Letter: Supply-siders ignore the need for demand

Friday, Jan. 10, 2003 | 9:17 a.m.

From its very inception, I have viewed supply-side economic theory with suspicion.

After a quadrupling of the national debt in the "Laffer curve" '80s and the situation today when -- despite $2 trillion in tax cuts to corporations and the investment class, ostensibly to spur them into expanding production and hiring -- the economy is still floundering long after it should have recovered from a relatively minor recession. I am convinced it doesn't work.

The problem is big business is not stupid enough to spend a lot of money producing goods they can't sell. So instead of expanding they are cutting back or standing still while sending their tax cut proceeds to offshore banks.

Which leads to the main reason the Bush economy is faltering. No amount of supply will do any good unless there is demand for it, and supply-siders seem to have forgotten that it's the law of supply and demand, not just supply, that drives any economy. And tax cuts for those who don't spend them do little for the effort!

What is needed right now is what has always worked. Government spending on public works and infrastructure, as well as social spending, to take money out of the Cayman Islands and put it into workers' pockets and watch the economy take off. But of course our moron in chief is not about to do this, so on goes "stagcession" as far as his warmongering will keep him in office!

DANIEL OLIVIER