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My issues with Supply Side Economics
Posted on 7/19/18 at 9:26 pm
Posted on 7/19/18 at 9:26 pm
Ben Shapiro on Supply Side Economics (less than 5 minutes)
I understand the general premise of supply-side.
1. Give tax cuts to wealthy and corporations
2. They will use the capital to invent new products to make life easier OR create new jobs via investments.
3. The general public benefits from the creation of new tech and jobs.
Overly simplistic, but that's the synopsis of his explanation. Shapiro is VERY intelligent, but his example primarily works in large metropolitan cities. There is more competition which creates an incentive to do better and offer better products/services.
My contention is as follows
1. If you reduce taxes the rich/companies are not obligated to invest in new technology, productivity, or recruiting/maintaining new employees. The money could just as easily be locked up in a bank for miscellaneous expenses.
2. Public benefit is not always the primary objective, especially for smaller companies. If a company is only trying to skate by, it could easily get away with offering less than competitive wages or selling a mediocre product as long as its cheaper than its competition.
3. Demand is what motivates supply. In his example he used iPhones. The advertising and supposed "cool factor" about the product makes people want to buy it. If I created 1 million Blackberry phones, but nobody bought them, the free market would punish me.
Nintendo created the Switch in a limited capacity. Everybody wanted it, but there was not enough. You could go online an people were selling for 50% more than the purchase price because demand was so high.
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Posted on 7/19/18 at 9:27 pm to volod
TulaneLSU would out-troll your amateur arse so hard
Posted on 7/19/18 at 9:29 pm to volod
This post was edited on 7/19/18 at 9:30 pm
Posted on 7/19/18 at 9:29 pm to volod
Wuh!
Posted on 7/19/18 at 9:32 pm to volod
quote:
. If you reduce taxes the rich/companies are not obligated to invest in new technology, productivity, or recruiting/maintaining new employees. The money could just as easily be locked up in a bank for miscellaneous expenses.
As opposed to being wasted by the Government
quote:
2. Public benefit is not always the primary objective, especially for smaller companies. If a company is only trying to skate by, it could easily get away with offering less than competitive wages or selling a mediocre product as long as its cheaper than its competition.
It’s employees would leave for better paying jobs and people would stop buying their product.
quote:
3. Demand is what motivates supply. In his example he used iPhones. The advertising and supposed "cool factor" about the product makes people want to buy it. If I created 1 million Blackberry phones, but nobody bought them, the free market would punish me.
Is this a statement or something else???
Posted on 7/19/18 at 9:33 pm to volod
Supply side economics needs a truly free market to work best, not cronyism. That’s where deregulation comes in.
Posted on 7/19/18 at 9:35 pm to volod
Are you retarded?
Posted on 7/19/18 at 9:35 pm to volod
Analyzing your premis in reverse.
Raise taxes of the rich and you will see them hold on to their capitol and inverts less. They will be less inclined to take risks with that capitol if they stand to make less reward because of taxes.
If the above is true, the cutting taxes will have the opposite effect of raising them.
Raise taxes of the rich and you will see them hold on to their capitol and inverts less. They will be less inclined to take risks with that capitol if they stand to make less reward because of taxes.
If the above is true, the cutting taxes will have the opposite effect of raising them.
Posted on 7/19/18 at 9:36 pm to volod
Companies aren't in business to hoard cash. Companies are in business to invest more and grow. But they can only invest more when there are attractive opportunities available to them and they aren't padding reserves due to greater uncertainty (i.e. the massive increase in regulation during the Obama years). As companies invest and grow, they hire more. As companies hire more, labor becomes scarce. As labor becomes scarce, wages go up. All of the above are indeed the preferred state of affairs for most companies. The reason companies used cash in irregular amounts for dividends and buybacks during the Obama years is because of historically low interest rates (prompting them to use debt to finance dividends and buybacks and thus increase stock prices without having to invest in capex) and an anti-business tone at the top (massive expansion in Federal bureaucracy, which competes for resources with the private sector). SSE isn't a flawless theory, but it's still a damn good one, all else equal.
Posted on 7/19/18 at 9:37 pm to volod
so what is the better alternative?
Heavily tax the rich and kill their incentive to invest their capital in business?
The rich are going to stay rich either way.
Heavily tax the rich and kill their incentive to invest their capital in business?
The rich are going to stay rich either way.
