Supply-side economics in real time

The American economy is bursting bounds almost previously unknown. From Instapundit where a discussion of the supply-side foundation for this transformation is found.

THOSE JOBS NUMBERS LOOK EVEN BETTER: The Washington Post grudgingly admits one amazing thing about today’s excellent jobs numbers – the black unemployment rate is now closer than it ever has been to the white unemployment rate. As the Post notes, in the past when the numbers got close it was because white unemployment was rising. That’s not the case today. Meanwhile, the New York Times says, “We Ran Out of Words to Describe How Good the Jobs Numbers Are.” It’s shocking what a supply-side cocktail of lower taxes, less regulation, and allowing businesses to get on with their jobs can do.

You are looking at the effects of classical economic policies, one more example of how not just useless but actually harmful modern macroeconomic policies are and how beneficial their removal is. All this is discussed on my Quora post: What is the difference between Keynesian and classical economics? which has just passed 1500 visits.

For a more complete story, let me again suggest you have a look at the third edition of my Free Market Economics. On the back cover you will see the following words written by the man who brought supply-side economics to the world:

‘This book presents the very embodiment of supply-side economics. At its very core is the entrepreneur trying to work out what to do in a world of deep uncertainty in which the future cannot be known. Crucially, the book is entirely un-Keynesian, restoring Say’s Law to the centre of economic theory, with its focus on value-adding production as the source of demand. If you would like to understand how an economy actually works, this is one of the few places I know of where you can find out.’
– Arthur B. Laffer, Laffer Associates, US

There seems to be a deep state in economics as well as in politics, where the economy is run for the benefit of crony capitalists, with governments parcelling out our savings either on their own pet projects or to their friends. This is serfdom and the road to poverty. Letting entrepreneurs make their own decisions on what to produce and how to do it actually seems to work. It’s not just balancing the budget; it is removing as much as possible the unproductive hand of government spending and over-regulation that is the only way to make an economy blossom.

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64 Responses to Supply-side economics in real time

  1. stackja

    A businessman running the show.

  2. Confused Old Misfit

    So, with a prominent example in front of them what do the featherheads of the Australian government do?
    a) Broaden the GST coverage to online sales
    b) Increase the minimum wage
    c) Propose a carbon tax on vehicles.
    d) restrict the movement of funds.

    Angels and Ministers of Grace defend Us!

  3. FOP

    How novel. Let the free market operate and individuals will find a way to invest money in order to make a buck. Along the way they will need to buy the factors of production to make it work. Unemployment (of factors as well as individuals) will thus fall.

    Bill Evans at Westpac has this week stated that the US unemployment rate is 3.9% compared to an estimated 4.50% full employment rate; in Oz unemployment is 5.60% compared to an estimated 5.00% full employment rate (aka the Keynesian notion of an arbitrary macro notion of full employment).

    We need fewer cronies in the land of Oz!

  4. stackja

    Also ACTU versus AFL/CIO.

  5. Spring is coming

    Before we get carried away some of PDT approach is good ole protectionism. So not quite a free market.
    But I hope it is in fact lower taxes less regulation. One swallow Doesn’t make a pie and all that.
    Allah we could do with a different approach here.

  6. Confused Old Misfit

    some of PDT approach is good ole protectionism

    And can you point me to a country that does not practice, in some form, this “good ole protectionism”?

  7. JohnL

    Nothing new. They have been practising this in (communist) Vietnam for last 20 years.

  8. Dr Fred Lenin

    Just oroves ,less smartass government equals more Real productive jobs,simple equation. Surprised the great tertiary educated economists don’t understand that,why not ? Lack of knowledge ? Or sheer ideological malice ?

  9. John Constantine

    Could we crowdfund the chicoms to instruct their bought and paid for Australian political class to pursue free market policies?.

    No quisling Australian creature of their Kleptocracy will obey any command except its masters, so why not just bribe the chicom whipcrackers instead of talking to their enslaved australian corruptocrats?.

