So hopeful you've got some time and interest when your back.
So to your main point about needing supply side interventions, I agree supply side theory has its merits and is absolutely useful in the right situations. The issue with its use here is that the 2008 financial crisis was not a supply side problem. It was a demand problem from which we never bounced back. I think our economy is in a transition period right now so its a little difficult to say what the best route forward right now would be because I don't think anyone knows where we are going right now. Record stock market prices, record profits, low wages, low worker particaption, no market correction in a year, Price to earnings ratios rather high, job growth solid but not stellar, economic growth mediocre. We are in unfamiliar territory I think.
My overly simplistic arguments against this being a supply side issue:
Corporations have been making record profits for nearly a decade and all over the world they are sitting on their cash. Yes, this has a lot to do with some dumb tax policies, but it is also a reluctance to invest. Key point: Our job creators have plenty of cash and are not doing anything with it.
Interest rates are staying steady at Low despite year after year of job growth and economic growth that is relatively good compared to the rest of the large economies of the world. Key point: Money is availabe to invest if you want it, but investment is weak.
Wage growth is weak despite record corporate profits and full employment for our labor participation rate at least.
Inflation has been low to non existent for nearly a decade again despite low interest rates and record profits.
Add this to the fact that wage and wealth growth has been exponentially higher for the top 10% of the income brackets and I have A LOT of trouble seeing how this reality is calling for supply side intervention.
This current low growth environment is mostly a product of poor demand. The recovery period was so prolonged because we had 4 years where total consumer debt fell and it JUST reached its 2008 level this March. This has never happened before after a recession.
Look at the chart of consumer spending. You see it drop sharply in 2008 and 2009 and then it starts back up again at a slower rate than before but there is no bounce back. That loss of demand was permanent and it will stay permanent so long as we are in the current situation of poor productivity growth and poor wage growth for 90% of our citizens.
https://tradingeconomics.com/united-states/consumer-spending
And again, it has nothing to do with envy. Tax cuts for the wealthy are poor engines for economic efficiency. Tax cuts for corporations are better, but still not great. The economic efficiency of many types of government spending are higher than these tax cuts. The economic efficiency of giving more real dollars to the bottom 50% of our income bracket is higher still, especially when the problem is consumer demand.
Here's a long report detailing the evidence that show that tax cuts and gains have little predictable effect on economic growth:
"The argument that income tax cuts raise growth is
repeated so often that it is sometimes taken as gospel.
However, theory, evidence, and simulation studies tell
a different and more complicated story. Tax cuts offer
the potential to raise economic growth by improving
incentives to work, save, and invest. But they also
create income effects that reduce the need to engage
in productive economic activity, and they may subsidize
old capital, which provides windfall gains to asset holders
that undermine incentives for new activity. In addition,
tax cuts as a stand-alone policy (that is, not accompanied
by spending cuts) will typically raise the federal budget
deficit. The increase in the deficit will reduce national
saving—and with it, the capital stock owned by Americans
and future national income—and raise interest rates,
which will negatively affect investment. The net effect of
the tax cuts on growth is thus theoretically uncertain and
depends on both the structure of the tax cut itself and
the timing and structure of its financing."
The report does, to your point, say that tax cuts combined with spending cuts of inefficient public spending does produce growth in models, but that has *never* happened in US history. Tax cuts have always been coupled with increased public spending that we've had to finance. Tax cuts that not matched with spending cuts from inefficient areas ultimately result in decreased growth which is the situation we are in now. 15 years of unfunded wars, public expansion, and tax cuts.
https://www.brookings.edu/wp-conten..._Tax_Changes_Economic_Growth_Gale_Samwick.pdf
I will conceed that Obama was a regulatory monster and I was not upset with Trump's aim to deregulate though he is not the person I would have chosen to do it.
