A Fact Liberals Deny

[Wake up CALL]

Reagan Was Right (http://)

An interesting and objective perspective on supply side economics.

[Clarkmeister]

Yup, that quite nicely sums up all the benefits.

[Cyrus]

Your link to the Supply Side Economics website leads nowhere !

I cannot think of a better demonstration of the value of the concept of Supply Side Economics itself.

Sincere congratulations.

[adios]

Good quips about the link. Just curious about what "Supply Side Economics" means to you all. I read a lot of stuff attributed to supply side economics that I'm not sure should be. Here's a synopsys:

Supply-Side Economics (http://www.sp.uconn.edu/~cunning/supplyside.pdf)

An excerpt from the link:

Theory: Incentives Matter Theory: Incentives Matter

Two principles from the first course in economics:
– If you tax something, you get less of it.
– If you subsidize something, you get more of it.

What have we as a society been taxing and subsidizing?

We have taxed:
– Income
– Employment and productive effort
– Investment and Saving
– Production of goods and services that the population at large needs and wants, worth more than the cost of production
– (And we’ve increase regulation of these
things.)

Is it any wonder we have gotten less of these?

What have we subsidized?
– Unemployment and leisure
(unemployment compensation, welfare, redistribution)

– Lack of productivity and contribution to society (welfare, etc.)

Is it any surprise that we’ve gotten more of these things?

[Cyrus]

-If you tax something, you get less of it.
-If you subsidize something, you get more of it.

Subsidizing something, more often than not, means allowing into the "market" a "something", a "product", that should not be there in the first place. Classical.

"We have taxed: Income, Employment and productive effort, Investment and Saving, Production of goods and services that the population at large needs and wants worth more than the cost of production"

It's a question of balance, rather than absolutes. (No this isn't about vodka either, Wake up Call.) But is America taxing the above-mentioned endeavors too much? One can only compare, since the alternative is to tax nothing and regulate nothing -- and let the street lights be the object of auctions.

Compared to the rest of the advanced, western-style democratic world, a world that includes Japan, the United States are doing alright. In fact, those that "create jobs" and all the other good things you mentioned are practically subsidized, instead of taxed.

Why aren't there more of them, then?...

[adios]

Cyrus obviously doesn't believe that the two principle he quoted should be included in any economics course let alone the first course in economics.

Two principles from the first course in economics:
– If you tax something, you get less of it.
– If you subsidize something, you get more of it.

[Wake up CALL]

Allow me to try this again Reagan's Great Insight (http://masonc.home.netcom.com/veryhigh.html) This link should work, however I did appreciate the humor regarding my blank link /images/graemlins/smile.gif

[Cyrus]

"Cyrus obviously doesn't believe that the two principles should be included in any economics course let alone the first course in economics."

Where did I say or imply that?

I simply commented on the main effect of subsidisation, Tom, a gov't policy that happens to be anathema for the American Right. The economic tenet is that, by subsidizing, we are distorting.

But that shouldn't make subsidies necessarily a bad thing! We know that activity X would disappear for example, were it not for state subsidies, but we need X for the kids, for instance. Or the elderly. (To wit, we subsidize that which would normally could not survive the free market but we, as a society, deem worthy to keep, anyway.)

As in the case of taxes, it's a question of balance rather than absolutes.

And another thing : the words "more of it" might be taken to imply that when taxes are lowered across the board, the national tax revenues will increase overall (since taxes from increased business activity will more than make up the loss from the rate drop). Well, instead of having a 20-post debate about it, let me just point out that this "theory" has proven to be disastrously false when it was actually applied during Reagan's presidency. As was predicted by every serious economist, tax revenues dropped.

--Cyrus

PS : I also give Reading 101 but you seem too advanced for that. /images/graemlins/grin.gif

PPS : Did you read the guy's rant involving poker (http://masonc.home.netcom.com/poker.html) ? It's in the same website that Will not CALL provided a link to. Your hero is a funny guy!

[Wake up CALL]

" Well, instead of having a 20-post debate about it, let me just point out that this "theory" has proven to be disastrously false when it was actually applied during Reagan's presidency. As was predicted by every serious economist, tax revenues dropped."

You must have been living in a different country than me if you believe that to be true. Temporarily they dropped but then the economy recovered due to the tax rate decrease and the revenues increased accordingly.

