Negatives Of Supply-Side Economics

In recent history, economic policy has often been a subject of great debate among politicians. The question of whether or not the government should employ demand-side or supply-side economics has troubled policy advisors since the latter half of the twentieth century. Supply-side economics, in particular, has gained supporters who claim that it will help improve the economy as a whole. Unfortunately, supply-side economics—also known as Trickle-down economics—has not been as effective as previously thought. Under this theory, countless economic problems are worsening, namely wealth inequality. The real effectiveness of supply-side economics can be seen through its supposed benefits, inherent failures, and adverse effect on America.

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Many of the wealthy are hoarding the money, preventing it from flowing into the market and the other classes. While some companies are spending the money on investments, it is not directly benefiting the middle and lower classes. An analysis of “tax rates and economic growth since 1945 revealed that there is no correlation between lowering tax brackets and increased economic activity.” This shows that lowering taxes on companies does not achieve the desired effect of increased economic spending in all social classes. In fact, the wealthy only spend approximately 30% of their income, while the working class spends around 98% of their income; on the other hand, poor people spend almost 100% of their income. It is evident that the middle and lower classes are expending more than the upper classes, generating more economic activity. By investing in the upper classes, supply-side economics fails to assist the middle and lower classes, who are the real long-term drivers of economic growth in this

Because of the implementation of this economic policy, wealth inequality in America has grown substantially over the years. According to Evan Kirkpatrick, “the gap [is] widening between the rich and the poor...it is happening at an accelerated rate.” In recent decades, the government has tried to lower taxes on the top 10%, which did not work out as planned because the upper classes were not investing heavily on the working class. Today, the top 20% owns over 75% of the total wealth in the United States. The increased wealth inequality that trickle-down economics has caused is preventing it from serving its purpose. The ultimate flaw in supply-side economics is that it does not directly support the middle and lower classes, instead it relies on the rich to help the poor, which is not always