Supply side economics: growth versus income distribution

Journal ArticleThis article discusses the supply-side policies of developing countries and the relationship between growth and income distribution leading to a equitable distribution of income, which have important implications for developed economies. The huge spurs to investment have aided growth but worsened income distribution making the rich richer and the poor poorer. Since in actual practice, the U.S. income tax is not notably progressive, the distributional effects are not likely to be major. The problem is to ascertain the position of supply-siders on government expenditures. The article states that if "supply-side economics" is a euphemism for "change the distribution of income to favor the wealthy," this should be spelled out. Most supply-siders would agree that tax cuts would lead to lower government revenues. Countries should consciously ensure that the poor of their societies would be incorporated directly into their plans. These countries invariably adopt a variety of techniques of production, not relying solely on the large-scale and capital-intensive modes. In this regard, efforts at community-based production and decentralization of energy generation may be useful