[adios]

A few facts which I've pointed out before on this forum and the stock market forum, tax revenues are dependent on GDP growth, the higher the growth the higher the tax revenues. During the era of disinflation that includes the Reagan, Bush Sr., Clinton, and Dubya; GDP growth on a compounded basis was the highest under Reagan (it's not even close) even with a nasty recession during his administration brought about by then Fed Chairman Paul Volker's campaign to break the "back of inflation" with unprecedented high short term interest rates. What Cyrus states is just not true. I've posted a link to Federal Budget Data quite a few times which shows tax revenues and GDP growth rates.

[Cyrus]

Mea culpa. I should've precised that while tax revenues went up in absolute figures, during Reagan's terms, the whole "economic plan" was an unmitigated disaster due to the huge deficits that were created (Reagan doubled the federal budget deficit) and the tremendous disintegration in the social fabric caused by the free-for-all offered to "dynamic entrepreneurs" such as Michael Milken. You want to talk about absolute figures in isolation, you're welcome to it, as I said. And I have another great game for you; we can play it with three shells or three cards, your choice. It's guaranteed fun.

One of the great myths of the 80s is that the Reagan Administration cut your taxes. In fact, Ronald Reagan signed the largest tax increase in US history (measured in constant dollars), which more than made up for his tax cuts (a tax cut that went disproportionately to corporations and the rich anyway). The difference is that while income tax rates were being lowered, Social Security taxes were being raised. It's 3-card monte for suckers.

But Reagan was following a trend, there. In fact, Social Security taxes in America have been raised nine times since 1977. This has been a major factor in transferring the tax burden away from the well off. Social Security payroll taxes have a ceiling-currently set at $60,600 , above which income is exempt from taxation. So somebody making $600,000 or $6,000,000 a year pays the same Social Security tax as somebody making $60,000.

These massive tax hikes for the non-wealthy were passed by bipartisan majorities, by Democrats and Republicans alike, without much controversy nor publicity. They were sold as a way of saving Social Security, one of the U.S. government's most popular and successful programs, from certain doom. The public was told that Social Security faced bankruptcy when the the huge Baby Boom generation began to retire, around the year 2011. Thus it was necessary for the Social Security trust fund to begin racking up huge surpluses.

The problem with that explanation is that the trust fund was immediately raided by other government agencies, which borrowed the money and replaced it with IOUs. So instead of covering the Boomers' retirement years, the surpluses were used to pay for other things-like income tax cuts for the wealthy, and corporate welfare programs. If Social Security and other trust funds are to meet their obligations in the 21st century, over $1 trillion, plus interest, will have to be repaid.

Reagan essentially brought the country as close to financial peril as possible. He more than doubled the deficit, even though he was previously ridiculing throughout his political career Democrats for "over-spending". George Bush Sr had called Reagan's financial strategy "voodoo economics" and he was, of course, right. (The denouement of events that brought about the collapse of the Soviet Union is often attributed to Reagan out-spending rival USSR and forcing it into Chapter 11. Not true. Reagan could have kept the Defense Spending constant, or even lower it, and still USSR could not catch up. But that would mean disappointing those that believed in Ronnie coming through with the goodies.)

But what happened when Reagan's tax cut was not followed by prudent spending cuts (spending was actually increased) and the economy went into a spiral?? Perhaps the most interesting attribution of blame came in the mid-1990s, from right-wing intellectual Irving Kristol, whose magazine The Public Interest (http://www.thepublicinterest.com/) had launched the supply side ideological boom. Kristol flatly stated that the mistake was in implementing the campaign promises of 1980! Supply-side doctrine, he said, was a political platform, not a public policy, and had on purpose a "rather cavalier attitude toward the budget deficit and other monetary or fiscal problems" because the point "was to create a... Republican majority." Kristol quite opnely stated that "political effectiveness was the priority, not the accounting deficiencies of government."

You can't say the guy was not honest.

