Friday, July 20, 2012 | 2 a.m.
The mainstream media is inundated by discussion of both Keynesian and supply-side — trickle down — economics.
Keynesian economics proclaims that deficit spending (government expenditures that exceed revenues) will spark the economy. Supply-siders maintain that reducing taxes and easing regulations will stimulate economic activity and thus lead to a boom. This, they believe, will end up increasing federal tax revenue caused by an increase in economy-wide incomes.
Neither of these economic theories have been successful during this current economic downturn. And there is no guarantee that either of these methods will work any time soon, even though both may well have unintended consequences, such as major long-term debt and unemployment.
The debt is out of control because both of these methods combined add to the federal deficit. It would be unrealistic to increase taxes above their current levels when there is general hardship throughout the land, and people need the cash in their pockets to survive. On the other hand, taxing the “rich” — those earning over $250,000 — will only provide marginal revenue and dampen the incentive for job creators in this group.
So for the present, we remain mired in economic malaise, while Keynesians and supply siders both argue their cases in the public square.
Ultimately, it is a return to noninterventionist policies based on individual economic freedom and the market that will be needed to turn the economy around.