Tuesday, March 19

Some thoughts on demand-side vs. supply-side economics

Bear with me for a moment, and follow me, if you will, in a brief story:
Start at square one, wipe all economies out, let's give ourselves a theoretical clean-slate.
In 'the beginning', so to speak, you have some humans that need clothing, need food, need shelter, right? So then these humans start making clothing, shelter, hunting and growing food, etc. At some point, they realize that it makes sense to specialize. Specialist hunters, farmers, tool makers, builders, clothing-makers emerge. And they begin to trade. This trade is the beginning of an economy. The specialists are the first businesses, they naturally emerge to meet the inherent demand. 
The human demand for goods & services exists whether or not anyone is there to fill it. And if people don't have money, they will barter for goods & services. Demand is inextinguishable, it's built into humans. Supply—specialists, businesses—always come to meet demand wherever it exists. So even without 'jobs', without employers, without 'suppliers', there is still the seed of an economy, because there is demand to be satisfied.
Eventually, the nascent 'barter' system gives way to money, because people realize it's more convenient than trading chickens, etc., and thus you have something that looks very much like our economy today. Human need, (i.e., 'demand') is inherent and inextinguishable.
This little story is my way of saying, "Supply-side economics is bunk."

(These thoughts were originally seen in some of my tweets.)