POLL: Do you believe that supply-side economics is legitimate economic theory?

[bwolinsky]

Quote from stock_trad3r:

Wikipedia is always a good starting point for research

I'm not saying it isn't, but think about why it's stupid to think you could even come close to comprehending it just from the articles.

It's not like I spent about 2.5 years or 10 semesters studying financial economics, which is a step beyond both economics and finance, with, again, a varied nuance that would take about that long to understand the intricacies of.

 

[MGB]

Any economic discussion includes a discussion on taxes.

I would abolish the IRS, and all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, progressive national retail sales tax, administered primarily by existing state sales tax authorities.

We are only taxed when we choose to spend on new goods or services, not on what we earn.

 

[bwolinsky]

Quote from MGB:

Any economic discussion includes a discussion on taxes.

I would abolish the IRS, and all federal personal and corporate income taxes, gift, estate, capital gains, alternative minimum, Social Security, Medicare, and self-employment taxes and replaces them with one simple, visible, progressive national retail sales tax, administered primarily by existing state sales tax authorities.

We are only taxed when we choose to spend on new goods or services, not on what we earn.

And then prices instantly escalate, kind of like how everything is expensive in England.

 

[NeoRio1]

Quote from bwolinsky:

Most of the responses on here are a bit troubling. This particular thread doesn't even understand what supply side economics is, and I recommend that anyone reading this stop here, put anyone that gave the wrong answer on ignore, and move on, b/c their lack of understanding for the theory implies they know nothing about trading. Most of the incorrect answers given show the poster know nothing about economics, let alone the nuances of supply side or demand driven modern macroeconomics.

I would agree this is a political debate rather than something concerning trading.

Most of the posters on this site are experts on everything.

Didn't you know that?

 

[MGB]

Quote from bwolinsky:

And then prices instantly escalate, kind of like how everything is expensive in England.

See, only smart people like the idea. They understand that manufacturers will raise the price on commercial goods to offset the costs of the additional tax initially (which bothers you according to your insight above), and many people don't see the benefit of that. But then short-sighted folks also don't see the eventual readjustment of prices resulting from competition, the supply-demand curve, and reduced business expense.

If you're rich, you're obviously going to pay more in taxes; you can buy more consumer goods, as you have more money. The more expensive the product, the more taxes. Every liberal loves that.

If you're poor, you're not going to pay as much tax, because you simply can't afford to -- you only pay for what you buy. Every liberal loves that, too. Besides, all the necessities of life are exempt from the national sales tax. Bread, diapers, baby formula, vegetables, etc. Non-essential items are taxed such as the Cadillac CTS, 60" TVs, cigarettes, laptops.

Statistically, poor people spend more than their wealthy counterparts on lotteries; this is probably a factor of educational level. The less informed people don't understand that the odds are against them, and spend more of their disposable income (in terms of percent) on games of chance. This is a regressive tax, but only because they don't know any better.

The same goes for retail tax. If you make foolhardy purchases, you'll pay more tax.

And that, friends, is the American way- smart folks save money, stupid folks don't, and the smarter get richer. In a free market economy, you should be rewarded for being a smart consumer, and punished for being a dumb one.

With all the extra income we get, and the added bonus of not having to maintain a federally-funded IRS, we can shore up American schools- especially those for low-income people, and maybe educate them on how to be better -smarter- consumers.

There are other benefits with this national sales tax.
1) All immigrants pay taxes, just like you and me (right now, they don't).
2) People who visit America for tourism pay taxes when they buy things.
3) No more tax forms on April 15th.
4) No taxes when you withdraw your retirement money.
5) No taxes when you contribute to your retirement fund.

 

[endsongs]

Any economic theory which creates sizable imbalances should be carefully examined before being deployed. Using supply side theories only ten years after the gold standard was removed was a complete disaster. Way too much money in the form of debt was created. We are now starting to feel the pain of 28 years of unpaid bills and debt IOUs passed on to future generations. It's time to pay up, folks, for that failed experiment.

 

[MGB]

Quote from endsongs:

Any economic theory which creates sizable imbalances should be carefully examined before being deployed. Using supply side theories only ten years after the gold standard was removed was a complete disaster. Way too much money in the form of debt was created. We are now starting to feel the pain of 28 years of unpaid bills and debt IOUs passed on to future generations. It's time to pay up, folks, for that failed experiment.

In my opinion, that is partially correct. The Federal budget should be going DOWN, but the politicians in D.C. keep INCREASING THE BUDGET.

Supply side economics itself is not a failure.

The BLOATED and OUT OF WHACK debts and deficits is a failure of the politicians in Congress. The sizable imbalances that you speak of was not caused by supply side economics. It was caused by politicians who constantly kept adding more stuff to the Federal budget every year.

 

[Random.Capital]

Quote from Thunderdog:

I think that supply-side, trickle-down "economics" is more voodoo than legitimate economic theory.

Supply-side and "trickle down" are two separate theories. Which one do you actually want to discuss?

 

[endsongs]

The other problem with supply side theory is when too much speculative supply is created. If consumers can't or won't pay for the supply created at break-even levels, the supply creation was wasted. The housing market now is a prime example. Homebuilders went overboard in starting too many houses under the expectation the sub-prime loans would keep a constant stream of buyers lined up.

 

[MGB]

Quote from endsongs:

The other problem with supply side theory is when too much speculative supply is created. If consumers can't or won't pay for the supply created at break-even levels, the supply creation was wasted. The housing market now is a prime example. Homebuilders went overboard in starting too many houses under the expectation the sub-prime loans would keep a constant stream of buyers lined up.

I wouldn't call this a problem per se. In a proper functioning economy, various sectors of the economy will expand and contract. Over time, your inventory levels goes up and down. The prices for the goods goes up and down.

For example, when automakers make too many cars, their inventory levels are too high. To reduce inventory, they reduce the prices.

When too many houses are built, the builders end up with inventory levels that are too high. To reduce inventory, they reduce their selling prices.

Economies expand and contract. Inventory levels go up and down. Prices go up and down. This is how a proper functioning economay is supposed to work.