Because the average household had to spend about $10,000 more on living expenses last year due to inflation, it might be wise to take a look at the type of economics being practiced right now.
Promising to build the economy from the “bottom up and the middle out,” our country is now practicing a weird version of “demand side” economics, where the government, not the people, decides what is in demand.
This type of economy is funded through higher taxes and/or printing money. It is implemented through government programs and regulations.
In demand-side economies, the government picks the winners and losers and decides what you are supposed to buy. Sadly, this has ended up giving the wealthy subsidies for expensive electric vehicles (EVs) and the poor higher prices for gas and food.
In the past two years, more than 500 new regulations and 6,000 rules have been placed on businesses, costing the owners over $300 billion in extra paperwork, extra time and added employees. This in turn raised the cost of services and products.
With the Federal Reserve trying to reduce the excess money that poured out to the public as stimulus during Covid, we remain in an inflationary state. This is due partly to the continuing input of money through loan forgiveness, federal pet projects and expanding federal aid programs without policing the rampant fraud.
We are now loaning $9.2 billion to Ford and a South Korean company to build their own chip-making factory and EV assembly plant. This is part of the Inflation Reduction Act of over $1 trillion.
When government decides what companies get money or financing, it potentially opens up a world of buying influence, cheating the public and other corruption. The irony of these IRS subsidies is that the more money that is printed to give away, the less that money is worth. This results in people maybe earning more but not enough to keep up with inflation.
A recipe that has worked many times (i.e.: the 1980s-’90s, New York City from 1994 to 2013) involves cutting taxes, cutting excessive regulation and stopping overspending to reduce our debt. This is known as supply-side economics.
It stimulates competition among manufacturers and businesses by allowing them to make a profit while competing to make cheaper, better and more widely available goods and services. Good companies succeed. Ill-conceived companies fail.
Counter-intuitively, this also brings in more tax revenue through increased taxes and job participation.
The last puzzle piece for economic recovery is, of course, the physical safety of businesses and consumers.
Hopefully, the new tax-reduction bill going through the House of Representatives will help to reduce inflation and debt and stimulate (without giving money away) the manufacturing and small businesses that create our all-important middle class.
Ask your Congresspeople to seriously examine it and vote accordingly regardless of their party.
Luann Byrne
Stanhope