--Cyrus

Reganomics : If You Don't Like History, Re-write It (http://www.ctj.org/pdf/canard.pdf)

The Effects of Federal Spending and Federal Debt (http://www.socialstudieshelp.com/Eco_Spending_and_Debt.htm)

CBO : Surpluses, Deficits, Debt, 1960-2002 (http://www.cbo.gov/showdoc.cfm?index=1821&sequence=0#table11)

CBO: Revenues by Major Source, in billions of dollars, 1962-2002 (http://www.cbo.gov/showdoc.cfm?index=1821&sequence=0#table3)

CBO : Revenues by Major Source, as a percentage of GDP, 1962-2002 (http://www.cbo.gov/showdoc.cfm?index=1821&sequence=0#table4)

Reagan vs Clinton (http://gning.org/reagan-vs-clinton.html)

[Wake up CALL]

Absolute dollars is a poor way to compare the national debt. Comparing it to the GNP is more reasonable. After all if you look at our debt outlook for the year 2010 it makes Reagan's look miniscule. Poor Cyrus, always trying to play tricks, remember, "Trix are for kids".

[adios]

Since you agree with that the principles enumerated should be taught, you imply their validity. A "clandestine supply side advocate" after all.

[adios]

More on this later when I have time.

[Cyrus]

"Poor Cyrus, always trying to play tricks."

It's quite funny that I'm accused of "playing tricks" by the master trickster of this thread. Read on, CALL.

"Absolute dollars is a poor way to compare the national debt."

Which is exactly what I wrote! Go back and read the first paragraph of my "Read 'em and weep" post. But it figures. Your wild claims about the success of Reaganomics (aka Voodoo Economics, according to George Bush Sr) have been shown to be hot air, as far as GNP percentages are concerned, and so, just like Ronnie, you engage in affrontery : Check the percentages, he says! (What a sight.)

"After all if you look at our debt outlook for the year 2010 it makes Reagan's look miniscule."

So that's what your "argument" boils down to, huh? That in 2010 the debt will be much worse. Brilliant.

I want to sincerely thank you. This is the third different thread that you have proven my points through your own, unintentional revelations.

Take care.

--Cyrus

PS : Aside to Tom Haley. When you "have more time" and do respond to my post, Tom, and I hope you do it a tad more seriously than CALL did, please make sure to address the issue of Reagan's 3-card monte, i.e. lowering taxes with one hand and raising them with the other, e.g. in Social Security. I look forward to your post, which I will have to read when I get back from a week's vacation. See ya.

[adios]

I've posted some of this info before regarding who pays taxes in the USA. I haven't posted about the Earned Income Tax Credit which basically makes up for whatever social security taxes (glad you're agreeing social security deductions on W-2's are taxes) are paid by the poor.

[brad]

(earned income tax credit)

well at least they get half back, anyway, right?

[Wake up CALL]

Cyrus I apologize if I misunderstood you. English is my 3rd language but am told I do quite well with it. I reread your post and still do not understand how what you wrote has any resemblence at all to the truth. At any rate you will be gone on holiday so perhaps you will learn something credible while you are away.

[adios]

"One of the great myths of the 80s is that the Reagan Administration cut your taxes. In fact, Ronald Reagan signed the largest tax increase in US history (measured in constant dollars), which more than made up for his tax cuts (a tax cut that went disproportionately to corporations and the rich anyway). The difference is that while income tax rates were being lowered, Social Security taxes were being raised. It's 3-card monte for suckers. "

Besides being blatently wrong this statement has a lot of problems. First of all here's a link to the budget data for the federal government.

Federal Budget Data (http://www.whitehouse.gov/omb/budget/fy2004/pdf/hist.pdf)

I'm not sure what Cyrus means by "constant dollars" but I'm assuming he means total dollars. As I've stated before the budget data should be normalized and viewed as a percentage of GDP since government revenues and outlays tend to increase at a rate close to what GDP increases at. Anyway in absolute dollar terms the Clinton administration had the biggest tax increases but of course GDP grew quite a bit. It looks to me like the biggest tax increase occurred from 1943 to 1944. Anyway when Reagan took office in 1981 the percentage of taxes collected as personal income tax was 47.7% when he left office the percentage was 45% in fiscal year 1989. In 1981 corporate taxes comprised 10.2% of the taxes collected and in 1989 corporate taxes comprised 10.4% of the taxes collected although during the Reagan years they dipped below 10%. A word about that, during the early part of the Reagan administration a severe recession took place that was induced by the Fed to "break the back of inflation" which had been running sky high in the 70's. During times of economic slowdowns corporate tax revenues decline which is big part of the reason why corporations paid less than 10% during many of those years. Social Security revenues increased from 30.5% to 36.3%. Total Social Security revenue has increased at compounded rate of 2.7% per annum sincue 1945. During the Reagan years Social Security increased at the compounded rate of 2.2%, well below the rate from 1945-2002.

