The Stupidity of Supply-Siders.

by Pitt Griffin on October 14, 2014 · 0 comments

in Business, Drugs, Economics, Immigration, Politics

“When a management with a reputation for brilliance tackles a business with a reputation for bad economics, it is usually the reputation of the business that remains intact.” – Warren Buffet.

Life is full of transactions between those who have stuff – and those who want stuff. In economic terms, deals are struck between suppliers and demanders. Take the market for illegal drugs. The suppliers range from the street dealer, back through the wholesalers, the transporters, and the cartels.

War on DrugsPoliticians had maintained that interrupting supply reduces illegal drug use. It sounds reasonable. But it doesn’t work. How do we know? Because we have been trying that strategy for 44 years, at a cost north of $2 trillion – with no dent in consumption.

So why have we kept doing it?

Because ‘tough on crime’ was political gold. And because it’s very profitable for the prison industry, the corrections unions and all manner of suppliers of anti-crime geegaws. Unfortunately for the beneficiaries of this failed strategy, the “cost is to damn high” crowd has cast their lot with the liberals and the “lock them up and throw away the key” gang is looking like profligate profiteers.

So if tackling supply is a boondoggle, what’s the answer? Tackle demand. It’s actually terribly obvious. Do a thought experiment. If you really want something – and you are willing to pay for it – will people find a way to supply it? (Hint: Drugs are even found in super-max prisons.)

Now consider this. If you don’t want something – and you aren’t going to pay for it – does it matter how many people want to supply it (notwithstanding their lack of incentive to do so)? No.

So the solution to illegal drug use lies in reducing demand – using some combination of education and rehab. At least that’s where we should spend the “War on Drugs” money if we actually want to win it.

The supply-side inanity is evident in our strategy for reducing illegal immigration. We spend billions to reduce the supply of illegal aliens – walls, sensors, guards, courts, repatriation. Result? Abysmal. The solution? Tackle demand.

Who wants (demands) illegal immigrants? Employers – both business and individual. What do you think would happen to the demand for illegal aliens, if we made employing them a felony, punishable with jail time? Let’s throw the CEO and SVP of HR of companies that employ illegal aliens in prison. Let’s arrest homeowners who hire the undocumented.  I guarantee the problem would go away overnight.

We’ll never do it. For all the bluster, we are addicted to alien labor.

Conservative economic policies are also based on supply. To whit, the infamous “voodoo economics’ of the supply siders. It goes something like this. Reduce taxes on the suppliers in the economy (say the drug dealers) and they’ll be so fired up, entrepreneurial vigor will propel the economy to heights heretofore only dreamed of.

LOL.

Tax cuts on the rich do not create demand. Without increased demand there is no increase in economic activity, no increase in production, no increase in employment. The only increase tax cuts on the rich engender is in the pile of cash the rich sits on.

Simply put, people don’t make stuff unless there is someone willing and able to buy it.

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