    Comrade Maaaaates.

  10. struth

    It will be amazing to watch the denial of what actually works by our socialist bought and paid for traitorous pollies as a few more years of USA success Trumps all others.

    Please do not call retaliatory tarriffs “anti free market”.
    It’s about a fair market.

  11. MPH

    It’s not protectionism when you’re rebalancing from a severely disadvantaged position. Or do you suscribe to the notion that someone who fights off a mugger has in fact committed assault?

  12. Spring is coming

    No I cannot point to one country that does not implement protectionist measures.
    But one naively hopes this is not the way forward.

    Oh and I have been informed by my other half the reason for the upswing in US employment is it’s cyclical
    And would have likely happened under HRC. That’s social media economics for ya!

  13. Howard Hill

    Or do you suscribe to the notion that someone who fights off a mugger has in fact committed assault?

    That’s how it works here, no?

    Our lot will never recognise a free market. This joint is all about duopolies for the mates. We are a convict class after all.

  14. Y

    I’m sure the “Liberal” party will get right on this.

  15. wal1957

    I’m sure the “Liberal” party will get right on this.

    No they won’t mate, they have their eyes on the big prize…our bloody super!

    Just wait for it!

    They won’t reduce their spend, so they will attack the $$$trillions that are sitting ripe for the picking!
    A$$oles!

  16. Tom

    In the era of meddling Big Government distorting markets and flattening economies like Australia’s with recession-level GDP stagnation, the commonsense of low-taxing small government getting out the way to let people run their economy unhindered has become radical economic theory.

    The ballooning in the size of the federal government – from $220 billion in outlays in 2006-07 to $470 billion a decade later – is effectively a $250 billion tax on the economy.

    But it will take a shock – like the collapse of the housing Ponzi, which is our substitute for a functioning market – to stop Australians from voting for more of the same. Australians are just too lazy; they like to compare themselves to the best, but America’s commercial culture runs rings around the anti-competitive crony capitalist farce in our little shithole.

  17. calli

    There seems to be a deep state in economics as well as in politics, where the economy is run for the benefit of crony capitalists, with governments parcelling out our savings either on their own pet projects or to their friends.

    You only have to be in the building industry here for a few months to realise that this is true. Once you’re “in” it’s a license to print money. And the way “in” can take some very curious turns.

  18. Dr Fred Lenin

    I read in Spectator where the countries affected by Trump tarries a re putting big tarries on US made goods they never buy. He has cut off their welfare from obummer the Nobble price winner,bad man .

  19. Faye

    conservativetreehouse.com has Larry Kudlow (Director of the National Economic Council under President Trump) on CNBC talking about America’s rise and rise of its economy in just 18 months. He believed Europe and Asia should follow America’s lead (tax cuts, deregulation, etc. etc) to get their countries on the road to prosperity. “Our model is working, theirs is not.” But best of all the said that they should “consider the SUPPLY SIDE kind of policy”.

  20. Iampeter

    You are looking at the effects of classical economic policies

    Do you have some examples?

    To day Trump has engaged in economically illiterate anti-trade and anti-immigrant policies, that “classic” economists would have nothing to do with. He’s also passed an Obama-style “infrastructure” bill. Also not quite “classic economics”.

    Seriously though, if this administration has done something comparable in actual classic economics I’d really like to know what that is.

  21. cynical1

    Broaden the GST coverage to online sales

    Drop the threshold on GST coverage from under $1K to under $0.

    FTFY.

    Even on second hand goods.

    Wait until Ebay has to start wading through GST refunds on thousands of lost,broken, and “Not as described” $10 items.

    Where does Paypal fit in. They already gouge on postage and always give a shit exchange rate.

    Anybody who reckons on the damage being a mere 10% to our shopping cost is kidding.

    Looking through the fine print, I see Ebay.au added GST to seller fees last year.

