How Does Supply Side Economics Work?

[TMMx]

"people will always demand goods."

Only if they have the money to pay for them. And markets can often reach a saturation point.

"With the lower tax burdens companies can open new positions and pay people (who would be receiving handouts) to make goods that they would demand anyways."

They're not going to hire people to make more of something if the market is already saturated with that good.

[cryvn]

How does supply side economics work?

Spoiler alert:
*it doesn't*

<--- an economist

[onemanschorus]

Because supply precedes demand. You must first produce before you can barter. People only gain the wherewithal to demand goods by producing them or helping others to produce them. 

If the government reduced taxes and regulations on businesses (not "give them more money"), the worry is not that businesses wouldn't hire people but that the budget deficit would grow. 

[TMMx]

@Divinity33372 Yeah, I noticed that too. Serves me right for giving them the benefit of the doubt and assuming they would actually have an answer.

[billskinner]

More recently than this video was made, you can find rich people, business owners, saying, on camera, that they don't create new jobs unless they absolutely have to.
The income gap between the rich and the poor is smaller than the wealth gap between the rich and the poor.  When the rich get more money, they keep it.  When almost every human you actually know gets money, they have spent it before their next paycheck arrives.  Money trickles up, not down.
The only time giving money to "business owners" results in "hiring more people" is when that business owner is just starting up, and not getting that money means that that business doesn't begin to exist in the first place (i.e., they get the loan or they can't start the business).

[Divinity]

I see 2 have thumbed down your video who couldn't manage to answer your question.

[RedZ]

You're probably right, but both sides don't really make clear sense to me. First, I'm pretty sure giving other people's money to business owners who didn't earn that money themselves creates malinvestment, so that's a bad idea. Second, how can you demand something that doesn't exist yet? I think supply comes before demand, no? 

[Nerobyrne]

Supply Side Economics will work if you somehow make the companies lower their costs, or if giving them money results in lowering of the cost of products on the market. In theory, it will, but it's not guaranteed that the owners of these companies will follow through. You are correct when you say that giving money to the consumers is much easier, as they will automatically buy more then, because most people spend what they have. Both sides work, but Supply Side is harder to accomplish.

[jamesbernsen]

"You give money to businesses."
No you don't. It's their money already. You just take less of it. Big damn difference.

[Splivitzz]

How could this question be asked ?? TAX CUTS are giving the consumers money !!~!! Massive tax cuts are part of the supply side formula. How could anyone who has read 1 page about the subject not know

[paradoarify]

Well I suppose a shitty explanation is better than no explanation. So an ignoramus like me will attempt an explanation.
It's better for the people planning production to have additional cash resources to plan production in a better way.
Keynes would only create a consumer bubble which increases shitty investment in failed parts of the economy. When the bubble 'splodes, there's another crash.
So it helps for the innovators to have more money to invest in in a way that will make money.

[SPRGOD]

People can always supply labour and people will always demand goods.

With the lower tax burdens companies can open new positions and pay people (who would be receiving handouts) to make goods that they would demand anyways.

Supply side economics cuts out the middle man.