Supply Side Economics Case Study

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"The failure of national economic policy is costing us more than jobs; It has begun to weaken that uniquely American spirit of risk-taking, large ambition, and optimism about the future. We must rally them now to bold departures that rebuild our national morale as well as our material prosperity." - Mitch Daniels
"Education is the best economic policy there is." - Tony Blair Many influential politicians and economists believe that economic policy directly affects the work force. That "bad" economic policy directly affects human capital. However, the term "economic policy" has great potential to be misunderstood or taken at face value. What exactly is this economic policy that is strong enough to diminish human capital and to destroy …show more content…

In a broader sense, supply-side economics seeks to deregulate the market to promote a flourishing economy through sound money and free trade. Supply-side economics is a relatively young theory of economic policy that has seen much use throughout history, despite only recently becoming a published theory. In the 25 years between 81 ' and 07 ' that supply-side economics was applied, the nation saw a 300% increase in net wealth, from $20 trillion to $60 trillion. Supply-side economics lowers marginal tax rates, the taxes paid per additional dollar of income, and increases the after-tax rate of return, which is the "nominal" or assumed rate of return minus the rate of inflation, from work and investment. It also deregulates the market, which is removing regulations and trade barriers enforced by the central government. This combination of lower taxes, higher returns, and less regulation is all geared towards increasing the incentive to produce. Many people believe that supply-side economics did not accomplish it 's goal, citing the Clinton administrations tax increases and it 's actual effect on the economy compared to the effect that the supply-side theory posits. In my personal opinion, supply-side econonomics has it 's faults. Most of the tax cuts and incentivization goes towards the wealthy. This increases the wage gap substantially as the wealthy are able to invest …show more content…

Each has it 's own strengths, weaknesses, and mysteries to deal with. Supply-side economics favors the wealthy. Keynesian economics favors the consumer and has severe long-term consequences. Monetary policy is the only way to manage and mitigate the strengths and weaknesses of economic ideologies and the Fed was created to that purpose and that purpose alone. We may often look at tax and interest rates and be disappointed by what we see. It is important for every American to realize that without economic policy, there would not be a stable

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