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Home >> United States & Canada >> Economics & Trade American Economic Policy from Hoover To Bush David Storobin, Esq. - 5/9/2005 On October 13, 1999, the Royal Swedish Academy of Sciences (The Nobel Prize in Economics Committee) announced that the 1999 Nobel Prize winner Robert Mundell has "established the foundation for the theory which dominates practical policy considerations of monetary and fiscal policy in open economies." Which theory dominates practical policy according to the Nobel Prize Committee? Supply Side Economics. "Mundell's research has had such a far-reaching and lasting impact because it . . . . [produced] results with immediate policy applications. Above all, Mundell chose his problems with uncommon - almost prophetic - accuracy in terms of predicting the future development of international monetary arrangements and capital markets." [1] EVERYONE IS A KEYNESIAN: REPUBLICANS EMBRACE KEYNESIANISMAs the U.S. and international economy crashed in the 1920's, the self-correction of the economy was put into question. The inflated stock market crash did not in and of itself cause the Great Depression, as the American economy has experienced several similar crashes without sliding into a depression. Nor is it necessary for a recession to turn into a depression, as we've witnessed in scores of recessions before and after the Great Depression. Indeed, a recession is necessary at the end of an economic boom to force government and business to become more efficient and get rid of excess waste (useless employees and expenses) that was compiled during the economic rise when nobody wanted to be the "bad guy" or cared enough to save when businesses were swimming in money. What did cause the depression was the Fed reducing the supply of money by 30%, as well as the Smoot-Hawley Tariff Act of 1930, raising tariffs on more than 200 products, which resulted in other nations, including Canada, raising tariffs on American goods. As a result, cheaper or better foreign goods could not make their way into the United States, while American goods could not be traded overseas without a severe competitive disadvantage. Already, farmers could not participate in the prosperity of the Roaring-1920's because of the Fordney-McCumber Tariff of 1922, causing tremendous hardship for rural communities while everyone else was prospering. The Smoot-Hawley Tariff Act caused the same economic devastation in the urban and suburban areas as the Fordney-McCumber Act caused among farmers. In the wool industry alone, the 1930 Act caused 60,000 people to lose jobs after the tariffs on wool rags was increased by 140%. [4] Politicians thought that they could force Americans to buy U.S.-made goods, thus solving the problem of increasing unemployment. However, international trade is a 2-way street and, naturally, foreign countries raised their tariffs as well. Additionally, foreign companies operating in the United States were often forced to close doors, resulting in job losses in industries from sales to advertising. Within months after the enactment of the 1930 Tariffs, unemployment skyrocketed from around 6% (roughly where it was before the Crash of 1929) to almost 15%. [5] Without the previously established foreign traders, many goods could no longer be sold. While facilities, man-power and even reserves were meant for pre-tariff days, there was no market for the goods produced. Thus, prices plummeted. The price of a bushel of wheat went down 70%. Overall, consumer prices dropped 25%. [6] Additionally, the Federal Reserve decreased supply of money by 30% during the Hoover administration causing the value of money to increase, resulting in a deflation. [7] The result of deflation and inability to sell as many goods as before to foreigners was under-consumption and excess production/reserve of goods. In response, Herbert Hoover became the first Keynesian President - even before Keynes published "The General Theory" (however, in the 1920's, Keynes did publish many other books, essays and articles promoting his ideology). During the 1932 elections, Franklin Delano Roosevelt blasted the Republican incumbent for spending and taxing too much, increasing national debt, raising tariffs and blocking trade, as well as placing millions on the dole of the government. [8] He attacked Herbert Hoover for "reckless and extravagant" spending, of thinking "that we ought to center control of everything in Washington as rapidly as possible," and of leading "the greatest spending administration in peacetime in all of history." Roosevelt's running mate, John Nance Garner, accused the Republican of "leading the country down the path of socialism." [9] Between 1930 and 1931, government spending increased from 16.4% to 21.5%. To pay for it, in 1932, Hoover raised taxes. Most Americans saw their tax rates double, with