too stupid but perfectly liberal. You've confused stimulate with churn. If you drop money from a helicopter or hand out one time welfare all agree it will churn an economy or create a bubble that will burst and cause a recession, much like the liberal housing bubble.
My point, again.
Innovators only have an incentive to bring something to market when consumers have money to buy their products. The technical term is "demand".
Demand is where the more virulent supply side policies run into trouble.
It stars with the fact that investors want the cheapest possible labor costs so they can maximize returns. This is called "getting incentives right", and it explains the productivity advantage capitalism has over socialism. But it also puts downward pressure on wages and very often results in offshoring (because investors make more when their goods are made for pennies a day by workers who live in hovels beneath brutal dictators).
Making room for tax cuts. In addition to lowering wages, Supply Side Economics (or its steroidal, globalized big brother "neoliberalism") makes room for tax cuts by cutting benefits, policies, programs, entitlements and regulations which bolster middle class solvency (and increase purchasing power). Additionally, this austerity is utilized to weaken labor, e.g., the more disenfranchised and downtrodden a labor market, the less you have to pay them (which, again, results in higher returns - provided, of course, that you can dump enough credit on the downtrodden so they can, in the midst of falling and stagnant wages, still buy your stuff. And don't worry if they default on their debt. The system will bail out the lender (John Galt) while foreclosing on the borrower (the middle class). Make no mistake - just as the postwar economy favored the middle class, the post-Reagan economy is fully controlled by concentrated private sector wealth and the politicians it funds).
The "real life" downside of supply side policies (which, again, lowers wages/benefits to increase returns) is a middle class which has far less money than it had in 1950. This loss in wages/benefits (and jobs) has resulted in a 30yr over-reliance on credit. Research household debt starting in 1980 when American families started receiving 3 credit card offers a week. The expansion of credit launched by Reaganomics contributed to an amazing boom, but it slowly undermined middle class solvency until too many consumers, awash in debt, were one big financial downturn from losing their shirts. Reaganomics had a great run until the consumer was so over-burdened with debt that demand was irreparably compromised.
This is not to say that Supply Side policies are without merit. Indeed, In the 70s wages and benefits were at their highest. Moreover, the Fed was charged with maintaining full employment, which meant it stimulated the economy to keep economic downturns from devolving into spiraling deflation and job loss. And Labor was very strong, which meant it had the leverage to Strike for higher wages. The result of 40 years of demand-centered policies lead to inflation, which chipped away at the very purchasing power which Washington was trying to bolster. It turned into a double whammy because workers were paid so well that they were in a higher tax bracket, but the inflation meant that they actually had less real money. Uncle Milty did a great job explaining this. (Not sure you've read "Capitalism and Freedom" but you should. My side lets me read brilliant thinkers from the "other team", whereas yours maintains very tight ideological control and does not permit any wandering from the mothership. This makes sense because if you need to turn Hussein into Bin Laden (or Bob Dole's health care plan into grandma killing death squads), than you have to wage war on media sources that are not controlled by the party apparatus).
But the larger point is this: Supply Side policies made sense in the 70s because the problem was inflation along with a regulatory environment which suffocated efficiency. This is why Carter deregulated transportation and communications. (But deregulation can also be over-applied, like when Greenspan, executing Reagan's dream, said we shouldn't regulate the expansion of credit, especially in the form of what he called its greatest innovation: subprimes. Let's not talk about the unregulated derivative market or the fact that the SEC was so defanged that Arthur Anderson could get away with letting Enron create fake spinoffs to hide losses from workers and investors)
Ultimately, when the problem is deflation and weak demand - like it is today - than supply side policies - by further weakening demand - have the effect of removing oxygen from a fire.
