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Old 03-18-2019, 10:50 PM
 
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The main problem with Demand side theory is that it’s highly inflationary, which is a big reason why you see higher prices in areas with lots of public spending(take higher education or medicine or anything in liberal densely populated areas for example). If you have lots of demand and not enough supply it will bid up prices and create shortages in some cases. Add the higher tax rates needed for higher public spending and you have even higher prices. Inflation/high cost of living is as anti-lower/middle class as it gets. Which is why you see lots of working class migration from expensive blue states to inexpensive red states. Demand side theory is also not as sustainable, the people you are taking from will eventually find ways around it or simply move or move their money and the people you are giving to will eventually stop being productive. You will eventually kill off productivity, chase away capital and simply run out of money to sustain the system.

Last edited by cttransplant85; 03-18-2019 at 11:00 PM..
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Old 03-18-2019, 10:55 PM
 
Location: Ruidoso, NM
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Quote:
Originally Posted by Elliott_CA View Post
The efficacy of each needs to be weighed with broad national data over a period of years, not with anecdotes based on one company or another.
Look at what "demand side" did for wages and living standards from the early 30s to late 70s, vs the "supply side" of the last 40 years. It's gotten us flat wages, a huge amount of fiscal and private debt, and a deteriorated infrastructure.
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Old 03-18-2019, 11:13 PM
 
Location: Ruidoso, NM
5,318 posts, read 4,946,391 times
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Originally Posted by cttransplant85 View Post
The main problem with Demand side theory is that itís highly inflationary.
I think you are imagining things. We didn't have high inflation when we supported demand in an efficient manner (primarily wages). Countries that have been doing this for a long time do not experience inflation problems.

"Demand side" is really the only thing that makes sense in the US. In poor or developing countries they can certainly be hampered by a lack of capital. Often any capital from natural resources is simply removed rather than used for development! But in any developed country there is an abundance of capital, and it *will* be invested in production if the demand (people with money to spend) is there. If the demand is depressed, capital will be used to bid up assets or it will leave the country...
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Old 03-18-2019, 11:28 PM
 
1,959 posts, read 695,498 times
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Originally Posted by rruff View Post
I think you are imagining things. We didn't have high inflation when we supported demand in an efficient manner (primarily wages). Countries that have been doing this for a long time do not experience inflation problems.

"Demand side" is really the only thing that makes sense in the US. In poor or developing countries they can certainly be hampered by a lack of capital. Often any capital from natural resources is simply removed rather than used for development! But in any developed country there is an abundance of capital, and it *will* be invested in production if the demand (people with money to spend) is there. If the demand is depressed, capital will be used to bid up assets or it will leave the country...
What are you talking about? We had extremely high inflation during the Carter years 18% by the end of his term. We’ve had historically low inflation since then. You’re ignoring basic supply and demand principles. What you want is an abundance of supply, too much supply where it brings down prices. This abundance of supply is why you can buy a mansion in Atlanta for a tenth of what a 500sq foot studio would cost in San Francisco.

You also need to make something before there even is demand. No one knew they wanted an automobile or a computer before they were brought to market.
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Old 03-19-2019, 12:44 AM
 
Location: Los Angeles
2,852 posts, read 1,521,002 times
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Quote:
Originally Posted by cttransplant85 View Post
What are you talking about? We had extremely high inflation during the Carter years 18% by the end of his term. We’ve had historically low inflation since then. You’re ignoring basic supply and demand principles. What you want is an abundance of supply, too much supply where it brings down prices. This abundance of supply is why you can buy a mansion in Atlanta for a tenth of what a 500sq foot studio would cost in San Francisco.
Yeah, sure. You need a history lesson:

The inflation of the 70's was due in large part to two oil shocks (73-75 and 1979). Nixon's wage and price controls weren't a great help either. So Carter appoints Volker at Fed in 79 to slay the inflation dragon.

When Ronald Reagan was President, Paul Volker began to lower interest rates and Reagan increased state spending in 82/83, and that, in tandem with falling oil prices, is what brought about “morning in America”. Those are Keynesian (demand side) tactics. Yet inflation didn't come roaring back.
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Old 03-19-2019, 08:40 AM
 
Location: Proxima Centauri
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Originally Posted by James Bond 007 View Post
The OP's post had nothing to do with supply or demand side economics.

I think that we are in agreement. However, if you look at https://en.wikipedia.org/wiki/Supply-side_economics and do a search on "trickle down" you will find that supply side and trickle down are linked. In the first instance, where the OP says that Costco passed on the tax saving to their employees, I feel that the OP is correct. In the second instance where he talks of cut hours he is off the mark and should have spoken of that same tax cut as you suggested.
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Old 03-19-2019, 08:51 AM
 
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I do not put much faith in terms. We often create terms then definitions that appease a certain crowd. For example, republicans do not like the term tax, but the term fee is acceptable to them.

Call it what you want, but arguing about the nuances of a definition humans created is ridiculous. Companies choose to use resources as they see beneficial them. Employees are disposable business items that rarely get credit and almost always the blame.
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Old 03-19-2019, 09:25 AM
 
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Originally Posted by James Bond 007 View Post
You did not describe anything resembling policy side prescriptions.
Artificial Minimum wage isn't a policy side prescription?
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Old 03-19-2019, 09:28 AM
 
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Originally Posted by Astral_Weeks View Post
Yes, have you actually ever read Keynes? He was not an advocate of the minimum wage.

https://www.forbes.com/sites/investo.../#3e57c77d29ac

Traditional demand side theory has hardly a mention about a legislated minimum wage.

Lowering interest rates or raising public spending on infrastructure during a recession are the center pieces of Keynesian or demand side economics. Those two items have nothing to do with a lower or higher minimum wage.

"Keynes stated in 1930 that tax-financed wealth redistribution was a smarter way to help the poor than fixing wages at above-market rates." For example, the Earned Income Tax Credit (ETIC) or some other similar mechanism would be supported by Keynes.
You're right, Keynes was not a supporter of the minimum wage.

But do you deny that those of his line (Krugman, Stiglitz) are not hardcore minimum wage proponents?
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Old 03-19-2019, 09:29 AM
 
4,875 posts, read 2,527,694 times
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Originally Posted by James Bond 007 View Post
The reason the OP's post was ridiculous is because he cited Costco as being the beneficiary of the republican tax cuts, but he completely forgot that Whole Foods was also a beneficiary of the exact same tax cuts! So he went on to cite Costco both raising wages and keeping hours intact as somehow being an example of "supply side economics" while Whole Foods also raised wages but had to cut hours, and somehow concluded that was an example of "demand side economics." But the stupid thing is that Whole Foods got the exact same tax cut Costco did, so why should Costco be an example of "supply side economics" while Whole Foods wasn't?

People need to get in the habit of thinking about what they're writing, before they write it.
It's not ridiculous because both firms reacted totally differently to the tax cuts, one implemented minimum wage, and the other organically increased wages based on profits and earnings.

To say otherwise is simply dishonest.
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