increase.

 

It shows you that this stand that the Liberals are making is purely political, not that I blame them, coming from their point of view. $40 Billion in the whole scheme of things really isn't that much, but they HAVE to fight this tooth and nail. They HAVE to try to get their base (progressives) riled up. If they were to lay down for the evil conservatives and "wealthy" then their whole argument they've been making over the last couple of years that somehow the "Bush tax cuts" and "policies" of the past eight years that got us into this mess, would be all for not. THink about it.

 

You hammer conservatives for giving tax breaks for the "rich", you get all the lemmings to parrot your talking points (like Pasta Joe), and you continue this strategy for a couple years and then all of a sudden when the time comes to let the tax cuts expire, you endorse the policies of the "past eight years" and you sign it into law.

 

They boxed themselves into a corner.

Edited August 31, 2010 by Magox

[OCinBuffalo]

I could be reasonable an accept portions of this as true. However I do wonder what the point of being reasonable with a nutcase like you is. Would you ever agree to a statement such as this...

What's wrong conner? Starting to like the feeling of actually knowing something about economics a little too much?

 

Of course we can't hang everything on Obama. Personally, I feel that when it comes to things like health care, he honestly had no idea that Pelosi, and the tools at HHS, were waiting in the tall grass for him. I think he expected them to create what he laid out in the campaign, word for word, and when they didn't, he was shocked. Now, I can blame Obama for leaving health care to that nitwit in the first place. And, I can blame him for breaking his own campaign promise, and what he ran against Hillary on, by forcing everyone to buy health care. But, ultimately, I blame all of them for the fact that the policy does not cut cost and in many areas raises it exponentially.

 

Now I know this is going to be difficult but,

 

Obama = Democrat

Pelosi = Democrat

Reid = Democrat

 

The Democrats are in charge, and have been in charge of Congress for 4 years. Before you say anything, look at that list again. I have no problem blaming Bush's 2nd term on him and the Republican congress, as well as Pelosi and her crowd, for creating this mess. Just the same as I have no problem blaming that list for failing so miserably the last 2 years. See, Scott Brown taking Teddy Kennedy's seat? That's not the Republicans fault...there's no way that should have possible. That's the list above's fault, especially when voters in their own party made it happen.

[Dave_In_Norfolk]

Ok, I would say that you are making an intellectually dishonest argument, but I'm not quite sure that in your instance it fits the bill.

 

Most economists would agree that the 40's expansion was due to WWII and not the "Public Works Program".

WWII was a massive government works program. Factories, day cares, housing, jobs as soldiers....and on and on.

 

The New Deal was too small, that's the point. and look what happened in 1937 when they ended many new deal programs, the unemployment returned

 

Not to mention the fact that so many New Deal programs bolstered the economy for decades

 

Not to mention the historical fact that every industrialized country's factories were bombed to hell and gone at the end of WWII but ours.

 

Great point! And where did these ruined economies get money to buy out goods from? Hint, you will hate the answer

 

Big government not only saved our econmy, but Europes and Japan's as well

 

Lovin it!

[Magox]

WWII was a massive government works program. Factories, day cares, housing, jobs as soldiers....and on and on.

 

The New Deal was too small, that's the point. and look what happened in 1937 when they ended many new deal programs, the unemployment returned

 

Not to mention the fact that so many New Deal programs bolstered the economy for decades

 

You do know that Fannie Mae was created as a result of the New Deal don't you?

 

Sometimes you have to take snapshots from a further distance to truly gauge it's true effectiviness....

[Dave_In_Norfolk]

You do know that Fannie Mae was created as a result of the New Deal don't you?

 

Sometimes you have to take snapshots from a further distance to truly gauge it's true effectiviness....

Does this mean you are giving me the point that WW2 government spending helped the economy? As did the Marshall Plan's massive spending?

[OCinBuffalo]

WWII was a massive government works program. Factories, day cares, housing, jobs as soldiers....and on and on.

 

The New Deal was too small, that's the point. and look what happened in 1937 when they ended many new deal programs, the unemployment returned

 

Not to mention the fact that so many New Deal programs bolstered the economy for decades

 

 

Great point! And where did these ruined economies get money to buy out goods from? Hint, you will hate the answer

 

Big government not only saved our econmy, but Europes and Japan's as well

 

Lovin it!

 

Ahh, arguing with idiots, my favorite thing. Do yourself a favor and find out the terms of the aid we, and the rest of the world, gave Europe and Japan, and then, find out how they used our money.

 

You will find that supply side economics were employed in on both cases. All the "socialization" of their economies did not occur until after these economies had stabilized and then grew rapidly due to pent up demand. In all cases, those that did chose Keynesian models AFTER they had recovered, or, they chose socialist models from the get-go, and most haven't created serious competition for the US since.

 

And of course, you are creating another cherry-picked, historically ignorant argument: the effect was not Europe/Japan's economies and making them go, that was the cause. The effect we required was to build a bulwark against the Soviets, which was the true goal. We couldn't take chances, so we dumped a whole bunch of money on these countries..none of which has to do with the value of Keynesian policy.

[Magox]

Does this mean you are giving me the point that WW2 government spending helped the economy? As did the Marshall Plan's massive spending?

Yes, government WW II spending did help the economy. And What the !@#$??

[Peevo]

A Master's degree in Economics, History, or Political Science I do not have, but I have an honest question about the effectiveness of infrastructure spending/repair.

 

The WPA and other public works programs essentially built our entire current functioning infrastructure we still use today. With the exception of the Interstate highway (50s) and obviously internet infrastructure (arpanet of the 1970's), we're still using, especially here in old ass Buffalo, the same hospitals, schools, roads, bridges and sewer systems, and power grid erected in the 1930's and before.

 

The NYC subway was finished in the 1930's. My high school was finished in 1939 and still going strong. That thing is so well made its ridiculous. When at Kenmore West in 2002 the kitchen and cafeteria burnt to the ground, they had to use dynamite to blow up the wall because a wrecking ball simply bounced off it. A huge wrecking ball couldn't take the wall down.

 

My point is that this stuff has a shelf life. I've read parts of the northeast's sewer system is over 150 years old. Don't you think it's time for an upgrade? What's wrong with that? Put people to work and literally rebuild our country. Stuff breaks.

 

We could use new bridges, new roads, new hospitals, a new power grid.

 

Call me a liberal weirdo but isn't that really what our taxes should be spent on, our infrastructure? Is there ANY candidate on either aisle talking about how our power grid is almost maxed out, how we're steadily running out of IP addresses, our crumbling highway system?

[Magox]

A Master's degree in Economics, History, or Political Science I do not have, but I have an honest question about the effectiveness of infrastructure spending/repair.

 

The WPA and other public works programs essentially built our entire current functioning infrastructure we still use today. With the exception of the Interstate highway (50s) and obviously internet infrastructure (arpanet of the 1970's), we're still using, especially here in old ass Buffalo, the same hospitals, schools, roads, bridges and sewer systems, and power grid erected in the 1930's and before.

 

The NYC subway was finished in the 1930's. My high school was finished in 1939 and still going strong. That thing is so well made its ridiculous. When at Kenmore West in 2002 the kitchen and cafeteria burnt to the ground, they had to use dynamite to blow up the wall because a wrecking ball simply bounced off it. A huge wrecking ball couldn't take the wall down.

 

My point is that this stuff has a shelf life. I've read parts of the northeast's sewer system is over 150 years old. Don't you think it's time for an upgrade? What's wrong with that? Put people to work and literally rebuild our country. Stuff breaks.

 

We could use new bridges, new roads, new hospitals, a new power grid.

 

Call me a liberal weirdo but isn't that really what our taxes should be spent on, our infrastructure? Is there ANY candidate on either aisle talking about how our power grid is almost maxed out, how we're steadily running out of IP addresses, our crumbling highway system?

No, very valid points. Too often we classify everything in a black or white sort of context. All spending bad, all tax cuts good or vice a versa.

 

The reality is that there is much more wasted spending from the government than there is in the corporate world. I'd rather have businesses and individuals keep more of what they earn to determine what they wish to do with it rather than government taxing these entities and individuals to try to stimulate the economy.

 

Infrastructure spending is one of the more stimulative ways the government can spend money. But it just can't be any infrastructure project, not for the sake of just spending money to provide temporary jobs that at the end are for projects that really aren't that important. Those examples you gave are great ways the government spent money, where we actually got a return back on our investment through efficiency.

 

Since the majority of the infrastructure is already in place for roads and bridges there really isn't nearly as much money that we could spend effectively on these projects. Sure, there are some areas that could get upgraded and yes it would give a temporary boost, but it isn't a sustaining solution.

 

Once those projects end, then what?

 

The reality is that we are in a massive hole, and spending should not be the cornerstone of our strategy to get out of this mess. Only through the private sector will we be able to climb out of this hole, the main role of the government should be to provide a positive business environment to thrive, and it's clear to everyone (unless you are lemming) that this administration doesn't have a clue in how to do that.

 

I remember posting a thread about a year ago, a study done by JP Morgan http://www.washingtonexaminer.com/opinion/blogs/beltway-confidential/Less-than-10-percent-of-Obama-cabinet-has-private-sector-experience-73911212.html showed that Obama's cabinet doesn't have hardly any private sector experience. Less than 10% of Obamas cabinet has private sector experience, making it BY FAR the least experienced cabinet in US History.

 

Some of the lemmings on this board tried to criticize me for this, but I knew that this would be a factor. How can you design a plan for the economy to grow jobs when you are a bunch of lawyers who don't have private sector experience?

[OCinBuffalo]

A Master's degree in Economics, History, or Political Science I do not have, but I have an honest question about the effectiveness of infrastructure spending/repair.

 

The WPA and other public works programs essentially built our entire current functioning infrastructure we still use today. With the exception of the Interstate highway (50s) and obviously internet infrastructure (arpanet of the 1970's), we're still using, especially here in old ass Buffalo, the same hospitals, schools, roads, bridges and sewer systems, and power grid erected in the 1930's and before.

