Viewed as a strategic thrust in its totality, Demand side economics is about the State making purchasing decisions for the public. It is about funding projects whose economic utility is between uncertain and nil. Is it really the lack of a road or dam that slows economic progress, when no one wanted to use the road anyway, and when access to power already exceeded what was needed?
Ponder this: as we sit in our collective chairs this Sunday, looking at the future, no few American consumer and businesspeople have money THEY DON’T WANT TO SPEND. Why not? The future is uncertain. It’s unclear what effect Obamacare–if unrepealed–necessary tax increases, and possible discretionary energy tax hikes will have on our economic life, especially if the Democrats somehow hold on to one or both chambers of Congress.
In the real world, people understand that your savings is your cushion against the unexpected. It is your cushion–with insurance–against unexpected loss, injury, unemployment. It is also your nest egg, to be used in old age, or to invest in a business. Keynesians want that nest egg. They have literally engineered an internally consistent economic theology in which you are better off giving your money to the State now, in exhange for the guarantee of benefits. They take your money, and give you unemployment benefits, health benefits, retirement money, and every other little thing your heart could desire. They just WANT YOUR MONEY. Give it to them, and nobody gets hurt. Don’t give it to them, they will take it through taxes and inflation. One way or the other, and they get it.
This is the goal. What would rational economic thinking look like?
Let us look at the glut situation. You have too many cars. What do you do? Sell them at a loss, reduce production, and INVENT SOMETHING NEW that people actually want to buy. Come out with a new model, such that the sex appeal or fundamental value is so powerful that people spend their money on it. This creates profit, which gets reinvested, which causes job growth.
The problem is that innovation cannot work to produce growth if no PRIVATE capital is laying around, and the surest way to KEEP–not get, but KEEP–private capital in circulation is by not confiscating it in the first place through taxation or onerous regulation that bulks up costs that can’t easily be passed along.
There can be no question that Supply Side Economics (aka common sense) works. The people who practice it always run deficits because they increase their SPENDING. It happened under Reagan and both Bush’s. It didn’t happen under Clinton since he had an activist conservative Congress for 6 of his 8 years. Even they, though, did almost nothing to address the debt.
We need to be clear: nothing short of a revolutionary fix is going to make the some $600 billion we pay (or soon will) annually in interest go away. How in God’s name do people worry about Halliburton, when they could be thinking about the people who get this money, year in, year out, guaranteed by the US Taxpayers? Halliburton, as big as it is, is chump change.
Again, my fix makes all this go away, eradicates the vestiges of Keynesism and what for lack of a better term I have called “Monetary Mercantilism”, and puts on a just economic footing as a nation–and potentially as a planet–for the first time EVER.
2 replies on “Further thought on Demand side economics”
My main question to you is how do we solve the problems of over consumption in a consumer economy? While we may be able to take our money back into our control, and establish a system which means inflation will never happen again, if we continue to produce things, throw them away, and produce new things, we still have the problem of too much junk, too much garbage, and overuse of natural resources. We need to solve these problems as well. While the Federal reserve, the world bank and the world trade center are BIG problems for freedom, social justice also means taking care of the planet so everyone has clean air and clean water. We also need to make sure that our food, which is currently polluted and increasingly controlled by a handful of companies, is back in the hands of the people. A revolution should take all of these problems into account if we really want to recreate a nation for the people.
To the extent environmental problems are real problems–as one example, I don't believe in Global Warming–they are problems for all of us. Yet, in a physical sense, they are empirical problems. How do we keep producing and throwing away? More and more clever production, coupled with more clever disposal. We have heard about coming global famines since the time of Malthus, but they never seem to appear. People like Norman Borlaug appear, and fix the problems.
For this reason, I am unwilling to conflate the physical problem of consumption with the moral problem of consumerism. They are two different issues.
As I see it, the PRIMARY problem is moral: how do we build happiness that is not dependent on material comforts? Inevitably, if people cease needing to consume for their psychological health, if it isn't being pushed on them relentlessly by our media and economists, then they will consume less.
Look at my other site, where I talk about what I term the Will to Qualitative Power. It's in the Otter piece, here: http://www.goodnessmovement.com . Click on the introduction tab, or whatever I called it.