Tuesday, April 21, 2009

Hay Demand and Supply-what economists don’t understand

When I was undergraduate student in economics a accountancy professor use to tell us how Chartered accountants forget to remember which is ‘credit’ and which is ‘debit’. 

How economists misunderstand the concept of Demand and Supply. 

Brian Wesbury writes in The American Spectator: 

  • “President Obama argues that, “with the private sector so weakened by this recession, the federal government is the only entity left with the resources to jolt our economy back to life.” Unfortunately, the federal government gets those resources from the private sector in the first place. So where is the “jolt” to come from?” 
  • “Supply-siders get excited about the future and remain mostly optimistic because they believe in human ingenuity. They look for ways to encourage risk-taking, wonder where the next invention will come from, and believe that opportunity is endless. What the Austrian economist Joseph Schumpeter described as “creative destruction” is the process of economic advancement. 
  • In the end, supply-siders have faith in individuals, especially in times of crisis, while demand-siders have faith in government. Think about this for a minute.” 

I strongly recommend the American economist Thomas Sowell book on “Basic Economics- A Common Sense Guide to the Economy to the US President Obama  to understand the jangle of supply vs demand side and how resources are allocated an market economy vs state controlled economy.

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