*Supply side economics is a logically inconsistent perspective.
It is a perspective on how economics work that is dependent on the profit motive of people to benefit society. More specifically supply side economics theory says that by stimulating the people who supply the marketplace with goods and services (business owners and management) , the economy will be stimulated indirectly.
Theoretically supply side economics is beneficial to society because business owners, in an effort to increase their profits, will hire more people and expand their businesses.
But herein lies the contradiction. If business owners are greedy enough to want to expand, wouldn’t they also be greedy enough to do so in the least costly manner? In other words it is unrealistic to think that they would become benevolent all of a sudden.
In truth supply side economics is not designed to benefit society but rather designed to benefit those in positions of power. The mechanisms of supply side economics bear this point out. Tax breaks for inordinately wealthy people, corporate welfare, and advantageous tax statuses for companies always benefit the individuals and companies in question.
But whether or not there is an expansion of business depends on whether the people in charge decide to reinvest the cash created by the tax breaks or whether they pocket the extra money. If business owners expand it would only be after their desired profit has been achieved. Indeed the bulk of any extra money would be pocketed. In fact successful businesses are successful because they generally pocket free money.
Demand side economics is not perfect. Nevertheless the mechanisms of demand side do, by definition, attempt to help those who demand goods and services which is the majority of society. Think tax breaks for parents.
If the idea of government is to create policies that help the most people then supply side economics should not be an option.
Trevor Brookins is a free lance writer in Rockland County, New York. He is currently working on a book about American culture during the Cold War. You can reach him at [email protected]