Posted on 7/19/18 at 9:38 pm to Kafka
quote:
TulaneLSU would out-troll your amateur arse so hard
#NolaMafia
Posted on 7/19/18 at 9:39 pm to volod
quote:
1. If you reduce taxes the rich/companies are not obligated to invest in new technology, productivity, or recruiting/maintaining new employees. The money could just as easily be locked up in a bank for miscellaneous expenses.
Even if this was true (its not), the banks would have more money to lend, would ease lending requirements and business expansion and resulting new jobs would still occur as a result of the reduced taxes.
quote:
2. Public benefit is not always the primary objective, especially for smaller companies. If a company is only trying to skate by, it could easily get away with offering less than competitive wages or selling a mediocre product as long as its cheaper than its competition.
Public benefit is not and should never be the primary objective of a business. The viability of the business is always the primary objective. If a business pays substandard wages they will have trouble hiring and retaining employees. If they make a mediocre product customers are free to buy something better from competitors.
quote:
. Demand is what motivates supply. In his example he used iPhones. The advertising and supposed "cool factor" about the product makes people want to buy it. If I created 1 million Blackberry phones, but nobody bought them, the free market would punish me.
Demand does motivate supply, so not sure what your stating here. The iPhone is in demand because of successful marketing and being a innovative product, the blackberry doesn't sell because it is not, the market works as you said.
This post was edited on 7/19/18 at 9:42 pm
Posted on 7/19/18 at 9:39 pm to volod
What % of all corporations are "large"? There are a lot of small corporations and sole proprietors that benefit from tax cuts. The bottom 50% already pay 0 taxes, why should everyone else subsidize? If you tax the shite out of large corporations, they're going to go super conservative or leave.
Posted on 7/19/18 at 9:41 pm to volod
quote:
3. Demand is what motivates supply.
No profit is. Demand in and of itself does not good if people don't have money to meet their demands. For money people need jobs. Jobs are created by hiring people to create supply. Once the supply is created and they have money then they can buy the supplies that they demand.
That's why our stupid and corrupt leaders screwed us over when they sold our manufacturing jobs overseas and why Our President is now bringing them back.
We're really lucky to have him folks!
This post was edited on 7/19/18 at 9:43 pm
Posted on 7/19/18 at 9:43 pm to volod
quote:Sure. People like losing money.
The money could just as easily be locked up in a bank for miscellaneous expenses.
Posted on 7/19/18 at 9:45 pm to jamboybarry
quote:
As opposed to being wasted by the Government
Okay. That's a fair point. This is why I did not push demand side economics as being a stand-alone good thing. I think you should pay fewer taxes because you earned the money. In an ideal economic world, we should pay taxes[b] and have them used effectively. [/
quote:b]
It’s employees would leave for better paying jobs and people would stop buying their product.
I completely agree. And I have seen this happen before. I am just pointing out one of the drawbacks.
quote:
Is this a statement or something else???
Just demonstrating how even in the real world, more supply does not always mean better demand. There is more that goes into making capital than simply having more of a good or service.
Posted on 7/19/18 at 9:49 pm to Rebel
quote:
Heavily tax the rich and kill their incentive to invest their capital in business?
The more the wealthy have to pay, the more wealth will flee the country. Then you’re stuck with a populous dependent on the government that can no longer pay out.
Know what happens next?
This post was edited on 7/19/18 at 9:50 pm
Posted on 7/19/18 at 9:50 pm to volod
Any non retarded adult that thinks that a dollar in the public sector is used more efficiently than the same dollar in the private sector is not non retarded.
Posted on 7/19/18 at 9:51 pm to Taxing Authority
quote:
Sure. People like losing money.
No. Some people just don't see the risk of investment as worth the reward. But as I admitted, this depends on the type of business we are talking about. A large company trying to expand would lose money if they held on to capital.
You made the same mistake as others. I am not saying supply side does not work at all. I am saying that it has some issue at the micro level because it makes assumptions about market behavior that it is not consistent with how many mid to small size companies operate.
Posted on 7/19/18 at 9:58 pm to BobBoucher
quote:
The more the wealthy have to pay, the more wealth will flee the country. Then you’re stuck with a populous dependent on the government that can no longer pay out. Know what happens next?
The bigger problem is the government overspending. There is way too much pork in politics. As citizens, we should pay less in taxes and make our government learn to work with less. If we cut some of the asinine programs, we could have the best of both worlds. Rich people would want to stay and see where their money goes.
On the reverse, I honestly think some people just want to avoid paying taxes regardless of how the government uses them. Other countries do not have the same ethics regarding employee treatment and benefits. So if pure profit is the motive, lower taxes don't guarantee they would stay.
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