Supply-Side Failures

John Maynard Keynes
John Maynard Keynes
John Maynard Keynes, born June 5, 1883, 1st Baron Keynes, CB, FBA was a British economist whose ideas have profoundly affected the theory and practice of modern macroeconomics, and informed the economic policies of governments. Keynes was the basis of Keynesian economics. | Photo: Smithsonian archives | John Keynes, Keynesian, Economics, Economy, Finance, Money, Banks,

How to Increase Production and Consumption

Advocates of Supply Side (Trickle-Down) economics believe wealthy people and large businesses create jobs, by allowing tax breaks and other financial subsidies to large businesses and wealthy people. The theory predicts that those tax breaks and subsidies will lead to more production, increasing the supply of services and goods produced. The money generated from this increase in supplies will eventual trickle down from above, to the masses below, enriching our entire society.

Advocates of Keynesian economics believe government plays a substantial role in job creation, and that government and consumer spending triggers economic growth. They achieve their goals through central planning, modeling and forecasting, along with tax incentives / penalties, interest rate manipulation, credit expansion and contraction, and the spending of our tax dollars to "stimulate" business sectors; to maintain high employment and stable market prices.

Unfortunately, they are both correct and incorrect, as both Supply Side and Keynesian economics can marginally spur job creation in the short run, and temporarily achieve their other objectives; but both economic philosophies will not sustain stable markets over a long-term. Nor will either system produce a sustainable labor force for the majority of our citizens that does not require social safety-net programs to fall back on.

Austrian economists will tell you private investors and innovative businesses drive the economy forward, by supplying the necessary money to build the factories, and to buy the means of production for the products that are being produced, and to produce new products and services that will spur the demand for consumer consumption in the future.

While the Austrian model is the only model to even entertain at this point, as history has repeatedly proven Keynesian, Supply Side, and especially Keynesian Supply Side economics have enormous costs financially and socially; but the Austrian model still leaves a lot to be desired, especially if the producers are not also the laborers.

How can we increase the wealth of our consumers, and how can we turn more laborers into producers? To me, those are the two fundamental questions to solve in order to improve the quality of life for the majority of our laborers and enrich our entire society. Unfortunately, we have strayed from the idea of a self-owned labor force, which would allow more of our laborers (who are also the bulk of our consumers) to also be the producers.

Turning laborers into producers can only be achieved by moving away from a private-ownership focused labor force, to a self-owned focused labor force, returning more wealth to the bulk of consumers (via ownership through their labor).

If we do not try alternatives and think of new creative ways to re-imagine our economic system, our economy and its main catalysts, the consumers and innovative start-up businesses, will remain in a state of suspension, until we are misled into believing debt is wealth, and eventually taken for another bubble burst ride, followed by high unemployment, a stagnate economy, and tax increases for everyone.

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Updated May 22, 2018 6:39 PM UTC | More details


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