the top rate rising from 24% to 63% (more than 2.5 times). [10] As a direct result of the tax hike, unemployment immediately jumped more than 2% to near 30%. [11] EVERYONE IS A KEYNESIAN: DEMOCRATS EMBRACE KEYNESIANISMFranklin Roosevelt ran on a platform that called for a 25-percent reduction in federal spending, a balanced federal budget, decreased government regulation of the private enterprise, and an end to the "extravagance" of Hoover's farm programs. [12] Yet despite calling the above promises "a covenant" during the 1932 elections, FDR and his VP built on Hoover's policies. Rexford Guy Tugwell, one of the architects of Franklin Roosevelt's policies of the 1930s, admitted, "We didn't admit it at the time, but practically the whole New Deal was extrapolated from programs that Hoover started." [13] The new administration, however, did sharply reverse course on the monetary policy, reducing the value of the dollar by 40%, causing sharp inflation, which is just as undesirable as deflation. [14] The FDR inflation did not resolve the Hoover problem of under-consumption and over-production since many business already closed doors or fired employees and/or got rid of their reserve at any price (after all, their goods were being devalued daily in Hoover's deflationary environment). So rather than help business, FDR inflation merely harmed consumers and shocked the economy. Furthermore, people quickly realized that their money are being devalued and ran to the bank to withdraw everything they had for immediate consumption. This and the surrounding economic depression caused several banks to go bankrupt, leading to a popular panic about the safety of investments and savings. The panic caused more people to withdraw money from banks, causing more harm to the economy. Roosevelt's response was to increase taxes and spending. In the first year of the New Deal, Roosevelt proposed spending $10 billion while revenues were only $3 billion. Between 1933 and 1936, the federal government's expenses increased by over 83 percent. Federal debt skyrocketed by 73 percent. [15] FDR's 1933 minimum wage requirements caused 550,000 African-Americans alone to lose their jobs. [16] Roosevelt engaged in multiple tax increases, resulting in the highest income tax rate standing at 90%. [17] In 1941, FDR proposed a tax of 99.5% on all income over $100,000. When Congress refused, the President issued on August 27, 1942 an executive order imposing a 100% (one-hundred percent) income tax on all income over $25,000. [18] In November 1942, Republicans won the mid-term elections and passed a law against the Democrat's executive order (a statute passed by Congress and either signed by the President or over the President's veto is supreme to the President's executive order, as per United States Constitution). [19] Yet, tax increases by Hoover and Roosevelt did not produce increased tax revenue. In 1929, 98% of Americans did not pay income tax and income tax rates for the top 2% ranged from 0.5% to 24%. By 1935, tax exemptions were lowered so that almost all workers paid taxes ranging from 5% to 79%. Yet, revenue from income tax fell by more than half - from almost $1.1 billion to $0.527 billion! [20] The upper class either stopped investing, or began investing oversees or in tax-exempt products. So while the "working class" had to toil for increasingly lower take-home wages, constantly subject to salary decreases due to tax hikes, the wealthy elites simply stashed their money away and either changed investments or lived off of interest. The rich don't need to work and pay taxes - they can simply stop investing if it is not worth their time and effort. The working class needs to keep working and keep paying higher taxes. Since the rich have so much more than the poor, tax revenue necessarily decreases. But the government needed money to pay for all the jobs it was "creating." Unable to tax investments and unable to collect enough revenue by taxing the working class, the FDR administration skyrocketed taxation on consumer goods, from cars to food. As a result, excise taxes on goods brought increasingly high revenue, rising from $500 million in 1929 to $1.36 billion in 1935. Sales taxes are necessarily regressive and harm the poor the most. After all, $100 in sales taxes paid by a person earning $10,000 constitutes 1% of the person's salary, but the same $100 is only 0.1% of the salary earned by a person making $100,000. Thus, rather than helping the poor and the working class, tax raises were implemented on them, while the wealthy were simply forced to find different ways to invest. [21] Secretary of the Treasury Henry Morganthau admitted in May 1939, "We have tried spending money. We are spending more than we have ever spent before and it does not work. And I have just one interest, and now if I am wrong somebody else can have my job. I want to see this country prosper. