Friday, April 20, 2012

Donít ignore the demand side

Without customers willing or able to buy, there can be no exchange of goods and services and, therefore, no healthy economy. The wall-to-wall focus of financial bloviators on deficits, productivity and growth, especially from the tea party wing of the Republican Party, entirely misses the point.

Discussions of deficits, productivity and tax rates and loopholes frame the central issue of a healthy economy in terms of too little supply. But the economy does not suffer from too little supply. The central issue of the Great Recession, as it was with the Great Depression, is too little demand.

In the theoretical world of economics, a lot of nonsense masquerades as brilliance, and wisdom is not all that common. Unproductive and overcompensated workers are not the reason there is little growth. Lowering local, state or federal spending to reduce deficits has not stimulated more employment.

Any respectable study of the past several decades, and especially of the last three years, will show that money has been trickling up rather than trickling down. CEOs making more than 400 times what their workers are and driving increased disparity between the haves and have nots has not been good for the economy.

The simple fact is that when large numbers of people have no disposable income, they stop spending. The rich cannot spend enough fast enough to counterbalance the shrinking consumption. Supplies, no matter how desirable, languish on the shelves. Factories need not produce replacements so they don’t hire or pay wages to factory workers. Without paychecks, workers can’t buy things. Demand continues to shrink and the cycle repeats. Sound familiar?

One of the first to recognize and champion the importance of the demand side during the Depression was Utah banker and businessman Mariner Eccles. He realized that a broad swath of the population had exhausted their resources, had taken on all the debt they could possibly carry and simply could not longer buy. Without customers, businesses could not function, and neither could the economy, no matter how much those at the top amassed. Eccles championed infrastructure projects, the minimum wage and old-age pensions as legitimate means of stimulating demand.

No matter what the bloviators claim, only more customers can bring an end the Great Recession.

About Comments

Comments with content that seeks to incite or inflame may be removed.

Comments that are in ALL CAPS may be removed.

Comments that are off-topic or that include profanity or personal attacks, libelous or other inappropriate material may be removed from the site. Entries that are unsigned or contain signatures by someone other than the actual author may be removed. We will take steps to block users who violate any of our posting standards, terms of use or any other policies governing this site. Use of this system denotes full acceptance of these conditions. Please review the full rules governing commentaries and discussions. You are fully responsible for the content that you post.

The comments below are from the readers of and in no way represent the views of Express Publishing, Inc.

You may flag individual comments. You may also report an inappropriate or offensive comment by clicking here.

Flagging Comments: Flagging a comment tells a site administrator that a comment is inappropriate. You can find the flag option by pointing the mouse over the comment and clicking the 'Flag' link.

Flagging a comment is only counted once per person, and you won't need to do it multiple times.

Proper Flagging Guidelines: Every site has a different commenting policy - be sure to review the policy for this site before flagging comments. In general these types of comments should be flagged:

  • Spam
  • Ones violating this site's commenting policy
  • Clearly unrelated
  • Personal attacks on others
Comments should not be flagged for:
  • Disagreeing with the content
  • Being in a dispute with the commenter

Popular Comment Threads

 Local Weather 
Search archives:

Copyright © 2020 Express Publishing Inc.   Terms of Use   Privacy Policy
All Rights reserved. Reproduction in whole or in part in any form or medium without express written permission of Express Publishing Inc. is prohibited. 

The Idaho Mountain Express is distributed free to residents and guests throughout the Sun Valley, Idaho resort area community. Subscribers to the Idaho Mountain Express will read these stories and others in this week's issue.