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 ?
The real problem the critics have with supply side economics and why it is feared by politicians of both parties have nothing to do with economics, but everything to do with power.
Still, the record indicates that Kemp, who has made his public image by espousing supply side economics and enterprise zones for inner city neighborhoods, is an opponent of church state separation.
Chapter 4 concentrates on inequality in the United States and focuses on the recent trend toward increased inequalities as the result of the Reagan's misconceived supply side economics. The author begins by examining income inequality among households, families, individuals, farm versus nonfarm, and black-white inequality, and then reviews long-term trends and the effect of sex discrimination and taxation on income inequality.
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.S.