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. I say after eight years of this administration, we have just as much unemployment as when we started. And enormous debt to boot." [22] And yet people were grateful to FDR for creating jobs. The Works Projects Administration (WPA) "created" 5 million jobs, according to New Deal supporters. But unemployment did not decrease. And where did the government get the money to pay for all these jobs? Did it have a separate source of income? No. The FDR administration killed jobs with tax increases and then "helped" people by providing them with government jobs. Jobs were merely transferred from the private to the public sector, causing dependence on government bureaucracy. MILITARY KEYNESIANISMFew historians or economists claim that Keynesian policies of Hoover and Roosevelt administrations took the country out of the Great Depression. It was World War II, which hit Europe in 1939, that allowed the United States to sell weapons, thus creating job opportunities and a source of income from foreign governments. With England and Russia fighting for survival in the face of well-organized, well-trained and well-equipped German forces, the United States found itself in perfect position to supply these and other countries with weapons and military technology. Naturally, either during or after the war, the United States got paid. The jobs created were paid for by foreign nations, rather than increased taxes. Economists quickly realized that while taxing and spending may not work because you are killing private sector jobs at the same time when you are creating public sector jobs, military Keynesianism works because jobs are often (though not always) paid for by a source of revenue independent of U.S. taxes. Following WWII, Keynesians took credit for the nation's recovery. With conservative journalists far outnumbered by the liberals in the media, Keynesianism was enthusiastically promoted by the press and became widely accepted and the United States for the first time enjoyed solid growth, low unemployment and modest unemployment. Introduced by the Republican Party under the Hoover administration and vastly expanded by the Democratic Party under Roosevelt, it was now the dominant fiscal ideology that few dared to question. Economists, however, realized the need to continue producing and selling weaponry to sustain the American economy, if the economy is to rely on government-created, rather than private jobs. And because so many jobs were transferred from the private to the public sector under the FDR administration, current administrations could not politically afford not to provide the already existing jobs. Selling non-military goods did not produce the same results, as the United States did not enjoy the same advantage over other countries in non-military goods. United States can make electronics, but so can South Korea. And if the U.S. is to sell something to South Korea, Koreans will demand that the U.S. also buy something. That is not the case with military products. Few countries could compete with American military technology and could not demand trade equity. Thus, the country desperately needed to continue the war-mode and "luckily" was "rescued" by the advent of the Cold War and wars in the Third World (either against colonial powers or civil wars). It is, therefore, hardly surprising that volatile periods, such as Wars in Korea and Vietnam (including sales of military technology to Koreans and Vietnamese), produced economic expansions, while more peaceful periods (Khruschev's early years, Détente, etc.) resulted in economic slow-downs. Both parties were Keynesian and both needed constant international instability and wars to sustain the American economy. Many historians described how Republicans and Democrats dragged the United States and other nations into military conflicts to support military Keynesianism (but that is outside the scope of this paper). SUPPLY SIDE'S FIRST STRIKESupply side economics has been developed and publicized predominantly by three individuals: Robert Mundell, the economic theoretician; Arthur Laffer, the economist skilled at public relations; and Jude Wanniski, the Wall Street Journal journalist. In 1961, the young Robert Mundell joined the IMF and was asked to analyze the monetary-fiscal policy of the United States. The economy was growing at slower than desired levels, with high unemployment, despite President John F. Kennedy's promise to improve the state of the nation's economy. Keynesians pushed for higher government spending. The U.S. Chamber of Commerce wanted a balanced budget and high interest rates. The Council of Economic Advisors argued in favor of low interest rates and a budget surplus to get people to spend their savings. All three camps focused on the demand side of economics, ignoring the approach of classical