What the supply-siders never realized was that supply-side economics has been eclipsed by supply-side politics. The supply-side insight that supply creates its own demand (Say’s Law) is every bit as true in the political realm as in the economic. By making their services available to those who seek to transfer wealth from other citizens to their own benefit, politicians have tapped into a rich vein of political support. Indeed, by supplying the service of enriching people through the political process, politicians have unleashed a powerful tsunami of demand for that service, and so government spending has continued to grow, impairing economic growth. Unless we find a way to break free from this self-destructive dynamic, our fiscal situation will someday come to be seen as hopeless as Greece’s today. Will the next generation of supply-side economists make amends for their predecessors’ negligence and stand forth to be counted in this existential battle? We shall see.
Wednesday, November 25, 2015
The Triumph of Supply-Side Politics: Where the Supply-Siders Totally Blew It
The supply-siders failed us all by not making a case against leviathan
government. They never put forth a coherent voice addressing the key political
question that our founding fathers grappled with at the constitutional
convention: What should government do? The founders, such as John Adams and
Madison, understood the suicidal tendencies of democracy and concluded that our
liberty and prosperity depended on keeping government small and limited (see
Ninth and Tenth Amendments); the supply-siders, by contrast, have been largely
silent about the proper scope of government. Nor have they examined the
question of the proper size of government from a more practical, utilitarian
standpoint by asking the question: What does government do well? The answer to
that question suggests a far more modest, constrained role for government.
What the supply-siders never realized was that supply-side economics has been eclipsed by supply-side politics. The supply-side insight that supply creates its own demand (Say’s Law) is every bit as true in the political realm as in the economic. By making their services available to those who seek to transfer wealth from other citizens to their own benefit, politicians have tapped into a rich vein of political support. Indeed, by supplying the service of enriching people through the political process, politicians have unleashed a powerful tsunami of demand for that service, and so government spending has continued to grow, impairing economic growth. Unless we find a way to break free from this self-destructive dynamic, our fiscal situation will someday come to be seen as hopeless as Greece’s today. Will the next generation of supply-side economists make amends for their predecessors’ negligence and stand forth to be counted in this existential battle? We shall see.
What the supply-siders never realized was that supply-side economics has been eclipsed by supply-side politics. The supply-side insight that supply creates its own demand (Say’s Law) is every bit as true in the political realm as in the economic. By making their services available to those who seek to transfer wealth from other citizens to their own benefit, politicians have tapped into a rich vein of political support. Indeed, by supplying the service of enriching people through the political process, politicians have unleashed a powerful tsunami of demand for that service, and so government spending has continued to grow, impairing economic growth. Unless we find a way to break free from this self-destructive dynamic, our fiscal situation will someday come to be seen as hopeless as Greece’s today. Will the next generation of supply-side economists make amends for their predecessors’ negligence and stand forth to be counted in this existential battle? We shall see.
