Is the Supply Side Failing?
A question we should be seeking the answer to is "Why has economic growth been so puny lately?"
We had the Great Recession which was caused by the government's insistence that home loan lenders lower their lending standards so that more folks could afford to own a home. Banks and Wall Street went along because they made money by following the demand for relaxed lending standards. The result was the Great Recession.
The Federal Reserve provided the liquidity to save the banking system. Since then the Fed has increased monetary base by an enormous amount, kept interest rates at essentially zero but the results have only been spikes in commodities and, lately, equities. Economic growth (GDP) has been puny. Why?
Too much attention has been paid to the demand side. Bush II lowered taxes so that folks would have more to spend. The government has continued massive Keynesian spending but economic growth still is terrible.
Maybe we are looking in the wrong place. Maybe the fact is that real economic growth starts on the supply side.
What do I mean? Did Blackberry, iPhone, and iPad get created by demand or supply? What was the demand for PC's the day the Apple II or TRS 80 came out? What was the demand for the Internet before 1995? What was the demand for cellphones before there were cell phones? What was the demand for Tesla before there was Tesla? Were the Wright brothers responding to a demand for air travel? CDs, DVD's, iTunes, Facebook, search engines?
My point is that much of what consumers now spend money on are things which were not responses to demand. They were innovations on the supply side.
Unfortunately the words "supply side" have become ridiculously politicized and anything which become politicized is more difficult to discuss objectively. I am not talking only about taxes. I am merely making the observation that much recent growth has started on the supply side and we need to ask "what's wrong with the supply side."
One person who is presently creating supply-side innovative stimulus is Elon Musk.