economics - supply side, a.k.a. greater production of desired goods and services. [2] Early in 1962, Mundell published a paper arguing that none of the approaches would work and what was required are lower marginal tax rates to spur economic growth. A few months later, Kennedy accepted Mundell's proposal and the tax cuts were enacted into law after the President's death. [3] The resulting economic growth of the mid to late 1960's was seen as an aberration and coincidence. Few attributed economic growth to tax cuts. KEYNESIANISM'S LAST STANDDespite passing John Kennedy's tax cuts, as recommended by Robert Mundell, Lyndon Johnson engaged in another attempt to spur the economy via traditional, non-military Keynesianism. On the wings of his spectacular victory over Barry Goldwater, which came - at least in part - as a result of JFK's assassination, Johnson sought to alleviate poverty by creating a government bureaucracy. As already mentioned, John Kennedy's tax cuts of the top marginal rate from 91% to "only" 70% led to spectacular economic growth. Between 1961 and 1968, the inflation-adjusted economy expanded by more than 42 percent. On an annual basis, economic growth averaged more than 5 percent. Tax revenue increased by 62 percent between 1961 and 1968, despite the decrease in tax rates. Adjusted for inflation, tax collection rose by one-third. [23] This gave President Johnson the revenue needed to create his social welfare programs. But it was only a matter of time before economic growth came to a crashing halt. In a progressive tax system, one must cut taxes regularly so long as there is inflation because the simple fact that we have inflation causes an unannounced tax increase since people's salaries fall into higher tax brackets without their purchasing power increasing. If your salary increases 25% but inflation increases the same 25%, your purchasing power remains the same, but you are likely to fall into a higher tax bracket. Furthermore, as economy and financial well-being improved, people fell into higher and higher tax rates. And while the wealthy elites were kept in the same (highest) tax bracket, it was the middle class that had to continuously pay more and more. Given the growth spurred by Mundell-recommended tax cuts, no tax increases were needed - every year more and more people faced higher tax rates and Johnson did not have to worry about pushing through unpopular tax measures. Rather than adjust tax rates to keep the incentive to invest at the same level as after the Kennedy cuts, Johnson preferred spending increases. THE FALL OF KEYNESIANISMWhen Richard Nixon came to power in 1968, he declared that "everyone is Keynesian." It was conventional wisdom that economy could only be stabilized by managing the demand, rather than supply. Yet, these were the last days of Keynesianism in the halls of power of the United States. The Nixon administration tried every Keynesian economic remedy, fiscal and monetary, including wage and price controls. [24] Everything failed. In May 1974, Robert Mundell correctly forecasted that unemployment would reach at least 8% unless a tax cut of at least $10 billion was passed. Half a year later, he recommended a tax cut of $30 billion. Instead, Gerald Ford enacted tax increases to "reduce pressure on prices." [25] Naturally, the economy did not improve and actually worsened. There was hardly anything else Keynesians could try. There wasn't even a World War to rescue the American economy as happened a generation before! Détente with the Soviet Union and the lessening of fighting in the Third World since colonial powers withdrew from most of it resulted in reduced need for U.S. military technology. By any objective measure, Keynesianism failed. Had it not been for World War II and resultant Military Keynesianism, the failure of this economic policy would've been evident by the 1940's. It took a little longer, but by the mid-1970's, it was clear that something new is needed. BETWEEN KEYNESIANISM TO SUPPLY SIDE ECONOMICSIn 1976, Republican Congressman Jack Kemp proposed a tax cut called "Jobs Creation Act" based on the ideas of Robert Mundell and his friend Arthur Laffer. Arthur Laffer invented the "Laffer Curve" which explains that there are two points on an economic scale where the government collects the same amount of tax revenue. For example, a tax of 0% and 100% produces the same tax revenue (nothing) because nobody would work under a 100% tax rate system. What the Laffer Curve says is that at some point, the higher the tax rate, the less revenue is produced because businesses and investors no longer have an incentive to work and invest. Both major Republican Presidential candidates, Gerald Ford and Ronald Reagan, rejected the idea during the 1976, as did the Democratic candidate, Jimmy Carter. When Carter came into office in 1976, he mostly rejected Keynesianism and employed