The basic premise of supply side (or trickle down, voodoo, etc.) economics is simple: let people - including rich people - keep more of what they earn and they will spend that additional money, which keeps others gainfully employed.  I would suggest that people should not be disproportionately robbed of the fruits of their labor simply for having the misfortune of being more talented at their chosen occupation than others regardless of the validity of supply side theory.  But, alas, that common sense view doesn’t suffice when confronted by liberals who believe that the function of government is to redistribute wealth more “fairly” - with fair being defined as equal without regard to capability.  Consequently supply side economics remains a whipping boy for such individuals.

You might have heard that Hollywood writers are about to go on strike.  Some are already trying to predict the financial impact on the region.  Obviously some of the loss will be felt by those who are directly affected, namely the workers.  But as the NY Times points out, other industries, such as restaurants, will also feel the pinch.  The mere fact that such a claim is made (justifiably) without question is an implicit admission that supply side economics is valid.

The claim suggests that if people, in this case the newly unemployed workers, have less money in their pockets that they will in fact spend less money.  In other words, the lost income has a deleterious trickle down effect.  If that is true then isn’t the opposite also true?  After the strike is over and all of the affected workers see their income increase from the strike level income, much like income increases realized via tax cuts, won’t they start spending more money, thus stimulating broader economic growth?

• Goodyear strikers struck out
• Illegal immigration news
• Alabama Arise releases 2009 agenda
• Defining need - one of my biggest pet peeves
• Want Two Years Tax Free?

This entry was posted by Brian on Thursday, November 1st, 2007 at 9:12 pm and is filed under Economy. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site. Please note the copyright policy.