Cyrus wrote:

"This has been a major factor in transferring the tax burden away from the well off. Social Security payroll taxes have a ceiling-currently set at $60,600 , above which income is exempt from taxation."

Wrongo Cyrus, the current ceiling is $84,900 now. Where have you been?

"These massive tax hikes for the non-wealthy were passed by bipartisan majorities, by Democrats and Republicans alike, without much controversy nor publicity. They were sold as a way of saving Social Security, one of the U.S. government's most popular and successful programs, from certain doom. The public was told that Social Security faced bankruptcy when the the huge Baby Boom generation began to retire, around the year 2011. Thus it was necessary for the Social Security trust fund to begin racking up huge surpluses.

The problem with that explanation is that the trust fund was immediately raided by other government agencies, which borrowed the money and replaced it with IOUs. So instead of covering the Boomers' retirement years, the surpluses were used to pay for other things-like income tax cuts for the wealthy, and corporate welfare programs. If Social Security and other trust funds are to meet their obligations in the 21st century, over $1 trillion, plus interest, will have to be repaid. "

Totally wrong Cyrus it never was and unless the laws change never shall be a "trust fund" in the traditional sense that many think think of when they think of a trust fund. The term trust fund is misnomer. Here's a decent link describing the nature of the trust fund and the problems:

Social Security Trust Fund is an "Illusion," Warns Former CBO Director June O'Neill (http://www.socialsecurity.org/dailys/04-15-02.html)


"Reagan essentially brought the country as close to financial peril as possible. Snipped more Cyrus disinformation ..."

As I've pointed out before, in the era of disinflation (brought about during the Reagan administration) the GDP grew at a faster rate than during Bush Sr., Dubya, or Clinton and it isn't even close. The stock market (reflecting the health of the economy and businesses) started one the greatest bull markets in history, interest rates started there long and steady decline, and unemployment declined as well. Also in terms of GDP the budget deficit wasn't even close to record and there's little proof in my mind that the budget deficit was really harmful.

One last point, Cyrus implies that the rich don't pay their fair share of taxes. I'd remind him that poor families have the Earned Income Tax Credit to offset any kind of Social Security tax paid (Social Security is nothing more than a regressive tax, the money is never invested in assets now and never has been). Anyway you can't tax cut when you pay ZERO taxes. Here's a Wall Street Journal (WSJ) op ed piece which I've posted before about who pays taxes:

Luckie Duckies (http://www.opinionjournal.com/editorial/feature.html?id=110002938)

Well may folks who do not pay taxes can get a cut after all. Here's another op ed piece from the WSJ:

Even Luckier Duckies

The new tax bill exempts another theree million-plus low-income workers from any federal tax liability whatsoever, so be pleased. But instead we are all now being treated to their outrage becuase the law doesn't go further and "cut" income taxes for theose who don't pay them.

This is the essence of the uproar over the shape of the child-care tax crecit. The tax bill the President signed last week increases the per child federal income tax credit to $1,000, up from the partially refundable $600 credit passed in the 2001 tax bill. But Republican conferees decided that the increase will not be paid ou to those too poor to have any tax liability to begin with.

Most Americans probably don't realize that it is possible to cut taxes beyond zero. But then they don't live in Washington, where politicians regularly demand that tax credits be made "refundable," which means that the government writes a check to people whose income after deductions is too low to owe any taxes. In more honest precints, this might even be called "welfare."

But among tax cut oponents it is a political spninning opportunity, "Simply unconscionable," says Presidential hopeful John Kerry. The Democratic National Committee declare that "Bush tax scheme leaves millions of children out in the cold ... one out of every siz children under the age of 18, families and children pushed aside to make room for the massive tax cuts to the wealthy."

Senator Olympia Snowe, the media's favorite Republican now that John McCain isn't actively running for President, says she is "dismayed." "I don't know why they would cut that out of the bill." adds Senstor Blanceh Lincoln (D. Ark.). Those last two remarks take chutzpah, because if either woman had been willing to vote for the tax bill, a refundability provision would have been in it.

