Preface to my next Work, coming out sometime next year.
. A wide variety of Economic theories exist today; all generally divided along lines of how much Government should regulate the Economy. Further disruption enters the discussion, because all Economists have beliefs the Ideal should be modified to benefit certain segments of the Economy. A Case in Point could be the new Homeland Security bill, presently awaiting Presidential signature as the Author writes. Homeland Security enactment exhibits Supply-Side Economics willingness to utilize Government action to support their agenda, despite all philosophy.
The majority coalition supporting the Bill through the halls of Congress, consisted of Republican Supply-Side supporters. They tacked on several provisions to help Business: notably allowing Corporations moving off-shore to escape American taxes, to be allowed to bid on Government contracts. There was actually no limitation to these Corporations in the Bid process afore hand; simply Government insistence these Corporations pay taxes on earned Profits from such Government contracts. The provision allows escape from such taxation. This provision was fully in accord with Supply-Side sentiment, which holds Government taxation of Business profits to be injurious to economic performance.
The other major provision placed in the Bill, though, was directly counter to the basic Supply-Side argument, which states Government should not regulate economic activity. This Provision forestalled Consumers from suing Drug companies for damages from supplied Vaccines. This is direct impediment of pre-accepted economic participant initiative; and direct evasion by Drug companies of responsibility for the quality of their product. They would use Government law to forestall redress, simply because it would affect business interests on the behalf of Consumers. This was hypocritical adoption of Government interference to protect business profits, in absolute denial of ideology.
Keynesianism can be equally hypocritical in political expression, refusing limitation on judgements against business in Civil Court actions; though it is recognized as unjust taxation, and detrimental to economic performance. They support usurious taxation of alcohol and tobacco, though realizing this is injurious to both Consumer and Business; with no proof existent that the medical costs of such usage equals the high assessments. They actually sponsor legislation allowing all medical costs to be magnified by around 400%, because it magnifies Government expenditure on Welfare programs. They are joined in this by their Economic opponents, because it is extremely profitable for the medical industry. The result is the same Pill sells for $.30 in foreign countries, while selling for $8 here; a wheelchair costing $1800 here, can be purchased elsewhere for $300. This is true when all Products are produced in the United States.
Most current Economic argument asserts less Government interference in economic activity remains best for economic performance. Monetarists contend certain instruments of production, mainly financial resources, should be used to moderate economic performance; allowing overt Government interference to lapse. Supply-Siders insist Government interference should consist solely of activity to benefit and advance Business interests, believing Business profitability to be the well-spring of economic performance. Tax Policy Economists, of which the Author is one, believe Government interference can be damaging to economic performance by it’s nature of bureaucratic regulation and ineffective distribution; thinking the imposition of taxes being the only correct realm for Government action in the Economy. Keynesianism still remains committed to massive Government control.
Monetarists equal control of the Banks, plus unrestrained Business interest. Supply-Siders desire unrestrained Business interest, with action taken to forestall Business liabilities and taxation. Keynesianism want massive Government regulation of business. Tax Policy Economists want judicious taxation to control the Economy, without ineffective Government regulation and regulatory costs. The above equates to the basic Economic theories currently operative, with Government action deriving from implementation of these theories, by venue of legislation.
A sad factor often arises from the process of Politics: The interaction of various economic theories to produce law, often adopts the worst of every theory; while canceling the beneficial aspects of any theory. The joining of Monetarist, Supply-Sider, and Keynesian has brought about the medical industry debacle in this Country, as noted above. Supply-Side conquest of the Keynesian Environmental Protection Agency has brought about the first lowering of Emission standards in the Agency’s history, with no thought Power companies will use said Savings to reduce actual Emission levels; they possessing no incentive to do so. Monetarists have lowered Interest rates to practically nothing, yet the National Debt is rising; Tax Policy Economists, specifically this Author, assert the policy is generating a new Stagflation.
This Book will attempt to prove the above argument. The Author will here give a short synopsis for those who would not read further. Levels of Consumption are dropping because of current economic uncertainty; because of rising Unemployment due to Business down-sizing, deficit Government spending on all three levels of Government, and rising Consumer prices–Inflation. Business is not capitalizing production facilities, due to the falling Consumption. Monetarist theory will work to promote Consumption only if it is not canceled by an Inflationary rate not over 1.3%. This condition is only worsened by Credit Card companies and financial institutions refusal to lower Consumer Credit rates. The lowered Prime rates only allow Business to refinance at lower rates than the debt was originally capitalized, and allow the financial institutions to refuse to lower Consumer Credit rates by marginal Profit gains. Monetarist theory has already lost all ability to affect the Economy.
The Bush Tax Cut stands as the joy of Supply-Side Economists. Business taxes were reduced to practically nothing, with many Corporations given Rebates for taxes they did not even pay initially. The National Debt began to balloon, and would have done so; even without the Sept. 11th Attacks with the War on Terrorism. The Business tax reductions have not led to capital investment, due to reduced Consumer Demand; they have simply allowed Business and Corporation to refinance at lower Interest rates, and maintain current Price schedules because of maintained Profits. The Bush Tax Cut actually impedes normal economic performance, because it supplies inelasticity to Price schedules. It also creates National Debt because of unfunded Government operations, draining assets from a financial market; already losing it’s aggregation facility due to lowered Interest rates.