NationStates Jolt Archive

I have an econ project to do.

I have to use supply side economics to try and lessen the rich-poor divide in the United States. We can do anything we want to the U.S. laws and economy as long as it involves the supply-side portion of the economy. We also need justification for our actions, in other words, a source that shows how one theory worked or failed in the past.


Thanks all!
-BLARG

be prepared for only the liberal view of everything, and pages of flaming. that is all.

-kwas out.

be prepared for only the liberal view of everything, and pages of flaming. that is all.


This is hard for me cause I'm a liberal. I don't have a choice with the supply-side though, it was assigned to me.

http://www.amazon.com/exec/obidos/tg/detail/-/0451527100/qid=1101602986/sr=8-1/ref=pd_csp_1/103-5827699-3551060?v=glance&s=books&n=507846

All you need :D

thanks myrth, I already have it. Doesn't really help here though.

Are there any conservatives out there who can help? I'm not used to thinking like this.

bumpz0r

Um... Adam Smith?

Um... Adam Smith?

wow. . .the insight.

OK, I'm playing devil's advocate here, because this is not my normal position, but the argument's probably something like this:

The key in supply-side is to boost production, thus supply, thereby increasing competition, lowering prices, creating jobs and incentivising specialisation. Ways of doing this are by lowering marginal tax rates thus increasing investment or reducing trade barriers so as to allow efficient wealth production. You don't want to do this by increased Government investment, because that means higher taxes, which means higher dead weight losses, plus all the usual inefficencies.

It's all aimed at increasing capital, therefore supply.

How does that decrease the rich-poor divide? Well, the model says it gets more people back into work. Assuming no welfare disincentives, that means more income for those previously not in work. Worth bearing in mind here that the chief source of income inequality (as measured in things like income deciles or against the median) is not between the rich and ordinary workers, but between those in full-time work (especially two-earner households, though that's sensitive to how household income is measured and adjusted for size) and those out of work. In most modern economies, the bottom few deciles are generally filled by households without a full time worker.

Also bear in mind the specialisation benefit. Specialisation is one of the best ways for an individual to add value to their output, thus increasing their income.

Here's what looks like a good place to find sources:Wikipedia (http://en.wikipedia.org/wiki/Supply-side_economics)

Like, I say, this isn't my preferred model, so I don't know I can give that much more in terms of detailed arguments.

Introduce punitive taxes on the wealthy?

*not an economics student*

Introduce punitive taxes on the wealthy?

*not an economics student*



then why the fuck re posting you racest basterd??!!

then why the fuck re posting you racest basterd??!!
Does this make sense to anyone? No? Alright.

I haven't gotten into too much economics yet...it's so complicated it makes my mind whirl sometimes when I philosophise in bed at night. This might not happen if I learned more, but I prefer working up in biochemistry to understanding Krebs cycle. I know that one good step would be to get rid of Bush. Next is to flagellate everyone in the Fed. Then perhaps make them have sex with each other. Some brilliant fountain of creativity and revelation may ensue.

But, seriously, I do know that Reganomics do not work, and that there must be heavier taxes on the rich and less on the poor than there currently are.

Most of all, compare the U.S. to Italy. If I recall correctly, there is no income tax there. Only taxes on purchases. This makes everything so much simpler and easier. And Italy's economy isn't doing too poorly. And let someone with a greater knowledge of economics actually get something meaningful for your project from that.

Introduce punitive taxes on the wealthy?

*not an economics student*

Seeing as the supply-side theory is centered on the idea that decreasing taxes, that probabaly wouldn't get BLARG very far... ;)


But, seriously, I do know that Reganomics do not work, and that there must be heavier taxes on the rich and less on the poor than there currently are.

Well Reagan did try to mix and match supply-side tax cuts with demand-side budget increases instead of the fiscal responsibility advocated by supply-side theory. Also, check this out:

On 8 of the 10 key economic variables examined, the American economy performed better during the Reagan years than during the pre- and post-Reagan years.

* Real economic growth averaged 3.2 percent during the Reagan years versus 2.8 percent during the Ford-Carter years and 2.1 percent during the Bush-Clinton years.
* Real median family income grew by $4,000 during the Reagan period after experiencing no growth in the pre-Reagan years; it experienced a loss of almost $1,500 in the post-Reagan years.
* Interest rates, inflation, and unemployment fell faster under Reagan than they did immediately before or after his presidency.
* The only economic variable that was worse in the Reagan period than in both the pre- and post-Reagan years was the savings rate, which fell rapidly in the 1980s. The productivity rate was higher in the pre-Reagan years but much lower in the post-Reagan years.

source (http://www.cato.org/pubs/pas/pa-261.html)

Most of all, compare the U.S. to Italy. If I recall correctly, there is no income tax there. Only taxes on purchases. This makes everything so much simpler and easier. And Italy's economy isn't doing too poorly. And let someone with a greater knowledge of economics actually get something meaningful for your project from that.

That looks helpful. :D

...

Most of all, compare the U.S. to Italy. If I recall correctly, there is no income tax there.
...

There's lots of income tax in Italy. All major economies have income tax - it would be an interesting democracy without it.
World tax rates (http://www.worldwide-tax.com/index.asp#partthree)

Enhance free trade and remove subsidy for food production. Reduction of food cost has a large impact on low income earners expenditure. And only minor effect on expenditure of wealthy individuals.

Would giving money to the poor to invest (such as in their own business) be a version of supply side economics?

Supply-side economics is to do with shifting the aggregate supply curve thereby increasing production without increasing prices (working off the idea that its on the horizontal part of the curve). So, it will increase the number of jobs in the economy. More jobs means a smaller rich poor divide as there are fewer unemployed. More people employed means greater spending in the economy, so businesses will have greater profits and hence increase production, requiring more jobs, etc. etc. Also, supply-side economists are all for the removal of the minimum wage, so more people will be able to work. Unfortuantely, this also means that others will have lower paid jobs for things like tomato picking and such. You couldn't change taxation because that is more fiscal policy. But the whole more people employed with a virtuous circle would mean that the rich poor divide would have decreased purely based on the fact that more people are employed.

As for decreasing the rich's incomes, I honestly can't remember. Progressive taxation is again the way I'd do it, but its fiscal so scratch that. If there is any way of using supply-side economics to move markets away from oligopoly and towards perfect competition, that would be the best way