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Supply Side theory vs Demand Side theory


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2019 Mar 12, 11:29am   1,621 views  9 comments

by Goran_K   ➕follow (4)   💰tip   ignore  

It's times like this I wish Iwog were still around (posting as himself instead of a sock puppet).



Supply Side Theory at work (courtesy of MisterLearnToCode)

On Thursday, Costco announced it would raise the hourly wage for 130,000 of its American employees. CEO Richard Galanti, while discussing the company’s fiscal third-quarter earnings, said that starting wages for employees would be raised $1 an hour to $14.50 an hour while other hourly wages would be hiked 25 to 50 cents an hour.

Galanti added that the new wage increases would be probably be added to the company’s regular wage hikes. He acknowledged that the tax cuts would garner Costco an added $300 million each year.

The impetus for the wage hike was the windfall Costco received from the GOP tax cut; the company made $32.36 billion in sales and membership revenue in the twelve weeks ending May 13. That represented a 12.1% increase over the same period last year. Costco has enjoyed four straight quarters of double-digit sales growth.
https://www.dailywire.com/news/31334...r-hank-berrien


Now let's look at the other side of the coin.

Here's demand side economic theory at work.


Whole Foods cuts workers' hours after Amazon introduces $15 minimum wage

“My hours went from 30 to 20 a week,” said one Whole Foods employee in Illinois.

Workers interviewed for this story were reluctant to speak on the record for fear of retaliation.

The Illinois-based worker explained that once the $15 minimum wage was enacted, part-time employee hours at their store were cut from an average of 30 to 21 hours a week, and full-time employees saw average hours reduced from 37.5 hours to 34.5 hours.
https://www.theguardian.com/us-news/...-hours-changes


Any questions?

Comments 1 - 9 of 9        Search these comments

1   Goran_K   2019 Mar 12, 11:34am  

Settled Science.
2   FortWayneAsNancyPelosiHaircut   2019 Mar 12, 11:51am  

Democrats are weeping. Less people on welfare and Costco making so much money people getting raises, instead of taxing it away from rich to redistribute.
3   Goran_K   2019 Mar 12, 12:03pm  

FortWayneIndiana says
Democrats are weeping. Less people on welfare and Costco making so much money people getting raises, instead of taxing it away from rich to redistribute.



I don't understand how lefties can be so against settled science. There is literally no real world examples of demand side theory ever working in real life.
4   FortWayneAsNancyPelosiHaircut   2019 Mar 12, 12:09pm  

I figured they are engaged in political demagogery and economic illiteracy.

Those were Reagan words, and he was right on that.

Goran_K says
FortWayneIndiana says
Democrats are weeping. Less people on welfare and Costco making so much money people getting raises, instead of taxing it away from rich to redistribute.



I don't understand how lefties can be so against settled science. There is literally no real world examples of demand side theory ever working in real life.
5   MisdemeanorRebel   2019 Mar 12, 12:21pm  

"We need unskilled migrants by the millions to keep wages low! Also, we need to raise the minimum wage by almost 100%!"
6   Heraclitusstudent   2019 Mar 12, 12:21pm  

Look at this graph for a minute:
7   Heraclitusstudent   2019 Mar 12, 12:29pm  

This is how borrowing changed around the 2008 crisis: the private sector was going into debt and stopped doing so.
As a result, the government jumped in a started borrowing (and spending). Why?
Because we needed to maintain "end-demand" or the economy would fall into a depression.
"End-demand" was high because of previous borrowing boosting it, and the government tried to maintain it high by throwing more money at it.
This is still the situation today after Trump's tax cut: the government is borrowing more, the private sector borrowing is going up again (student loans, car loans, mortgages).

Why is do we need borrowing to keep the "end-demand" in place?
In a normal economy, employees are paid enough so their spending drives the economy. This is not sufficient here.
If there is a end-demand problem, why is a supply-side solution what is needed?

A supply side solution was needed in 1980 because the bottleneck was production resulting in high inflation. Now the bottleneck is end-demand. Inflation is extremely low.
The situation has changed radically. But some people are still stuck in 1980.
8   Heraclitusstudent   2019 Mar 12, 12:32pm  

Also the minimum wage in CA is $12/h, and is going up.
$14.50/ h buys you the right to live in your car in CA.
These are glorified homeless people.
9   Goran_K   2019 Mar 12, 1:18pm  

That sounds like a lot of science denial to me.

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