supply-side economics

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Related to Supply side economics: Laffer curve, Trickle down economics

supply-side economics,

economic theory that concentrates on influencing the supply of labor and goods as a path to economic health, rather than approaching the issue through such macroeconomic concerns as gross national product. In the United States during the 1980s, supply-side economics was associated with conservative proponents of the free-market system. Such measures as tax cuts and benefit cuts to the unemployed are basic supply-side tactics, with the intention of increasing the incentive to work and produce goods and services. The theory holds that high marginal tax rates and government regulation discourage private investment in areas that fuel economic expansion, and that more capital in the hands of the private sector will "trickle down" to the rest of the population. The theory gained popularity during the late 1970s, with a tax revolt in California and economic hardship during the CarterCarter, Jimmy
(James Earl Carter, Jr.), 1924–, 39th President of the United States (1977–81), b. Plains, Ga, grad. Annapolis, 1946.

Carter served in the navy, where he worked with Admiral Hyman G. Rickover in developing the nuclear submarine program.
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 administration (1977–81). Arthur Laffer and his "Laffer curve" doctrine became the heart of the economic programs of Ronald ReaganReagan, Ronald Wilson
, 1911–2004, 40th president of the United States (1981–89), b. Tampico, Ill. In 1932, after graduation from Eureka College, he became a radio announcer and sportscaster.
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's presidency, during which tax rates were cut substantially. Although supply siders maintain that the tax cuts of the 1980s were responsible for the decade's economic growth, critics argue that such policies caused massive federal deficits, penalized the poor and middle class, and induced excessive speculation that severely damaged America's economy. The subsequent tax increases under Presidents George H. W. Bush and Bill Clinton and the concurrent corporate investment, economic growth, and drop in unemployment during the 1990s further undercut supply-side suppositions.


See V. Canto, Foundations of Supply-Side Economics (1983); R. L. Bartley, The Seven Fat Years (1992).

References in periodicals archive ?
Third, because of its dismal record in the 1980s, anything tagged supply side economics legitimately could be dismissed as "voodoo.
Unsuccessful in bids for his party's presidential nomination in 1980 and 1988, Dole finally succeeded in his third bid by positioning himself as a "moderate" alternative to Pat Buchanan's populist isolationism and Steve Forbes' supply side economic optimism.
Laffer is partnering with the Texas Public Policy Foundation to create theLaffer Center for Supply Side Economics, with a focus on preserving and promoting supply-side ideas by housing all of his work dating back to the 1970s and providing a forum for new and original research on economic ideas based on the core tenets of supply-side economics.
I do not believe in the myth of supply side economics and, given that in the west money is just a commodity, then is the demand for it was there then it would have been created anyway.
The Reagan era, which is the era most often identified with supply side economics ushered in the largest budget deficits seen in post-WWII U.
Meanwhile, Kristol has unabashed visions of this period being like the Carter interregnum, when supply side economics took wing and gave the Reagan forces of 1980 an intellectual veneer.