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Thread: Why Supply-Side Economics Is Right And Keynesian Economics Is Wrong

  1. #1
    INGSOC GURPS's Avatar
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    Why Supply-Side Economics Is Right And Keynesian Economics Is Wrong

    Why Supply-Side Economics Is Right And Keynesian Economics Is Wrong
    Work and value-adding production make an economy prosper, and eliminating disincentives to doing so, such as high taxation and regulatory burdens, stimulates growth.


    Unfortunately, so focused was Keynes on Malthus and the notion of demand failure that he hardly bothered to study classical theory beyond Malthus’s work. In fact, as I’ve noted before, so superficially familiar was Keynes with the classical school that he leveled the unbelievable claim that it had no explanation for recessions: “Classical theory … is best regarded as a theory of distribution in conditions of full employment. So long as the classical postulates hold good, unemployment, which in the above sense involuntary, cannot occur….”

    Equally preposterously, he charged his predecessors with believing the grossly oversimplified notion that “supply creates its own demand”—that is, merely producing a good guarantees its sale. Had Keynes read Ricardo or virtually any other classical economist, he would have known that production creates demand only if consumers desire what is produced.

    As Robert Torrens put it, production creates demand assuming there are “proper proportions”—that is, assuming the structure of supply must match the structure of demand: “In every conceivable case, effectual demand is created by and is commensurate with production, rightly proportioned…. Vary our suppositions as we will, increased production, provided it be duly proportioned, is the one and only cause of extended demand, and diminished production the one and only cause of contracted demand.”

    In other words, if production does not correctly anticipate consumers’ preferences, it doesn’t create demand. Furthermore, and contrary to Keynes’s wildly irresponsible assertion, failure to anticipate consumers’ demand preference was one way classical economists explained recessions. According to Torrens: “The want of due proportion in the quantities of the several commodities brought to market, which operates thus injuriously upon capitalists, inflicts equal injury upon the other classes of the community…. The ruin of the cultivator involves that of the proprietor of land; and when the motive and the power to employ productive capital are destroyed, the productive labourer is cut off by famine.”



    We’re tempted to suggest a conspiracy here — but it’s just liberals agreeing yet again that conservatives have hidden, evil motives, because modern liberals simply can’t conceive of any other reason to disagree with the liberal consensus.

  2. #2
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    I won't pretend to understand anything more than basic economic theory, and I don't believe most who would claim to.

    I can however say that when we have practiced one theory for quite a while and found the results to be less than ideal for a good portion of the population and then we continually double down on those policies, it's not likely to improve the financial situation for those already doing poorly under existing policies.

    Or put simply, not only do the wealth creators need consumers who can afford to purchase their products/services/etc., but if they enjoy living in a stable society and don't want to be subject to the occasional sudden forced total redistribution of wealth they also need to pay to keep the idle pacified.

  3. #3
    INGSOC GURPS's Avatar
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    Quote Originally Posted by Clem72 View Post
    I won't pretend to understand anything more than basic economic theory, and I don't believe most who would claim to.


    Me Neither ... but this was well written


    Keynes whole thing is borrow and spend in the down times ....
    to spur production and consumption aka keeping people employed



    I'd be ok with that, but Democrats never want pay back ... only ramp up spending even higher in the times of plenty
    We’re tempted to suggest a conspiracy here — but it’s just liberals agreeing yet again that conservatives have hidden, evil motives, because modern liberals simply can’t conceive of any other reason to disagree with the liberal consensus.

  4. #4
    Quote Originally Posted by GURPS View Post
    Me Neither ... but this was well written


    Keynes whole thing is borrow and spend in the down times ....
    to spur production and consumption aka keeping people employed



    I'd be ok with that, but Democrats never want pay back ... only ramp up spending even higher in the times of plenty
    I would agree except neither side really ever wants to pay back.
    "Pain heals. Chicks dig scars. Glory... lasts forever." - Shane Falco

  5. #5
    INGSOC GURPS's Avatar
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    Quote Originally Posted by stgislander View Post
    I would agree except neither side really ever wants to pay back.


    well not now ......

    I'm referring to Small gov. fiscal Conservatives - NOT the Current GOP Leadership [ya know Unicorns]
    We’re tempted to suggest a conspiracy here — but it’s just liberals agreeing yet again that conservatives have hidden, evil motives, because modern liberals simply can’t conceive of any other reason to disagree with the liberal consensus.

  6. #6
    Quote Originally Posted by GURPS View Post
    well not now ......

    I'm referring to Small gov. fiscal Conservatives - NOT the Current GOP Leadership [ya know Unicorns]
    When was the last time "Small gov. fiscal Conservatives" were in charge? I'm not sure we can even say that when Newt was Speaker.
    "Pain heals. Chicks dig scars. Glory... lasts forever." - Shane Falco

  7. #7
    INGSOC GURPS's Avatar
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    Quote Originally Posted by stgislander View Post
    When was the last time "Small gov. fiscal Conservatives" were in charge? I'm not sure we can even say that when Newt was Speaker.

    Fair Enough ... at least then someone was still paying some lip service

    Hey they cut Welfare Under Clinton
    We’re tempted to suggest a conspiracy here — but it’s just liberals agreeing yet again that conservatives have hidden, evil motives, because modern liberals simply can’t conceive of any other reason to disagree with the liberal consensus.

  8. #8
    Quote Originally Posted by GURPS View Post
    Fair Enough ... at least then someone was still paying some lip service

    Hey they cut Welfare Under Clinton
    True dat.
    "Pain heals. Chicks dig scars. Glory... lasts forever." - Shane Falco

  9. #9
    Quote Originally Posted by GURPS View Post
    Me Neither ... but this was well written


    Keynes whole thing is borrow and spend in the down times ....
    to spur production and consumption aka keeping people employed



    I'd be ok with that, but Democrats never want pay back ... only ramp up spending even higher in the times of plenty
    Wrong, as usual.

    Keynes point was to build up reserves during good times to spend them in downtimes. In other words, govt should raise tax revenue during good times and lower tax revenue during bad times. People like you never understand that this is a two sided equation. People like you also never understand that this is not a Democrat only problem. The current deficit problem started under Reagan.

    Republicans don't want to reduce the deficit or debt any more than Dems do. If you don't understand this, then just look at the current discussions about tax cuts.

  10. #10
    Quote Originally Posted by transporter View Post
    Wrong, as usual.

    Keynes point was to build up reserves during good times to spend them in downtimes. In other words, govt should raise tax revenue during good times and lower tax revenue during bad times.
    And Democrats have interpreted it all to mean, spend big during the good times, spend even MORE during the down times.
    Seriously, what Democrat ever campaigned on actually CUTTING spending (other than just cutting defense, where they spend it anyway)?
    There just ain't no such thing as "reserves".

    To be honest, this is just sensible money management. Even Joseph advised the Pharaoh to save during the seven good years of harvest.

    People like you never understand that this is a two sided equation.
    People like you also never understand that this is not a Democrat only problem.
    I'm curious just what "people like ME" means.

    No, it's not just a Democrat problem, but I'll blame them just the same until they make saving money and cutting deficits a thing.
    Their biggest thing is "investing" which is just their word for "spending even MORE money".
    “Good intentions will always be pleaded for every assumption of authority. It is hardly too strong to say that the Constitution was made to guard the people against the dangers of good intentions. There are men in all ages who mean to govern well, but they mean to govern. They promise to be good masters, but they mean to be masters.".Daniel Webster

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