    Since 1 July 2017, Goods and Services Tax (GST) has applied to services eBay provides to consumers in Australia (e.g. final value fees, Stores subscription fees). GST on the sales of low value goods through eBay is a completely new tax and applies to buyers of imported low value goods on eBay, not sellers.

    Amazon has already quit.

    Even the EU shames us.

    Principle of taxation

    1. Sales between individuals are not subject to VAT or to any formality
    throughout the Union. The price is paid once and for all at the place
    of purchase.

    2. For professional dealers, VAT is to be levied on the vendor’s profit
    margin.

    Most second-hand goods have already borne VAT when they were originally
    sold as new or were sold at a previous stage.

    Thus, in order to end all forms of double taxation, the Seventh VAT
    Directive provides that throughout the Community sales of second-hand
    goods will be taxed, in the country of the vendor, on the basis of the
    vendor’s profit margin (the difference between the price at which he
    bought the good and the price at which he resells it), and not on the
    basis of the full value.

    Remember that $10 you got back in the budget?

  22. Australia can be likened to a modern vaudeville show where the audience is shouting to the actor who is looking for his car keys under a lamplight, that they are beside his car where he dropped them in the dark.
    The drunk key loser is determined that he will continue to look under the lamplight because statistically, he has a greater chance of finding them where the light is more revealing.
    But no one is laughing at this comedy.

  23. Pyrmonter

    Tell me, how do the politics of tariffs feature in the works of Laffer and Stockman?

  24. mh

    To day Trump has engaged in economically illiterate anti-trade and anti-immigrant policies, that “classic” economists would have nothing to do with.

    Iampeter, whatever it is – it’s working! When Jeff Bezos’ rag has to acknowledge the Trump administrations results, you know America is winning. Big League.

  25. egg_

    There seems to be a deep state in economics

    All the tards read the same dumbkopf authors?

  26. Confused Old Misfit

    Some people would not know a “classic” economist if they fell over one.

    Economics is a science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.

    J.B. Say 1803
    “It’s the study of scarcity, the study of how people use resources and respond to incentives, or the study of decision-making. It often involves topics like wealth and finance, but it’s not all about money.”
    It is not a “How To” manual. It is a field of study, replete with theories, some of which are quantifiable, others are impossible to replicate. Those, such as communism and socialism, should be avoided.

  27. JC

    Iampeter

    On balance Trump has done the lord’s work instituting pro market policies. He’s been a small amount shitty on trade and the only thing touched on the immigration side has been reducing ref numbers. Don’t under this omelette.

  28. JohnA

    Confused Old Misfit #2726335, posted on June 2, 2018, at 11:33 am

    So, with a prominent example in front of them what do the featherheads of the Australian government do?
    a) Broaden the GST coverage to online sales

    Much huffing and puffing but without any legislative change actually required. The most futile of “changes.”

    The Goods and Services Transaction Tax applies already to every transaction, with exemptions for various exempt local and all export supplies, plus input-taxed supplies in two categories.

  29. nemkat

    No they won’t mate, they have their eyes on the big prize…our bloody super!

    The ALP slogan to be unveiled 10 days out from the next Election.

  30. Iampeter

    He literally just implemented steel tariffs with the justification of “national security” against America’s hardened enemies like Canada. This is another example of those “classic economics”?

    Seriously Kates, you should rename your column here to be: Kates-CNN – No Ideas, No Principles, Just Mindlessness.

  31. Iampeter

    Stuff like this column is why focussing on just economics is not going to help you with politics. Politics comes before economics in the conceptual hierarchy and so your economics will always bend to your politics.

    Because Steve supports a big-government, leftists like Trump, he will bend on his economics and even kid himself that what is going on here is “classic economics”.

    Textbook example of disintegrated thinking.

  32. RobK

    Peter,
    Trump abandoned the TPP because it was not a free trade deal and would weaken US sovereignty as well as other nations’ sovereignty and increase centrist control. A bad deal that would stiffle competition by favouring the largest.
    Other tariff measures have been bargaining chips to level the field.

