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the supply side answer

the supply side answer - Digital Rules The Supply-Side...

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Digital Rules The Supply-Side Answer 12.28.09, 12:00 AM ET Rich Karlgaard The School of Economic Public Policy known as "supply side" is out of favor. But it's not as dead as it looks and is poised for a comeback. The theory works. The production of goods and services does indeed create its own demand. Otherwise, high-redistribution, low-productivity countries would be rich. Jamaica, for example, would be as rich as Singapore. As Josh Lerner recently pointed out in The American : "In 1965 the two nations were equal in wealth. Four decades later, their standing was dramatically different." What happened? Singapore invested in supply. It built infrastructure such as ports with government funds. It kept taxes low, regulations light, trade open and laws simple but strictly enforced to encourage private investment. "Jamaica, meanwhile," writes Lerner, "spent many years mired in political instability, particularly the disastrous administration of Michael Manley during the 1970s. Dramatic shifts from a market economy to a socialist orientation and back again, with the attendant inflation, economic instability, crippling public debt and violence, made the development and implementation of a consistent long-run economic policy difficult." President Barack Obama is a thoroughgoing demand-sider. Considering the $787 billion stimulus
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