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Friday, October 31, 2003

Supply-Side Theory 101:

Those of you out there who doubt the validity of supply-side economic theory should follow this little example.

Indian software firms are excited about the newly announced GDP growth in the United States. Why, you ask? Because growth means more orders for their software. When capitalists (investors, purchasers, buyers, and consumers) have more to spend, others (such as the aforementioned software firms) can sell more products, and can subsequently create more products. Creating more products leads to the need for 1) more materials for consumption, and 2) more human capital to do the work. This, in turn, leads to more workers having more capital to spend on more things, as well as more providers of materials for consumption, who will, you guessed it, need to hire more people to produce them. Is this sinking in yet?

Blame the Bush tax cuts. I am.

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.: posted by Dave 10:58 AM





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