macroeconomic theory
ELI5: What is supply-side economics and why is there such opposition to it?
This was a really good explanation. Are their counterarguments to your points, though?
More on reddit.comIs there a consensus among economists on supply-side economics?
CMV: demand side economics works better than supply side economics (aka trickle down economics).
First, don't confuse supply-side with "trickle down." They're different ideas.
Supply-side economics looks at what drives an economy: the people who create, who supply goods, who invest in companies. Demand-side looks at who consumes in an economy: believed to be those who go to stores, consume the supply.
Supply-side is the better option because it hits the economy at its source. It prioritizes capital, which is the gasoline of the economic engine, in for form of advancing investment and providing business capacity. It also recognizes that the supply side is also the demand side, because business-to-business transactions are the lifeblood of consumption and many of the largest firms are ones that deal solely with other firms. Hand money to the "people," and you're just ensuring that the money is spread too thin to have a material impact, and at the expense of suppliers.
We saw it in practice with COVID this year: [the economy faltered because the rich and businesses weren't spending anything] (https://www.npr.org/2020/06/17/878946307/the-rich-have-stopped-spending-and-thats-tanked-the-economy). Consumption of retail goods (typically where most demand-side spending occurred) rebounded in May, but the drivers of the economy still stayed home and saved instead.
Now, personally, I believe economic policy should reflect what's best for the most people, not necessarily adhering to any specific value judgement. On net, though, "supply-side" economics, as it were, provides more broad benefits to an overall economy. Individual demand-side policies (such as, for an example, food assistance) may have positive economic returns, but on a whole, none of it matters if you don't have the investment.
More on reddit.comSupply Side Economics or Demand Side Economics? Why?
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I have a basic understanding of what they are. Essentially increasing supply (which usually comes from investments from the wealthy) is the best way to economically grow, and that supply “trickles down”.
Now when I hear people say “trickle down economics doesn’t work”, they usually cite studies that say tax cuts for the rich don’t work. But I would imagine that’s because the tax rates for rich people are already low enough that lowering them more doesn’t have a great benefit. I would imagine if the tax rate for rich people were like a 99% wealth tax tax cuts for the rich would be good.
Aren’t these black and white statements really misleading? Yes trickle down economics doesn’t work but that’s because we already have made it so that more tax cuts don’t trickle down as much. And the neoliberalism in the 80s seemed to have helped a lot from stagnation. Isn’t their a balance between supply side and demand side economics rather than saying one is categorically true