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I think we may be seeing the end of demand-side economics, or at least it's dying gasps. If there's a gap between production and demand, you can look at it two
by DanielBMarkham 13y ago
I think we may be seeing the end of demand-side economics, or at least it's dying gasps.
If there's a gap between production and demand, you can look at it two ways: either people don't have enough money to meet the demand, or we're making the wrong things.
Supply side economics said we should always stimulate supply -- demand would follow. Give breaks and incentives to keep making things, dammit! Of course, the problem here is that simply "making things" doesn't take the economy anywhere. It doesn't trickle down.
Demand siders are similarly stuck in one spot, claiming that if only people had enough money, the economy would be fine. Give the people money and the rest will work itself out. It'll trickle up.
I think that both supply and demand are moving targets, and by focusing on them we're missing the larger point: is the money doing anything new? Because economies exist to grow and adapt, not stagnate. If you're dumping money on factories to produce things nobody wants, it's not growing. Likewise, if you're giving money to people to do the same thing they've always done with it, it's also not growing.
We're going to need a more sophisticated way at looking at this. I welcome the idea of giving money away. Anything that will move the conversation forward from these two simplistic and entrenched positions is most welcome.
Let's test it.