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'''Supply-side economics''' is a [[macroeconomics|macroeconomic]] concept developed in the 1970's as a counter to the dominant Keynesian macroeconomic theory  during the years of [[stagflation]].  Before the early 1980's Keynesian views predominated.  Economist [[John Maynard Keynes]] believed that "demand creates supply". This concept drove many of the ideas behind the recovery from the Great Depression.  Government played a role in subsidizing individuals by giving them jobs and therefore an income to have to spend on goods.  This "demand-side" theory posited that demand would create supply, and feedback to in turn create more demand.   

'''Supply-side economics''' is a [[macroeconomics|macroeconomic]] concept developed in the 1970's as a counter to the dominant Keynesian macroeconomic theory  during the years of [[stagflation]].  Before the early 1980's Keynesian views predominated.  Economist [[John Maynard Keynes]] believed that "demand creates supply". This concept drove many of the ideas behind the recovery from the Great Depression.  Government played a role in subsidizing individuals by giving them jobs and therefore an income to have to spend on goods.  This "demand-side" theory posited that demand would create supply, and feedback to in turn create more demand.   

Supply-side theory is based on Say's law, which, paraphrased, states that supply creates its own demand.  A simplified version of these ideas were taken up as a popular political movement during the 1980 election campaign, with [[Ronald Reagan]] advocating for a modified policy of supply-side economics (although [[liberals]] more often used the term "trickle-down" economics). The decreased regulation begun in the late 1970s, together with lower marginal tax rates would provide enough savings and investment to pool new capital and drive economic growth. Manufacturers for example, would hire more people, produce more and create more demand and economic activity.  The idea gained wide popular support, and became known as "Reaganomics".  

Supply-side theory is based on Say's law, which, paraphrased, states that supply creates its own demand.  A simplified version of these ideas were taken up as a popular political movement during the 1980 election campaign, with [[Ronald Reagan]] proposing a modified policy of supply-side economics (although [[liberals]] disparagingly used the term "trickle-down" economics). <ref>[http://www.investopedia.com/articles/05/011805.asp Understanding Supply-Side Economics], David Harper </ref> The decreased regulation begun in the late 1970s, together with lower marginal tax rates would provide enough savings and investment to pool new capital and drive economic growth. Manufacturers for example, would hire more people, produce more, and create more demand and economic activity.  The idea gained wide popular support, and became known as "Reaganomics".  

Most criticism came from the Left, but some on the Right was skeptical as well.  [[George H.W. Bush]] during a campain speech famously referred to it as "[[voodoo economics]]", due to discarding of [[New Deal]] orthodoxy.  On the Left, it was seen as threat to the [[welfare state]] with the loss of federal revenues in tax cuts that had funded the failed [[War on Poverty]] programs for more than a decade.

Most criticism came from the Left, but some on the Right was skeptical as well.  [[George H.W. Bush]] during a campain debate famously referred to it as "[[voodoo economics]]", due to the discarding of [[New Deal]] orthodoxy.  On the Left, it was seen as threat to the [[welfare state]] with the loss of federal revenues in tax cuts that had funded the failed [[War on Poverty]] programs for more than a decade.

One key aspect of the program in 1982 was tax cuts for businesses to Research and Development in high technologies for the United States to become more competetive with Japanese electronics manufactors who had dominated the industry since the late 1960s.  Liberals were critical of the idea, claiming "tax cuts for business" only benefited 'the rich"; howeever, the "trickle down" effect became a flood of prosperty in high tech industries by the mid to late 1990s.

One key aspect of the program in 1982 was tax cuts for Research and Development (R&D) in high technology firms intended to make United States more competetive with Japanese electronics manufactors which had dominated the industry since the late 1960s.  Liberals were critical of the idea, claiming "tax cuts for business" only benefited "the rich"; however, the "trickle down effect" became a flood of prosperty in high tech industries by the mid to late 1990s.

==References==

 

<references/>

==Reaganomics==

 

"Reaganomics" includes the idea of tax cuts proposed and enacted by President [[Ronald Reagan]].  It usually refers to the idea of "trickle down theory" in which lowering taxes on capital gains and those with higher incomes will stimulate the economy, thereby improving the economic situation of everyone.<ref>'Supply-side economics is better known to some as "Reaganomics", or the "trickle-down" policy espoused by former U.S. president Ronald Reagan. He popularized the controversial idea that greater tax cuts for investors and entrepreneurs provides incentives to save and invest and produce economic benefits that trickle down into the overall economy.'  [http://www.investopedia.com/articles/05/011805.asp Understanding Supply-Side Economics], David Harper </ref>

 

 

==External Links==

==External Links==

*[http://www.independent.org/publications/tir/article.asp?issueID=15&articleID=89/ "My Time with Supply-Side Economics"], by Paul Craig Roberts

*[http://www.independent.org/publications/tir/article.asp?issueID=15&articleID=89/ "My Time with Supply-Side Economics"], by Paul Craig Roberts

*[http://www.independent.org/publications/tir/article.asp?issueID=20&articleID=231/ "What Really Happened in 1981"], by Alan Reynolds and Paul Craig Roberts

*[http://www.independent.org/publications/tir/article.asp?issueID=20&articleID=231/ "What Really Happened in 1981"], by Alan Reynolds and Paul Craig Roberts