Sunday, October 13, 2019

Do we still need to keep ramping up product production, or isn't there a more up to date economic strategy?

Trickle down economics keeps getting discredited, but somehow it persists. It gained lots of traction during my college years when inflation was rampant. Prices were going up for lots of commodities and products such as gasoline. There was some attempt to have price controls, but that often led to shortages. There were the gas lines of the 1970's. Some economists thought, if you help the producers, give them tax breaks and so forth, there would be more supply and lower prices.

Thus what I think Supply Side Economics is about? Question mark here as, admittedly, trying to read up on that subject causes my eyes to gloss over.

We face a very different situation now. Here in the US, we are awash in cheap products. There is usually lots of supply. There isn't the "Energy crisis" like in the 1970's. We've basically fracked (oil fracking) our way out of that. Today's problems are a bit different. It's been getting harder to afford a place on this planet that one can call home. Ramping up factory production, or oil drilling, isn't going to create more place for people on this planet. Better planning might, however. Density, transit and so forth; in the places where the jobs are and the people want to live.

We also have the cost problems associated with income discrepancy. Large segments of the population that can't afford the services provided by high income professionals such as medical services and insurance services. Education is effected by this also; for instance the high cost of college administrators. Giving more money to the wealthy isn't going to help here.

In my college years, I heard it said that giving money to consumers would just increase demand and push prices up farther, or lead to shortages. That thinking might work for gasoline, but not necessarily for all parts of the economy.

Today, I hear economists, such as Paul Krugman, talk about the need to stimulate demand for things we need; like building green infrastructure.

4 comments:

Ken said...
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Ken said...

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