Demand, demand, demand, demand!

We have all heard the functioning of our economy summarized as "supply and demand". Well tonight at the Republican presidential debate they left half of our economy out. All discussion of our economy and its problems was limited to tax cuts and reducing government regulation. The candidates all seem to think that this will fix our economy and get everyone back to work. This of course shows that all of the Republican presidential candidates are either total morons or liars.

So lets say we cut taxes, especially on businesses and business owners, and reduce government regulation. Both of these actions would give businesses more money to spend and so of course they would immediately start buying new equipment and hiring new people. Umm... no.

You see as many times as the candidates want to say that the reason businesses aren't hiring is because they are worried about taxes and regulation this just isn't true. If the government was to reduce taxes and cut regulations the money saved by businesses could be used for expanding production with new equipment and employees, but it could also simply be saved or used to pay off debt the business had acquired. I would think that most businesses would look at the current economic climate, consumer confidence levels, and the low levels of demand across the vast majority of our economy, and decide that right now investing the money they saved back into their business would be too great of a risk. Instead it would make more sense to simply pay off some debt or hold onto that money until the economy starts improving and then use it to do a bit of hiring. Tax cuts for businesses and the wealthy and eliminating regulations are solutions to a supply problem. We don't have a supply problem right now, the store shelves are full and companies are reporting record profits. The candidates tonight though kept promoting ways to fix a supply problem when what we have is a demand problem.

So how do you fix a demand problem? Simple, you start off by raising taxes on the people with the most money and who don't do the most consumer spending, that would be the wealthy. Then you take that tax money and use it to fix our roads and bridges and electrical grid and dams and to improve public transportation. To do this you hire hundreds of thousands if not millions of people and pay them for their work.

How will this fix the demand problem? When all of those people have pay checks they can spend they will spend them, they will buy groceries and gasoline and clothes and cell phones and computers and cars and all sorts of other things. When they start buying the companies selling and making the things they are buying will have to hire new people to help keep up with the demand. When the people they hire start getting pay checks they will go out and spend money creating even more demand and more jobs. We can't fix our economy by concentrating on supply, we have to fix the demand side of things and as much as it will cause conservatives to scream and complain when they hear it, business can't fix demand, only government can do that. We saw this in the Great Depression and we are seeing it again right now.

What puzzles me is how so many people could believe the self righteous lies they were told tonight at the Republican debate? This is not complicated economic theory, it is plain and obvious and can be understood by anyone of average intelligence which can only mean that the people of this country are either too lazy to figure out the truth, or too greedy to want to know the truth, or too stupid to understand the truth. I'm hoping they just haven't had someone scream the truth in their face loudly enough yet. So if you hear some yelling coming from my direction you will know that I haven't given up hope yet.