Philosophy of Added Supply

President Obama inherited the practical effects (the benefits derived from detriments) of supply-side, economic philosophy.

Although we knew the aggregate effect of supply-side philosophy is recession, we did it anyway because, philosophically, letting the American people keep all the income they earn is, like Adam Smith said, the right thing to do--it maximizes the practical utility of self-interest to build the wealth of the nation. Being sure, then, that the most able to pay taxes pay the least causes maximum employment at the lowest possible prices. It maximizes tax revenues while reducing the need for government spending by adding supply.

Supply-side philosophy, which is currently being offered to cure our economic woes after having caused it, formulates this hypothesis: If we do not adhere to supply-side, economic philosophy we will have low employment and a rising cost of living. Since the Obama administration does not adhere to conservative philosophy, we therefore have both unemployment and rising costs.

Apparently, Moody's doesn't believe in supply-side philosophy either.

Adding supply is a philosophy of risk that is not peculiar to the Reagan administration which, by the way, was plagued with high inflation, unemployment, and record budget deficits. The recessionary trend of the 80's did not abate until his successor, President Bush, raised taxes on the rich to reduce the deficit and record-high interest rates.

Adding supply is a philosophy that defines the legitimate distribution of reward going back to the founding of our nation. It is a philosophy that justifies the expected detriment (the austerity needed to create the wealth of the nation) being borne by "the little people" to produce the benefit--making rich people rich (causing a surplus, or adding supply). This is a very simple philosophy: you cannot be the beneficiary of the detriment if you have to share the detriment--that would be lower class.

You cannot be king (the tax collector) if you have to pay the tax; and you cannot profit from the interest on the debt if you have to pay it.

Remember, your income (your class) is wages, salaries, capital gains, dividends and interest divided by prices, and that includes taxes (the cost of government). If you are benefiting from rising prices (inflation) and interest on the debt (unemployment) at the lowest effective tax rate, you are decidedly, by every measure, upper class with every incentive to increase the cost of government (debt and the taxes to pay the interest on the debt) while reducing the benefit (entitlements).

The realpolitique of power (who bears the cost and who gains the benefit--the risk to reward) depends on a credible, philosophical foundation.

Power cannot be maintained if it is not believed to be legitimate.