  33. Tim Neilson

    Iampeter
    #2726497, posted on June 2, 2018 at 4:28 pm

    So let’s do the logic.

    The US economy is booming under Trump.

    Trump isn’t doing entirely what the doctrinaire libertarians want him to do.

    Conclusion? No-one should feel obliged to follow slavishly the dogmas of doctrinaire libertarians.

  34. RobK

    Peter,
    As I understand it the TPP would’ve also set up protocols for various measures to allow trade rules to enforce emmissions policies of member countries, decided by a panel. It would be the teeth of the Paris Agreement in effect. Bad idea.

  35. Confused Old Misfit

    He literally just implemented steel tariffs with the justification of “national security” against America’s hardened enemies like Canada.

    The security issue is not one of fear of attack by Canadians which would, in any event be preceded by an apology.
    The security issue is a matter of having the capacity to supply one’s self with the commodity needed and to not be reliant on another party.
    In the Canadian case, Canada does not produce much steel at all and even less aluminium. What they were doing was to middleman Chinese and Indian product.
    The US steel industry had been destroyed by the environmental movement (acid rain & all that rubbish). NAFTA gave the Chinese & Indians a way to sell through Canada and Mexico to fill the void.
    The word “security” is being willfully misused by people like Justin Trudeau.

  36. Confused Old Misfit

    without any legislative change actually required.

    Then to what, pray, are Amazon et al reacting?
    The link you cite relates to GST paid by sellers. The issue here is GST to be paid by Australian purchasers on imported goods purchased online with a valuation < $1000, these purchases having previously been GST free.

  37. Rafe

    The fracking revolution started to move the needle during Obama’s tenure (no thanks to him) and Trump has done more good than bad however pure you want to be on trade. His tax and deregulation moves signal to business that the government is on their side for a change. I suggested long ago that the gains from his good policies would compound and it seems they have.

  38. Makka

    It’s a hackneyed phrase but confidence is back. And growing.

    Confidence, lower taxes and more certainty in the future are a time proven road to prosperity. That, iampeterhead, is what Trump has provided.

    The real question; are people historically of the left willing to vote with their commonsense. There is a great opportunity for America’s blacks to shed their lemming mentality for the disgusting parasitical policies of the left and build real futures for themselves and Trump. Let’s hope they are smart enough to do themselves a favour.

  39. struth

    Iampoyda you do make me laugh.

    Ho fergin ho

  40. Iampeter

    Other tariff measures have been bargaining chips to level the field.

    Tariffs cripple the country that implements them. You should always get rid of tariffs. This is classic economics.

    Other tariff measures have been bargaining chips to level the field.

    That makes no sense because tariffs can only weaken your negotiating position.
    It’s like burning down your own business because you want a “level playing field” when you go to sell it.

    The US economy is booming under Trump.

    Nothing with 0% interest rates after a decade is “booming”. And nothing ever booms because of leftist economic policies. Conclusion: look up the difference between correlation and causation.

    Basically you guys are cheering the same policies that if Obama was implementing you would be posting “grrrr socialists”, “grrrrr cultural marxist”, “rabble, rabble, rabble”.

    It’s almost like none of you know anything about politics and are just barracking for a football team.

  41. Egor

    “The word “security” is being willfully misused by people like Justin Trudeau”.
    No, no… Justin really believes that Trump fears that Princess Patricia’s Light Infantry will cross the 49th parallel.
    Justin likes his role as a middleman for Chinese steel exports. In the end Canada will do as it’s told.

  42. nemkat

    There is a great opportunity for America’s blacks to shed their lemming mentality for the disgusting parasitical policies of the left and build real futures for themselves and Trump. Let’s hope they are smart enough to do themselves a favour.

    The first boatload of Africans landed at the Hudson River Plantation in 1619.
    In the 400 years since, you’d be battling to find any contribution they’ve made.
    They vote overwhelmingly for Welfare, and nothing Trump can do will ever change that.