Senator Lincoln introduced the idea in the Senate Finance Committee, but then announced she wasn't going to vote for the bill anyway. Ms. Snowe was also one of those, along wiht Senator George Voinivich (R., Ohio), who insisted that the bill's total "cost"- in tax cuts and new spending-not exceed $350 billion. Something had to give in House-Senate conference to meet that dollar limit, and out went refundability. The bill passed by a single Senate vote, with Vice President Dick Cheney breaking the tie.

As it happens, the tax bill does a great deal for low-income families even without the refundable child credit additon. It expands the 10% income tax bracket, meaning that workers can earn more before leaping ito the 15% and 25% brackets. This is a far better way to provide a tax cut than is a refundable credit, because it lowers the high marginal-tax rate wall that these workers face as their credits phase out at higher income levels.

There's alos $10 billion in the bill earmarked for Medicaid, the state-federal health insurance program for the poor. And any family that actually has remaining tax liability benefits from the extra $400 child tax credit.

More braodly, the critics want everyone to forget how steeply progressive the tax code already is. IRS data released lat year show that the top 1% of earners paid 37.4% of all federal incomes taxes in 2000. The top 5% paid 56.5% of federal taxes,and the top half of all earners paid 96.1%. In other words, even before President Bush started slashing taxes on the poor by increasing the child tax credit in 2001, the bottom 50% of filers had next to no federal income tax liability.

But don't low-income workers have to cough up the payroll tax? They certainly do, but don't forget that the federal Earned Income Tax Credit was designed to offset payroll taxes and is also "refundable." In 2000, the EITC totaled $31.8 billion for 19.2 million Americans, for an average credit of $1,658. Some 86% of that went to workers who had little or no income tax liability.

Republicans who just voted for the tax cut might be less defensive and try to explain all of this. But instead too many of them are heading for the tall grass, with Senate Finane Chairman Chuck Grassley already promising to cave as early as this week on the child tax credit. This is the kind of political box Republicans walk into when they endorse tax credits that favor one group over another. Democrats are better at playing favorites.

We raised some hackles last year when we noted this growing trend that more and more Americans paid little or no tax. "Lucky duckies," we called this non-taxpaying class at the time. Notwithstanding liberal spinners, after this tax bill they're even luckier.

[MMMMMM]

I think Tom Haley did a good job of rebutting Cyrus' claims. Just to add support and some new information, here is an excerpt from Thomas Sowell. By the way, Thomas Sowell, in his plainness and compact clarity, is rapidly becoming my favorite columnist (some might like to peruse the link to his other archived articles).

(excerpt) "Another fundamental confusion over tax cuts is confusing lower tax rates with reductions in tax revenues collected by the government. One of the enduring political myths of our generation has been the claim that the rise of federal deficits during the 1980s resulted from President Ronald Reagan's "tax cuts for the rich."

Tax rates were cut. Tax revenues were not. More tax revenue was collected during every year of the two Reagan administrations than had ever been collected in any previous year in the history of the country. Nor was this experience unique.

When John F. Kennedy cut tax rates during the 1960s, tax revenues went up. The whole point was -- and is -- to encourage more economic activity, and more activity generates more tax revenues, even at lower rates. The same thing happened back in the 1920s.

Why then were there federal deficits during the Reagan administration? Because Congress spent even more money than the rising tax revenues brought in. There is no amount of money that Congress cannot outspend.

Although these were christened "the Reagan deficits," all spending bills originate in the House of Representatives -- and Ronald Reagan was never a member of the House of Representatives. Indeed, the Republicans never controlled the House of Representatives during either of the Reagan administrations.

Only after the Republicans gained control of the House in 1994 were there budget surpluses -- for which Bill Clinton took credit, even though he too had never been a member of Congress.

It is fascinating to see Congressional Democrats, who have for decades been spending the country into growing deficits, suddenly expressing shock at the current deficits that have occurred while George W. Bush was in the White House -- and the country was at war.

How serious are these deficits? As with all debts, the burden depends on what your income is. As a percentage of national income, today's deficits and national debt are far below what they were when Democrats were doing the spending."(end excerpt)

link to above excerpted article:
http://www.townhall.com/columnists/thomassowell/ts20030715.shtml

link to Thomas Sowell archives: http://www.townhall.com/columnists/thomassowell/archive.shtml

[Boris]

So tell us Tom, what is Supply Side Economics? Inquiring minds want to know.

