Supply-Side Economics Explained

RUSH: Yesterday on this program we had a phone call from an economics student at the University of Tennessee. His name was Jordan, and he wanted me to explain to him supply-side economics because his professor was ripping supply-side economics from top to bottom, claiming it led to income inequality. And we spent a good, what was it, 25 minutes on the phone with the young guy, and I thought, ‘You know, those of us who are involved in all this every day, we just take it for granted people know what it is.’ It’s a big mistake. It’s frustrating. I mean, because the Reagan years led to a 25-year boom. You look at the GDP of nations around the world in the 1980s and look at them today, prior to this crash, and there’s no doubt that the Reagan boom was responsible for worldwide economic growth, not just in the United States.

So we assume when real world experiences cause people to vastly improve their prosperity — increase their prosperity, their job opportunities, economic security, we assume — that people living in the midst of this understand why. And it’s sad to admit that apparently they don’t, because if the eighties were instructive, it’s the economics of so-called ‘supply-side.’ It’s really just capitalism. If the economics of capitalism and its superiority were demonstrably responsible for an increase in the standard of living profoundly in this country, which it was, you would figure that people would understand it. But by virtue of recent elections and so forth, they don’t.

The only possible exception to what I’m saying — and I hope that the exception is true, because I frankly don’t like being so pessimistic to have to think we have to just keep drilling into people the truth about capitalist economics, supply-side, whatever you want to call it; the basic tenants of the founding, liberty and freedom. We do. I know we do, because they’re constantly under assault at the academic level and in the media. You hope that real world experience will trump that. The ultimate hope is that people living their lives, seeing what’s happened to their lives based on various economic policy will be able to spot the lies they’re being told.

But when the lie is constant and when it is infiltrated with emotion and so forth, and at the first sign of economic trouble, here come the anti-capitalists saying, ‘See? See? See? It ultimately doesn’t work. It leads to inequality. It’s unfair,’ and blah, blah, blah. When you couple that — and this is the possible exception that sort of ameliorates my pessimism here. When you couple it with the fact that there hadn’t been a Republican president espouse capitalism since Ronald Reagan — when you couple it with the fact that the Republican Party has not given voters a similar option to Ronald Reagan since then — then it sort of makes sense why they haven’t elected one. The Democrats are always going to pose one degree of socialism or another in a candidate. This is just the most extreme. But the Republicans used to provide an alternative. They don’t.