  43. Confused Old Misfit

    In the end Canada will do as it’s told.

    Then I hope someone tells Canada to get rid of that poncing nancy boy Trudeau!

  44. J.H.

    Confused Old Misfit
    #2726509, posted on June 2, 2018 at 4:45 pm

    In the Canadian case, Canada does not produce much steel at all and even less aluminium. What they were doing was to middleman Chinese and Indian product.
    ———————————————————————————————
    That is is the Crux of the matter and well pointed out by COM….. That “Middle Man” part is the bit the media leave out, politicians skip over and the public never get to hear about….. It wasn’t Canadian steel and Aluminium…. It was Chinese and Indian… and anyone else’s and goes for all sorts of products.

    Trump built skyscrapers…. he understands the Scams that abound around construction and importing.

  45. nerblnob

    Is there a list of Trump’s deregulations anywhere?

    When I try to discuss regulation with family and friends who aren’t in business, they seem convinced that deregulation is a scam to fleece the workers, poison the atmosphere, and allow far right extremist neoliberal alt-right capitalists to roast gay muslim babies on pitchforks..

    Even some of the ones who claim to be in business, but they’re inevitably on the inside of some regulatory rort.

  46. struth

    Could just imagine I ampeter as one of those chicks that come on to worksites with a clipboard and say I know nothing about your job but my book tells me you’re doing it all wrong.

  47. Makka

    They vote overwhelmingly for Welfare, and nothing Trump can do will ever change that.

    I’m not so pessimistic. Of course there will be a certain cohort who will always vot welfare but the dramatically improving black UE numbers will encourage much more thought about their possibilities comparing welfare to jobs and careers. It’s the younger generations that have to have the opportunities that will change voting habits and that looks like improving. It really is a matter of how much the swing away from the Dems will be.

  48. Iampeter

    No, struth lol. You’re describing yourself.

  49. struth

    It’s that rapier wit and giddy intellect in responses like that we all dread.
    FMD.

  50. Empire 5:5

    It’s almost like none of you know anything about politics and are just barracking for a football team.

    Agreed. At least you’re an individual who defies the collective and fully supports your own ignorance. That’s true character. You’ll figure out the rest with the benefit of hindsight.

    Godspeed junior. Adolescence is temporary.

  51. woolfe

    When the playing field is leveled he will get rid of tariffs. He understands the benefits of competition.

  52. Tom

    Poor old Iampeter. Worst case of TDS I have seen in the Antipodes. A head full of ideology will do that. Try some pragmatism, you clown. You obviously have no idea how stupid and out of touch you are. You sound like Paul Krugman.

  53. JohnA

    Confused Old Misfit #2726514, posted on June 2, 2018, at 4:49 pm

    without any legislative change actually required.

    Then to what, pray, are Amazon et al reacting?
    The link you cite relates to GST paid by sellers. The issue here is GST to be paid by Australian purchasers on imported goods purchased online with a valuation [under] $1000, these purchases having previously been GST free.

    No those purchases were not necessarily GST free. Customs would assess all Entry 10 imports (through brokers for businesses registered for GST, like my book business) regardless of the goods value.

    Entries known as “informal” usually small value, destined for end users, were assessed for Duty, Charges (eg fumigation, demurrrage and similar oddball bits and pieces) and GST. BUT if the total amount of DC&G to be collected was under $100, Customs said it was not worth chasing because the cost of collection was greater than the value to be recovered. The end user won but I suspect that the GST was still repatriated to the ATO.

    It was a collection policy, not a GST exemption. But it seems you have swallowed Gerry Harvey’s propaganda.

    Most likely, Amazon is reacting to the change to require them to be collectors of GST on behalf of the ATO, instead of Customs. That is, they are being required to be registered as sellers for Australian GST purposes, and to calculate and include GST on their invoices into Australia.