a series of monetarist measures, as developed by Milton Friedman. Fed Chairman Paul Volcker followed Friedman's call for slow, steady increase in money supply. The result was economic stagflation - high inflation coupled with high unemployment. According to the Phillips Curve (and the Taylor rule which is based on the Phillips Curve), when inflation is high, unemployment should be low - and when unemployment is high, inflation should be low. Basically, when people have jobs and money, they should increase demand for products, thus causing inflation. Carter's monetary policies were able to "beat" the Phillips Curve, simultaneously causing high inflation and high unemployment. Government bond interest rates rose to 10%, while the prime rate climbed to over 20%. [26] A generation later, on June 6, 2003, the Financial Times reported that Milton Friedman conceded that the having quantity of money as a target is not a good means of improving the economy. [27] EVERYONE IS A SUPPLY SIDER: GOP EMBRACES SUPPLY SIDE ECONOMICSBetween the 1976 and 1980 elections, registered Democrat Jude Wanniski, a Wall Street Journal reporter, wrote a book called "The Way the World Works." The book made its way into Ronald Reagan's hands, who found that supply-side economics conformed with his own education at the time when classical economics was taught in schools and universities. For centuries, Say's Law argued that Supply creates Demand. The rule does not mean that the simple act of creating a supply of anything will create a demand for the product, as Keynesians claim in attacking classical economics. The law merely means that you need to create a supply of something someone wants in order to be able to demand something that you want. As such, a shoemaker needs to make shoes that a farmer wants in order to "demand" food from the farmer in exchange for the shoes (or in exchange for the money that the shoemaker made by selling his shoes to someone else). Supply siders argued the same. There can be no demand without supply. At an individual, "micro" level, one needs to exchange goods, services or money for whatever he desires. At a government, "macro" level, money is merely a way to exchange goods and services in a more efficient manner. After all, just because the Federal Reserve puts pictures of dead Presidents on pieces of paper, doesn't mean there is more food or more housing or more computers in the country. Similarly, making people "want" something more, doesn't mean that there is more food, housing or anything else. Demand without supply is nothing more than a desire and has no effect on the nation. Transferring money from one person to another does not "increase" demand, it merely shifts it from Person A to Person B. Therefore, according to Supply Siders, the only way to increase demand is to increase supply. This is the opposite of Keynesianism. As Keynesian economist Paul Sweezy acknowledged, "The Keynesian attacks all fall to the ground if the validity of Say's Law is assumed." [28] Moreover, Supply Side Economics supports free markets and international trade, as well as the Gold Standard, while Keynesianism is opposed to all of the above (or at least wants to limit it). As basic as this may sound, Keynesianism was so well entrenched in American psyche by 1980 that Ronald Reagan's opponent, George H.W. Bush Sr., referred to Supply Side Economics as "voodoo economics" and still advocated Keynesianism. Reagan won the 1980 elections and immediately surrounded himself with . . . monetarists loyal to Milton Friedman! In 1981-82, the Fed implemented monetarist policies in tightening the supply of money. As a result, dollar rapidly gained value, causing deflation (if the economy stays at the same level, but the amount of money decreases, the value of each dollar increases because each dollar buys you more than before). By the summer of 1982, the monetarist experiment was over. The Fed added liquidity and the Reagan administration decided to proceed under the banner of Supply Side Economics. [29] Despite the common misconception, Supply Side Economics is not a theory of taxation, but rather a general theory of economics, which includes tax rates as one aspect of the theory. It does not believe that cutting taxes alone produces greater government revenue, but rather that increased economic activity as a result of lower taxes may create greater revenue for the government under some circumstances. It is also not a theory concerned predominantly with increasing tax revenue, but rather with improving quality of life. In understanding Supply Side Economics, one must not make the statist assumption that only the government can improve the welfare of the populace. Indeed, Classical Economics argues that government is detrimental to improving the economy, as has been acknowledged even by leftist Classical Economists, such as Karl Marx (who stated