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Why do people poo poo the fact that demand side stimulus creates jobs?

ok...lets do this.... a) a tax cut to every big corporation earning $50 million dollars or more, and a cut in capital gains only applicable to those with capital gain in excess of $100,000 or more per year or b) a tax cut to everyone making less than $250,000 a year and a special tax credit to all small businesses with less than $5 million dollars a year in gross sales that rewards them for providing health care and the number of american citizens they hire. Why is it that people are so sure that plan a) would create more jobs? I personally think that plan b is more of a demand side stimulus which is aimed more at the middle class and creates more money avaiable for people who are not superrich who will then go out and spend the money on goods and services..in other words raising demand for goods and services...which will then entice the supply side to move to meet the demand by making investments to create those goods and services and creating jobs. Plan a which is a supply side approach does put money in the hands of those who can if they wish decide to invest it. But which is more reflective of a free economy.....demand being the leading indicator or supply? Isnt it backward to assume that the supply side will automatically do whats good for the economy? Could the supply side not be more likely to funnel their extra money into things that do not necessarily stimulate our economy..like investing it in foreign markets for example and creating jobs in other countries? I know what the conventional belief is..that a) is superior to b) but I think that its backward...I think that b is more important because if b is triggered than a will come forth to satisfy b and this is what the free market is all about. and everyone will be happy. I think that concentrating on a) is putting a lot of faith that the supply side has the best interest of the country at heart which is not necessarily the case...they have their own best interest at heart. justin...I think you made my point for me...when you said the rich will go elsewhere. the middle class will never go elsewhere ..they are more loyal to our country and our economy... and you miss my point...my point is not about punishing the rich..its about where a proposed tax cut should go and which is best for true stimulation of economy of USA. MY point is that when mid class has extra money it creates more business opportunities for the rich which will still allow them to make money. How are they being punished or cheated if they are making money?? the laws of economics say that demand drives supply and suppliers rush to meet demand. My proposal is more about true economics than your theory. Yours is more about some sort of elitism that assumes that somehow the rich have our best interest at heart. I repeat..and U yourself just said it...they dont...they have their own best interest at heart...even if it means closing factories here and sending them to China or India. its DEMAND ....FOLLOWED BY SUPPLY. nOT SUPPLY SOMEHOW CREATING DEMAND... think about it and you will see I am right. It is the people ..the consumers who must first have the ability and the extra cash to be able to want more goods....once that happens the rich will make their money when they give the consumers what they crave.. one more thing justin. there may have been a time when the supply side approach was effective, but in the new globalization era, it is no longer the best policy for a country to follow. Those multinational corporations are thinking more about global strategies to improve their profitability than whats best for the country..which should be what we the people care about and what the politicians should care about. So if boosting the american economy is the goal (no the chinese or the Indian or the Mexican etc..), then demand side is more appropriate as it attacks the problem more directly... this is a classic debate of elitism vs the people. Obviously you are bent on an ideology that the people must bend to the whims of the elite. I believe that the country is about the people and if the people are respected than all will be good. If the people get that tax cut and not the elite, the elite will make money anyway when the people spend it...... and your inflation argument is very weak.....what does it matter if a family decides it needs refrigerators and the market responds to that demand as opposed to some elite deciding they will make Big screen TV and push them on the public or maybe decide that china looks like a good place to invest that money. No matter what you say, you cant hide from fact my philosophy is more patriotic than yours. You sound like a globalist corporatist. you have no allegiance to the USA or its people or workers and families.

Public Comments

1. because people understand wealth envy more than they understand economics. more than a few studies have shown that people will give up their last dollar to make sure the "rich guy" loses two. they feel that 'rich' people got there by cheating poor people, and they fell they'll never be able to be 'rich' themselves, so the 'rich' should be punished. they don't seem to realize that jobs are created by rich people. rich people own the companies the middle class works for. they don't realize that by taxing the rich for punishment, the rich will go elsewhere, and take those jobs with them. sure, the middle class will always be here. and without any jobs or capital it will quickly become the lower class, and the country in general will head towards third-world status. you can't 'demand' more stuff from a economy that cannot afford to make more stuff. all that demand just pushes up the price, it does not force production. capitalism will always supply more stuff than can be consumed. the oversupply always reduces prices. the free market is only true when the government is not involved. that's what makes it free. people are free to make and sell and buy, and the government does not try to socially engineer a specific outcome. people tend to forget that labor is a commodity, just like oil or paper. the laws of supply and demand work exactly the same way. in order for b) to work, the government has to get the money to fund those checks. if it raises that money by taxing production, it will see a net decrease in revenue....it has every time in the past. when asked specifically if he understood that increasing the tax rates (even just those at the top) would lower the revenue collected by the government, one presidential candidate said he did....but that his plan was more 'fair'. it is not the government's job to use the tax system to create fairness, it is the government's job to use the tax system to fund the government. i'll happily agree that demand creates jobs. but giving money to the middle class to help bolster demand results in little more than unchecked inflation. taking money away from those who decide to fulfill that demand (and make a profit as a result) merely works to discourage productivity.