    It’s the same pea and thimble trick as the “internet tax” as if sales made via the internet were somehow previously exempt from GST, and there was suddenly a change to the GST system to make internet sales taxable.

    Could you imagine having to record separately your telephone sales, so that you can be taxed on them differently? Because, for crying out loud, the internet is a bunch of computers connected by telephone lines.

    The whole thing stinks of political duplicity – and a whole lot of stupid thinking.

  54. Roger W

    “That makes no sense because tariffs can only weaken your negotiating position.”
    Not sure how you figure that out. The EU has had an enormous number of tariffs in place for years. For example, currently 12.5% on jam, 9.5% on cars, 16% on clothing, 8% on furniture. These figures based on what Canada saved by doing a deal with the EU recently, and they vary each year and with different countries.
    How do you persuade the EU to abolish these tariffs? Do you ask “pretty please” or do you say I’ll punish you until you come into line, and then we can do a deal? With the current EU leaders, don’t expect too much by appealing to their better nature. Expect even less by appealing to common sense or some theory that their own tariffs are hurting them. That hasn’t worked for several decades now, especially when the punishments are largely suffered by the southern European countries and the benefits enjoyed by Germany. In France, where they haven’t balanced their budget since 1974, food tariffs buy the votes of the peasant farmers, and so on. As Adam Smith said, there’s an awful lot of ruin in a country – and even more in a continent!
    You can live in your theoretical bubble or you can function in the real world.

  55. Iampeter

    Not sure how you figure that out.

    By knowing what tariffs are. Tariffs are a tax on imports and so all they end up doing is hurting imports.

    The EU has had an enormous number of tariffs in place for years.

    All of which hurt the EU.

    How do you persuade the EU to abolish these tariffs?

    You don’t. It’s the EU’s problem.

    You can live in your theoretical bubble or you can function in the real world.

    You’re the only one in a theoretical bubble. Like most posters here you don’t know what you’re saying or what you’re even trying to argue.

  56. cynical1

    without any legislative change actually required.

    Being sly, like the other fellow.

    Yes, we get that technically there is GST on second hand goods here.

    But only if sold in the expectation of making a profit, and in an enterprise
    with a turnover of +75k.

    Eg. A car dealer. Doh.

    The question is: Why are second hand goods imported,given no exemption from brand new goods when the original owner already paid Sales/Gst/VAT on the original purchase?

    From 1k to zero in foul move?

    I would expect every stamp,tin soldier, butterfly, doll, and God knows what else collector who hunts the World via Ebay, is ready to vote for Worker Bill.

    Even I am.

    Fuck the Liberals.

    Dearest housing prices, rents, electricity, retail, cigs, alchohol, migrants, company tax.

    And I don’t drink or smoke.

    I used to use high end fishing reels not sold here.

    That goes on 1/7/18.

    Spare parts should be a laugh.

    Top of the pops in everything.

  57. cynical1

    In the 400 years since, you’d be battling to find any contribution they’ve made.

    Robert Johnson, Son House, Buddy Guy, Otis Rush, Louis Armstrong and JL Hooker
    were unavailable for comment.

  58. cynical1

    No those purchases were not necessarily GST free. Customs would assess all Entry 10 imports (through brokers for businesses registered for GST, like my book business) regardless of the goods value.

    Because they are business related.

    FFS.

  59. cynical1

    Because they are business related.

    FFS.

    Fixed.

  60. JohnA

    cynical1 #2726981, posted on June 3, 2018, at 1:16 pm

    Because they are business related.

    FFS.

    Fixed.

    So was Gerry Harvey’s original statement correct? No.

    Did the GST legislation need to be changed? No.

    is it a red herring? Yes.

  61. Tel

    Tariffs cripple the country that implements them. You should always get rid of tariffs.

    Name one country that has been crippled by tariffs.

  62. JC

    Name one country that has been crippled by tariffs.

    Australia was slowly crippled by tariffs from the peak of the 1930s to the 1980s when we began to untangle them.

    However, a really good example would be Argentina.

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