 

The NYC subway was finished in the 1930's. My high school was finished in 1939 and still going strong. That thing is so well made its ridiculous. When at Kenmore West in 2002 the kitchen and cafeteria burnt to the ground, they had to use dynamite to blow up the wall because a wrecking ball simply bounced off it. A huge wrecking ball couldn't take the wall down.

 

My point is that this stuff has a shelf life. I've read parts of the northeast's sewer system is over 150 years old. Don't you think it's time for an upgrade? What's wrong with that? Put people to work and literally rebuild our country. Stuff breaks.

 

We could use new bridges, new roads, new hospitals, a new power grid.

 

Call me a liberal weirdo but isn't that really what our taxes should be spent on, our infrastructure? Is there ANY candidate on either aisle talking about how our power grid is almost maxed out, how we're steadily running out of IP addresses, our crumbling highway system?

This is a fine example to illustrate not only Demand side vs. Supply Side, but also, the difference between valid liberal motives, and retarded liberal methods.

 

The motive is clear and convincing: let's invest in our infrastructure, as that will pay dividends if the private sector can leverage these improvements into business opportunities.

 

The method is retarded because its about paying off political interests rather than creating growth: let's permanently hire, or send money to state governments so they can permanently hire, and therefore never fire, more government employees, or to keep the ones we can't afford, creating even more drag on growth, in terms of taxes on the private sector. Sure, this may create/keep demand. But, for how long? You will run out or artificial money to keep paying for this artificial demand, and you will drive up interest rates = Jimmy Carter Stagflation. And, even in a perfect Keynesian wet dream, how in the hell is the private sector supposed to respond to this new demand, when all their capital is being taxed away?

 

Specific example: if you build wonderful new highways, but my trucking company can't afford to hire new drivers and buy new trucks, because you hired away all the labor I might have hired, making it cost more for me to get new drivers, and, you taxed away most of my profits so I can't afford new trucks...I can't leverage your new highway and grow my company. Now, your new highway has cost every trucking company big time, all you have really accomplished is moving the bottle neck from one place to another, and this sector of the economy stagnates while also indirectly stagnating all its suppliers and vendors.

 

Again, there's nothing wrong with the motive, but the method is retarded.

 

How about this as an alternative: instead of building the highway with government workers, you invest in trucker training programs, giving tax breaks and low interest loans. Instead of increasing capital taxes, you cut them. And, instead of hiring government workers to placate your union masters, you give a contract to the lowest bidder to build the highway. The private sector benefits from all of these methods, growth is created, and the increase in taxes pays for the highway contract. This is therefore...not retarded.

Edited September 1, 2010 by OCinBuffalo

[Dave_In_Norfolk]

There is a fundamental difference.

 

1) The question is, if the government were to give you a $1000 tax cut as opposed to the government increasing your taxes by $1000, who will most likely spend it more efficiently, you or the government?

 

2) Corporations in many cases prove that they can spend their money in a much more stimulative manner than the government, so I am completely on the supply side of economics.

 

1) You are ignorant. If you actually think priming the pump is simply raising taxes you are simply parotting the right wing trash line. Save that for your hero Larry Kudlow when you are watching him and talking to the tv.

 

2) Do they? Like taking money and investing in China? Great! A global corportion has a goal of earning money, not creating jobs in America. You totally miss that point in all your posts. I suppose if the corporations had another tax cut they would simply ignore weak consumer confidence and invest in workers, machinery and surplus supply just because they can, right?

[Magox]

1) You are ignorant. If you actually think priming the pump is simply raising taxes you are simply parotting the right wing trash line. Save that for your hero Larry Kudlow when you are watching him and talking to the tv.

 

2) Do they? Like taking money and investing in China? Great! A global corportion has a goal of earning money, not creating jobs in America. You totally miss that point in all your posts. I suppose if the corporations had another tax cut they would simply ignore weak consumer confidence and invest in workers, machinery and surplus supply just because they can, right?

No one takes you seriously.

[Gary M]

Did it work in the 40's?

 

 

Just for fun, I'll argue that these two systems are almost identical

 

 

a) Supply Side= pump money into the economy with tax cuts and borrowed money like Reagan

 

b) Keynesian=Borrowing money and using it to invest, build and directly create jobs

 

What a horrible comparison,

 

Tax cuts do not "pump money into the economy" they let people/companies keep what they earned. Which usually gets spent on new hires and capital expenditures, and do not increase government debt if accompanied by spending cuts.

 

Borrowing money creates debt and creates additional expenses (interest).

[Rob's House]

Just for fun, I'll argue that these two systems are almost identical

 

a) Supply Side= pump money into the economy with tax cuts and borrowed money like Reagan

 

b) Keynesian=Borrowing money and using it to invest, build and directly create jobs

You should focus on this statement and roll it around in your head until you are able to find the discernable differences between the two. I know it wasn't your intent, but in two sentences you exposed the fundamental flaw of your logic. When you figure this part out you will immediately realize what a fool you have been; if of course you have the courage for honest introspection.