My demand driven economics gets run down a lot. Can someone explain supply side economics because I'm struggling with it?
I am an Austrian type of guy.
Here is a nice primer on what Austrian's think and believe. Here are a few blurbs. I would focus on the key principles and the boom and bust cycle.
http://www.adamsmith.org/sites/default/files/resources/austrian-primer-text_2.pdf
"And government action is usually misplaced in another important
way. There is no way that officials can know what individuals do in
fact value. They cannot look into our minds and know whether we
would gladly pay more taxes to have better schools or hospitals,
for example. Market prices could tell them what the public is
prepared to give up for such things, but by ignoring prices and
trying to ‘improve on’ the market, they inevitably fail to maximise
our values. In a vibrant market, where people constantly adjust
their plans against changing conditions, officials could not even
collect the necessary information before it became out of date, and
could certainly never know what people would choose. Perhaps the
government has a role in making sure markets work smoothly; but
as far as Austrian economists are concerned, it has no business
intervening in them."
"The first thing to remember is that the expansion in the money
supply starts at some point of origin. It might start with the
government printing more money in order to pay its debts or its
bills, or to expand public enterprises. It may come from the central
bank lowering interest rates and other banks creating more money
in the shape of mortgages, overdrafts and loans to their customers.
So the new money has its first effect at that point. Government
suppliers and workers may be the first to benefit from an
expansion of fiat money, for example. They find themselves better
off, and spend more. That makes their own suppliers better off;
and the new money ripples out from there to the next suppliers,
and so on, raising prices and drawing in investment and resources
at every stage."
"The Austrian view is that human events are driven by the actions
of individuals, that only individuals make choices, and that society
and social institutions do not have a mind of their own, somehow
independent of the minds of the individuals that comprise them.
There is therefore no such thing as a ‘collective will’, and any politics
rooted in that idea is fundamentally flawed. Politics must respect
the fact that decisions are made by individuals, not collectives."
"it is precisely
because people differ about the value of things that they enter
into exchanges – to the benefit of both sides. Their mutually
beneficial social behaviour is not the collective will of people who
agree about everything, but a reciprocal arrangement between
people who disagree. If everyone shared the same views on
society, then collective politics might be feasible; but the reality
is that they do not. Consequently, Austrians feel that it is better
for political solutions to emerge through peaceful settlements
between individuals, than by the majority imposing their will on
everyone else."
"freedom should
be maximised, and that coercion should be minimised, and
that this would create a dynamic, harmonious, self-regulating
society. Yet for markets to operate, they needed rules (such as
the respect for property and contracts), just as a fire needs a
fire-basked to burn properly. So there was a role for the state in
enforcing these rules."
"Even if one does reject central planning, many people still believe
that a mixed economy works best: for example, having free
exchange and competition (which incentivises innovation and
customer service), within a framework of central co-ordination
(which avoids duplication and ensures all options are covered).
But Austrians say that any government intervention necessarily
places the values of a small political class over the values of the
whole population, freely collaborating in trade, and so diminishes
human welfare."
grin:
