Wow! Barely three weeks after The Queen’s passing and the nation’s economy is a mess, although through no fault (mostly) of the citizens. Ugh! Seriously, did The Queen have to do everything?!?! Apparently, Prime Minister Liz Truss seeks to reprise the same failed supply-side policies as Ronald Reagan. As The New York Times reports, “Four days after Ms. Truss’s tax cuts and deregulatory plans stunned financial markets and threw the British pound into a tailspin, the prime minister’s political future looks increasingly precarious as well. … Ms. Truss, he said, could have taken a more cautious approach: rolling out the supply-side measures first, like plans to untangle Britain’s cumbersome residential planning rules and build more housing, which are hurdles to economic growth. Then, when inflationary pressures had eased, the government could have cut taxes. But that was never in the cards, Professor Portes said, because Ms. Truss and Mr. Kwarteng are free-market evangelists who ardently believe that cutting taxes will reignite growth, and because they have little more than two years to turn around the economy before they face voters in a general election.”
Once again, supply-side economics does not work as well as the conservative academia and models (equations) suppose it. This is a splendid case where reality does not match the theory because we’ve actually lived through such policies. Again, I will say what I have always said about supply-side economics: It’s like pushing on a string. It does not work. What is the more effective way to utilize a string to move an object? You pull on it, f***tards! Also known as demand-side economics. You first create a demand, and the supply follows. You don’t “over” create supply hoping people will demand “things,” for they may not.
For some reason, there seems to be this tautological belief that if it exists, then people will want it — whatever “it” is, which includes disposable income engendered by misguided tax cuts for the rich. If the economy breeds pink ponies, then everyone will want one. Of course, supply-side economics is more complicated than that, but the notion is the same. Just because you make it doesn’t mean people want it or are in the mood to buy it. Conservatives do love to think that more money in the hands of the well-off will create jobs. No! They just hoard more of it. They don’t put it to productive use. That is to say, utilizing capital to create factories, businesses, etc. They put it into the stock market, so they make money off of money. This is not the hopes and dreams of stimulating the broad base of the economy. It just makes the rich richer while impoverishing the 99 percent and government. Tax cuts for the lower and middle classes are a different story since they use disposable income differently. And we wonder why inequality keeps widening between the haves and have-nots. Speaking of the lower and middle classes’ differing spending habits from the rich, I won’t even address the idea of juicing demand via tax cuts for the non-wealthy during already inflationary periods; that is a whole other matter of complexity that engenders issues of its own. Suffice it to say, Truss’s tax cuts will make inflation worse for those who can’t afford it. But I digress. I recommend reading a book by Tomas Piketty, Capital in the Twenty-First Century for greater elucidation.