Reviving Demand Side Economics
The United States passed a law that heavily cuts taxes for the wealthy and corporations, including some other tax relief for lower income earners. This is known as Supply Side economics. This is the economic principle that more money available to those who supply in our economy will then pass that money to their laborers who help them supply those goods to consumers.
Supply Side economics has been a prevailing economic thought since the mid-1970s where more conservative circles and emerging liberal circles believed that empowering the working class by endowing the managing or producing class with more money would bring about wage growth. While this has never shown to have been the case, these “conservative” economic principles are where the term Neo-Con comes from, or newly conservative. Their policies are based on trickle-down economics, giving us the terms Voodoo economics and Laffer Curve. Some notable neo-conservative leaders: Bill Clinton, Barack Obama, Hillary Clinton, Al Gore. But still today’s wages remain stagnant, labor has little disposable income with which to exercise their power as consumers and public safety nets are woefully underresourced.
SO WHY NOT THE ALTERNATIVE? Why not focus on policies of DEMAND SIDE ECONOMICS. Capitalism is premised on working people demanding what they want anyway. Now Republican leaders believe in some idea that you should take what you can get and like it. But Capitalism is actually people demanding goods and then capitalists react by trying to supply enough to meet those demands. Unfortunately, in a world where global corporate profits are vastly elevated over worker rights and protections we have corporate profiteers that send their wealth directly to their 1% stake holders, companies like Wal-Mart, McDonald’s and Amazon: real monopolistic threats to American entrepreneurship and ingenuity.
Besides, the Demand Side theory is more fun anyway. The power is in the hands of consumers to make choices. When consumers are allowed to make their own choices based on their own tastes, every moment become more like our America democracy. With more money people can more particular choices. They can afford the small bakery owned and staffed by neighbors instead of going to Starbucks. When the local pharmacy and flower shop can compete fairly with Safeway for local neighborhood business, that is economic democracy meeting their neighborhood’s demands! But this starts by putting money back in everyone’s hands.
What Demand Side policies could we enact to increase resources for everyone?
· Create a progressive minimum wage and link executive and corporate board compensation to that company’s lowest paid employees
· Require any layoffs to provide for at least 6+ months’ salary
· Educational placement for hard to fill manual labor jobs
· Universal health care
· Infrastructure service projects (e.g.: Peace Corp) to serve underserved communities, including more public defenders and mental health professionals
· Housing, mortgage and equity building plans for households of all income levels
· Establish a local credit union to develop banking plans for students and low-income clients
If we aren’t given a fair shake of that capital for a fair day’s work, then we aren’t participating in capitalism. Then it’s just a hollow concept; rich people cheating people and trying to give it fancy names. Even as Adam Smith understood it, the free market system of Capitalism only works when the workers get an actual, fair and bargained-for day’s wage. Otherwise, it’s just an inefficient social experiment that sounds a lot more like slavery.
