In a by-conversation, our reader continues to comment on markets:
Supply does not create demand. Demand creates supply. This is basic high school level economics. Applies to every business ….. except Apple.
I’d argue that the Republican ideology context is different from the Apple context. In the former, they see the lifting of taxes as more fuel for building factories, etc, as if those taxes are holding back that investment. This ignores two problems, if you’ll permit the digression (this is me on a head cold):
- The cost of borrowing money, the usual way of investing in product, old or new, has been ridiculously low for a very long time. This suggests that there’s no unfulfilled demand.
- Much demand comes from those in the lower tax brackets. By increasing taxes on them, demand will be further suppressed.
This, it seems to me, is just a way to give more money to the people who don’t need any more.
Now, Apple wasn’t supplying an already open market. They opened a new market, created (or discovered – I’m not sure English actually has a precise word for the phenomenon) the demand by dangling spanglies in front of everyone, and then gilded the lily with an integrated “app” offering (probably the very word “app” was part of the siren song), the famous ecology. I think this is a bit different from trying to create demand by increasing supply …. although just typing it makes it sound similar.
Another reader remarks in the context of the first reader:
That’s a very good point. Supply-side trickle down has been tried and extolled over and over, and it has never once delivered. This may well be the primary reason. A company can’t sell more product X if there aren’t buyers for it. The eventual buyer for all products is the consumer, and consumers are majority lower and middle class. (This ignores those companies who sell exclusively to the government, which in turn pays them with money forcibly extracted from the populace — which sounds rather feudal in this context. But even then, the populace is still majority lower and middle class.) More money in all the average person’s pockets means more commerce, and more business. More money in the pocket of the 1% means a slow death spiral into collapsed economies.
And I see I repeated this reader’s argument above, except he was more direct. I wonder if we’re going to be experiencing the Trump Recession as part of the insanity by half our electorate.
But it’s a true thing that taxes, in the libertarian and GOP worlds, are considered, at the very best, a necessary evil. In my evolving view, there’s certainly room for abuse in taxation, but this is how we fund those services which are ill-provided by the private sector. To suggest that taxes hold back economic expansion (itself a concept that bears reconsideration as a desirable goal) is an ideological assertion which is meaningless without context – but that’s how it’s given.
Where’s the silver lining? If the tax “reform” is passed as formulated and we do experience the Trump Recession my reader predicts, that particular religious precept ideological assertion can be given the lie.