As for your web link, I have to give it a big thumbs down. Not at all informative and total right wing propoganda. We tax the productive activities because there is nothing else to tax. Simple as that.

Laffer argued that beyond a thereshold tax rate, any marginal tax increase would have such a stifling effect on the economy that tax revenues would fall. It therefore stands to reason that if a gov't is taxing above the threshold rate, they might as well lower taxes because you would not only increase tax revenues but make people happier in the process. There is some empirical evidence to support the view that current tax rates are at or above the Laffer maximum. But the case is certainly not cut and dried.

[Boris]

What do you hope for us to glean from your link to the federal budget data? I couldn't make heads or tails of it other than the Reagan years seem to look alot like all the other years.

[adios]

"I couldn't make heads or tails of it other than the Reagan years seem to look alot like all the other years. "

That's exactly what I wanted you to get out of it. Cyrus makes the claim that the Reagan signed the biggest tax increase in history and the data shows that his claim is false IMO.

[adios]

"So tell us Tom, what is Supply Side Economics? Inquiring minds want to know."

The link regarding supply side economics was intended to bring about a discussion of it. If you re-read my post you'll see that I stated that I read and hear about a lot things being attributed to supply side economics but I'm not really sure if they apply. Just was curious as to what it meant to different people. I was thinking more along the lines of suppliers producing more to stimulate demand. Given the synopsys course material from the link I provided I don't read anything about supply or suppliers in it so I really don't know why it's called "supply side economics." I'm getting the distinct impression that you feel that I am in favor of eliminating or making draconian reductions in transfer payments and that's simply not the case.

"As for your web link, I have to give it a big thumbs down. Not at all informative and total right wing propoganda."

If you have a better link to bring about discussion I'd be happy to take a look at it. Sorry to to disappoint you. As far as being right wing propoganda it actually is course material from a course in Macro Economics from the University of Connecticut. I'm not at all sure about the political leanings of the teacher.


"Laffer argued that beyond a thereshold tax rate, any marginal tax increase would have such a stifling effect on the economy that tax revenues would fall. It therefore stands to reason that if a gov't is taxing above the threshold rate, they might as well lower taxes because you would not only increase tax revenues but make people happier in the process. There is some empirical evidence to support the view that current tax rates are at or above the Laffer maximum. But the case is certainly not cut and dried. "

Well there certainly is a threshold rate wouldn't you agree?

[Boris]

Is this link a joke? I'm being totally serious here.

[adios]

"Is this link a joke? I'm being totally serious here."

I didn't get anything out of it either which is why I asked the question about what supply side economics is. I've got an enquiring mind as well /images/graemlins/smile.gif.

[Boris]

Of course I agree there is a threshold rate. I wouldn't even be surprised if the US is near it's maximum tax burden.

[Cyrus]

"Since you agree with that the [supply-side economics] principles enumerated should be taught, you imply their validity. A "clandestine supply-side advocate" after all."

A conclusion reached hopefully in jest, otherwise wildly inadequate : I also happen to support having in the schools' curriculum the concepts of Socialism, Creationism, Materialism, Determinism, and lots of other belief systems. This doesn't necessarily mean that I support each and every one of 'em.

By your logic, I should conclude from your post that Tom Haley supports teaching only the accepted and established line at schools. Should I ?

[MMMMMM]

To a certain point I would say you are correct regarding what should be taught, Cyrus...but only to a point.

If we teach Creationism should we also teach Voodoo, for instance?

I don't think we should teach that which has been scientifically disproved (other than in a historical sense), although I can see teaching that which may have been neither proved nor disproved.

[Cyrus]

"If we teach Creationism should we also teach Voodoo, for instance?"

Same thing, no? /images/graemlins/laugh.gif

"I don't think we should teach that which has been scientifically disproved (other than in a historical sense), although I can see teaching that which may have been neither proved nor disproved."

I would take as a condition that "enough people support that belief system" for its basic tenets to be taught at schools. If Voodoo is practiced by a bunch of Haitians (and one Zombie (http://www.bjrnet.com/board/voodoo/index.cgi)!) then it's worth two lines at most. If it's practiced by the entire population of China, well, then it would merit a little more than two lines, you would agree. Think Communism, instead of Voodoo.