that market economics and private enterprise are necessary, and capitalism may not be rushed. Communism, according to Marx, may only take place in developed nations after capitalism has run its course by developing everything there was to develop). But it is the Supply Siders ideas on taxes that made supply side economics a "theory which dominates practical policy considerations of monetary and fiscal policy in open economies," according to the Nobel Prize Committee. The first tax cut after the Kennedy took place under the Carter administration. From 1978 to 1981 the top capital gains tax rate was reduced from 36% to 20%. As a result, between 1978 and 1985, revenue from capital gains taxes increased 90%, from $20 billion to $36 billion. When the capital gains tax was lifted by to 28% in 1985, revenues tumbled by 20% in the following 5 years. Revenue from capital gains tax did not rise to 1985 levels until Bill Clinton passed a cut on the tax. [30] In 1982, Ronald Reagan lowered income tax, with the top rate going from 70% to 28%. In the following 7 years, revenue increased by 24.1% after counting for inflation. Compare that to the tax hikes of 1990 and 1993, when revenue increased only 21.6% after counting for inflation. Thus, we see that a tax cut produced more revenue than a tax increase. [31] From 1980 to 2000 the amount paid by the top 1% went up from 19.05% to 37.42%. The share of the bottom 50% went down from 7% to 4%. Meanwhile, the amount of taxes collected went up from $249 billion to almost $1 trillion in the 2 decades. [32] Due to the success of Supply Side Economics, Reagan was re-elected by a spectacular margin in 1984. In 1988 George H.W. Bush ran and won on the "read my lips, no new taxes" platform. Yet, he raised taxes, harmed the economy and was kicked out of office in favor of a "New Democrat." After "12 Long Years," Democrats wanted to return to power. Between 1968 and 1992, Republicans ruled for all but 4 years, and the lone Democratic victory came against a Keynesian Gerald Ford who pardoned Richard Nixon, angering much of the nation. EVERYONE IS A SUPPLY SIDER: DEMOCRATS EMBRACE SUPPLY SIDE ECONOMICSWhen Bill Clinton was chosen in 1992 as the Democratic candidate, he ran as a fiscal moderate. Yet, upon coming to power, Clinton returned to the liberals' Keynesian roots, raising income tax rates and trying to create a massive health care bureaucracy. The result was a huge loss by Democrats in the 1994 midterm elections. Understanding that the nation shifted against Keynesianism, Clinton embraced many tenets of Supply Side Economics. Unlike FDR, Clinton no longer had the option of raising taxes to 90%. He also understood that raising taxes harms the economy. Instead, Bill Clinton cut the capital gains tax, and reformed welfare to cut spending. Even before the defeat of the Democrats in November 1994, the President signed NAFTA and other free trade agreements. By any objective measure, Free Trade, in general, and NAFTA, in particular, have been a spectacular success. Not only did trade with Mexico triple in 10 years, but unemployment also went down to historical lows - under 4%. The manufacturing output of the United States increased by 41% in the 10 years following NAFTA, compared to 34% in the 10 years preceding it. [33] Moreover, the Economist (United Kingdom) reported that despite the outcry about outsourcing of American jobs, "at the national level, more jobs are outsourced to America than the other way around. American workers, in other words, are net beneficiaries of outsourcing (it goes without saying that consumers always were). And in the cross-border trade of white-collar services, a chief concern, America's surplus with the rest of the world is not shrinking; it is growing." [34] Additionally, many jobs are created in the United States as a result of outsourcing. For example, cheaper goods are sold in higher volume, which means more jobs for salespeople, advertisers, store managers, drivers and transporters of the goods, store janitors, and all the other people associated with shopping or that surround shopping centers (e.g., a pizza store in a mall that benefits from an increasing number of shoppers). It is, therefore, economically and politically impossible for anyone to get rid of free trade policies. As the longest economic boom in American history came to an end, some have begun to blame free trade agreements. Yet, economists understand that recessions are a natural occurrence since all economies must go through recessions to get rid of boom-economy excesses and one could hardly expect anything but a recession in the wake of September 11, 2001. 