DEMAND drives the economy, not supply

[drdigi420]

Although investment capital is part of the equation, it is DEMAND that makes an economy run.

A perfect example is the illegal drug trade. No matter what is done to discourage supply, the demand is there, so supply happens.

DEMAND drives the economy, not supply. Why does noone in the media seem to understand this basic economic fact?

[cprise]

1. It's both

With a supply of cheap energy, the auto industry could create demand for larger vehicles (SUVs) which themselves are more expensive than cars and have larger profit margins.

And cheap energy has everything to do with validating the supply-sider's MO of passing-off hyperactive waste as real growth.

[barb162]

2. nobody in media has taken a basic econ. course

same story in the White House.

One exception is Lou Dobbs who is really terrific and he keeps beating on the crap going on in this country.

[SmileyBoy]

3. I knew that by the time I was in high school.

If the demand isn't there, supply doesn't need to be high.

It was the first thing I learned in my economics class in the 11th grade.

[NuttyFluffers]

4. it explains why supply-side economics never worked.

historically it never works, it's all about demand. hence commercials to fabricate demand.

only time supply-side gave the impression of running the economy is because of manipulation and corruption - and in the long run that cripples the economy, and the stress has to go somewhere else (human suffering, decline in social creativity, stagnation, etc). eventually all artificial conditions end, and with supply-side manipulation with great and horrific results (hence the uglier parts of history).

and yet many of our best and brightest can be suckered into believing the unbelievable, time and again...

[jbm]

5. it's neither..

it's become more like a hostage situation. Everytime i turn around I'm getting hit with some kind of new charge or increase on the phone or the health insurance or the utilities. I haven't increased my demand, and they haven't supplied me with anything new, they just jacked up the price and our society is designed in a way that these things are pretty much necessities. We're nuttin but sharecroppers!

[Nikia]

6. That's because there's always demand for health care/utilities

It isn't like people are going to go without electricity or heat in the winter. Many people are scared to go without health insurance too. Oil companies also benefit from ineleastic demand. These companies can up their prices without fear that demand will decrease much. It doesn become a hostage situation.

[Cleita]

7. I've taken it a step further.

If everyone in a population has money to spare in their pockets they will spend more creating a demand, which translates into more profit. This is why taxing the poor is counter productive. They are the ones who need the pampers for the baby. The rich won't miss the money if they are taxed more and if the money is used for things a population can use like health care, child care and education, it creates all those jobs delivering these benefits. Just my two cents.

[Mudcat]

8. Yeah, it's both

Both elasticity of demand and elasticity of supply are basic economic concepts

[OneBlueSky]

9. and who creates the demand? . . .

the suppliers . . . marketing, advertising, product placement all conspire to make consumers feel they need the product . . . whether they do or not . . . and they usually don't . . .

[Cleita]

10. What about the people who need stuff and can't afford

to buy it because they are underpaid, or have huge medical expenses, etc..

If you put money in the hands of the ordinary worker to buy the things they need for their families, the suppliers probably wouldn't have to create demand trying to entice those with money to overspend on their needs. Just IMO.

Also, it would be nice if the worker had a little left over to indulge in a little plaything or two.