(Wait... /images/graemlins/smile.gif)

And it's not about teaching/presenting students with "not proven nor disproven theories". No, the current status of scientific belief systems is pretty much established. Let there be no misunderstanding about that. (Some or all the basic scientific tenets might be overturned "tomorrow", but this is irelevant.) We should teach and present fully the current status of our collective knowledge. We should also present, with every pro and con we can avail, all the belief systems that still affect a "large enough number of people". Creationism for instance.

I am a big advocate of allowing students to make up their own minds. And of presenting them with all the facts. (Realizing that, for instance, Creationism is Voodoo is easy in such a case.)

[adios]

What I wrote in my post:

"Since you agree with that the principles enumerated should be taught, you imply their validity.

What Cyrus quoted me as posting:

""Since you agree with that the [supply-side economics] principles enumerated should be taught, you imply their validity."

Another Cyrus axiom of 1==0, therefore I, Cyrus, can prove anything. The principles enumerated aren't specific to supply side economics as outlined in the UCONN link I posted.

[Cyrus]

"The principles enumerated aren't specific to supply side economics as outlined in the UCONN link I posted."

You are being disingenius, Tom.

You have claimed that I "imply the validity of the principles enumerated". If those principles are not about supply-side economics, why on earth would you go on to claim that I am a "clandestine supply side advocate". What is this ?

...And you still haven't answered my question : Should we be teaching students only the official line ? In science, as in anything else.

[MMMMMM]

"You are being disingenius"--lol, love it--(I'm not commenting here on the matter Tom and Cyrus are discussing, just observing that Cyrus has a Yogi knack too;-))

[adios]

The part about being a clandestine supply sider was a vain and probably poor attempt at humor. I was just kidding. I offer an apology to you if you were at all hurt or offended. I realize you don't agree with the ideas outlined in the course, at least carried to an extreme. I don't know if I agree with them carried to an extreme. Anyway my original question was indeed a question to elicit responses about what people perceive supply side economics to be. I was a little surprised at what's being taught in Macro Economics (at least a UCONN which I assume is somewhat representative) as to what supply side economics is. My notion of it is that it has something to do with supply leading demand as I had a prof discus this in class not too long ago but I can't remember everything about that discussion. I realize that Laffer had an influence on Reagan but I've never studied Laffer in depth. I also doubt that Reagan applied "supply-side" economics rigoroursly.

[Baltimore Ron]

[ QUOTE ]
"Is this link a joke? I'm being totally serious here."

I didn't get anything out of it either which is why I asked the question about what supply side economics is. I've got an enquiring mind as well /images/graemlins/smile.gif.

[/ QUOTE ]

This will be a very short primer on supply side econ - apologies to any econ profs in the audience.

There are three main schools of thought in the area of macro economics: supply side, demand side and monetarist (which can wait for another time.)

Demand side is the classic Keynesian philosophy which attempts to "regulate" the economy by managing the demand side of the supply-demand equation. Whenever consumers are saving too much and consuming too little the government steps in to soak up the excess capacity in the economy. Usually this results in deficit spending, since tax increases would be counterproductive during a recession. Whenever the recession ends, the government should return to fiscal rectitude and begin paying down the debt it incurred during the recession.

Supply side theory says, in essence, that supply creates its own demand. Providing incentives to producers to expand capacity will result in more people working and those already working with more income to consume the supply being created. This is usually accomplished through the tax code. Things like lower marginal corporate tax rates, accelerated depreciation and investment tax credits are used. Also, because so many small business owners and self-employed professionals pay their "business" income tax on their individual tax returns, lower marginal personal rates, especially at the top end, are important.

Which theory is correct, if either? I'll never tell. /images/graemlins/cool.gif

BR

[adios]

"Supply side theory says, in essence, that supply creates its own demand. Providing incentives to producers to expand capacity will result in more people working and those already working with more income to consume the supply being created."

This is basically my understanding as well.

[Baltimore Ron]

Graphs, while being wonderful tools for understanding data, also can have some pitfalls if not understood. This graph needs a little interpretation.

One, the graph uses a log scale on the left-hand side. This is a useful way of representing compounding increases over a long time series (in this case 100 years), but it can also lead to misunderstanding the size of nominal amounts when it shows nice straight-line trends.

The other caveat is one of assumptions. Granted, this is an extreme case in the example, but assuming no macro effects from such a large debt run-up is a little unrealistic. A debt-to-GDP ratio approaching 4.0 would put a govt's ability to borrow money in serious question.

BR