2004: EVERYONE IS A SUPPLY SIDERToday, neither Republicans nor Democrats support high taxes. Both John Kerry and George W. Bush Jr. Both sides proposed tax breaks prior to the 2004 elections. Neither side was opposed to international trade. True, Kerry may complain about outsourcing of jobs, but even he never proposed eliminated free trade agreements in favor of tariffs. The fact remains that it is in the wake of NAFTA that the U.S. reached historical lows in unemployment, so it would logically follow that free trade cannot destroy the American economy and is almost definitely beneficial to it. The explanation given by Keynesians and socialists for the rise of Supply Side Economics is that the rich have taken over both major parties. "The bosses have 2 parties, we want one too," says the radical left. But Supply Side Economics has not been embraced because of some conspiracy. It has proven itself and succeeded where monetarism and Keynesianism failed. Neither party pushes for higher spending and higher taxes anymore. At most, Democrats may oppose a GOP-proposed tax cut in favor of a smaller tax cut. Even George H.W. Bush Sr.'s closest adviser James Baker recently admitted that he's now a Supply Sider and referred to himself as a "reformed drunk" in a Wall Street Journal editorial on April 20, 2003. [35] "It should be known that at the beginning of a dynasty, taxation yields a large revenue from small assessments. At the end of the dynasty, taxation yields a small revenue from large assessments," said 14th century Arab philosopher and economist Abd-ar-Rahman Abu Zayd ibn Khaldun. [36] Today, once again, both Republicans and Democrats understand this basic truth that has been known by Classical Economists for centuries. The fiscal experiments with non-Classical Economics of the last 75 years are over. The government, whether right or left, understands that the only way to feed more people is to create more food; the only way to house more people is to create more housing; and the only way to satisfy people's demands is to create a greater supply of goods. And the way to do so is to let the efficient private market take charge, while the inefficient government plays a secondary role. Everyone is a Supply Sider now. CITATIONS1. Wayne Jett, 2003. A Supply-Side History and the Road Ahead [Online. Cited May 10, 2004]. Supply Side University. Available from World Wide Web: (http://www.polyconomics.com/supply.htm) 2. Id. 3. Id. 4. Lawrence Reed, 1998. Great Myths of the Great Depression. [Online. Cited May 10, 2004] Mackinac Center for Public Policy. Available from World Wide Web: (http://www.mackinac.org/archives/1998/sp1998-01.pdf) 5. Richard K. Vedder & Lowell E. Gallaway, Out of Work, Unemployment and Government in Twentieth-Century America. New York University Press, 1993, 1997, p. 78. 6. Id. 7. Id. 8. Id. 9. Id. 10. Id. 11. Vedder, p. 78 12. Id. 13. Id. 14. Id. 15. Id. 16. Id. 17. Id. 18. Dr. Burt Folsom, 2002. Why the New Deal Failed. [Online. Cited May 13, 2004] Accuracy in Academia. Available from World Wide Web: (http://www.academia.org/lectures.html) 19. Id. 20. Id. 21. Id. 22. Id. 23. Daniel J. Mitchell, Ph.D., 1999. Time for Lower Income Tax Rates: The Historical Case for Supply-Side Economics. [Online. Cited May 14, 2004] Heritage Foundation. Available from World Wide Web: (http://www.heritage.org/Research/Taxes/BG1253.cfm) 24. Jett, 2003. 25. Id. 26. Id. 27. Id. 28. Bruce Barlett. Supply-Side Economics and Austrian Economics. [Online. Cited May 11, 2004] Liberty Haven. Available from World Wide Web: (http://www.libertyhaven.com/theoreticalorphilosophicalissues/austrianeconomics/supplysideeco.html), which quoted from Paul Sweezy, "Keynes the Economist," in Symour E. Harris., ed., The New Economics (New York: Alfred A. Knopf, 1950), p. 105. 29. Jett, 2003. 30. Stephen Moore (Director of Fiscal Policy Studies at the Cato Institute), 1997. Are Supply-Siders All Washed Up? [Online. Cited May 8, 2004] Cato Institute. Available from the World Wide Web: (www.cato.org/dailys/06-06-97.html). Originally published in the Wall Street Journal. 31. Id. 32. Summary of Federal Individual Income Tax Data, 2001. Tax Foundation. [Online. Cited May 1, 2004] Tax Foundation. Available from the World Wide Web: (http://www.taxfoundation.org/prtopincometable.html) 33. Daniel T. Griswold, 2004. After 10 Years, NAFTA Continues to Pay Dividends. [Online. Cited May 8, 2004] Cato Institute. Available from the World Wide Web: (http://www.cato.org/dailys/01-08-04.html). 34. Economist, April 7, 2004. When Good News Spells Trouble. [Online. Cited May 14, 2004] Available on the World Wide Web at: (http://www.economist.com/world/na/displayStory.cfm?story_id=2572245) 35. Jett, 2003 36. Say's Law and Supply Side Economics. [Online. Cited May 11, 2004] Available on the World Wide Web at: (http://www.friesian.com/sayslaw.htm). Quoted 'Abd-ar-Rah.mân Abû Zayd ibn Khaldûn, The Muqaddimah, An Introduction to History, Franz Rosenthal translation, abridged and edited by N.J. Dawood, Bollingen Series, Princeton University Press, 1967, p.230
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