Supply-side economics

Supply side economics is a major school of thought in macroeconomics, especially influential since the late 1970s. It holds that economic growth is best achieved by boosting the productive capacity of the economy, the supply of goods and services, rather than focusing on demand. Advocates argue that reducing barriers like high taxes and regulation encourages investment, entrepreneurship, and higher output. This approach contrasts with the Keynesian focus on demand, emphasizing policy reforms to empower producers and spur long term prosperity. The central proposition of supply side economics is that incentives matter. When taxes are reduced on income, capital gains, and corporate profits, individuals and businesses are thought to be more likely to work, save, and invest. Greater investment in businesses and innovation increases productivity across the economy. Supply siders also support deregulation to remove barriers hampering market activity. Critics argue these policies can worsen budget deficits if expected revenue gains from growth do not occur. Supply side policies gained notable traction during the 1980s, especially under leaders like Ronald Reagan in the US and Margaret Thatcher in the UK, who pursued major tax cuts and market oriented reforms. Supporters point to the strong economic expansion and job growth that followed, while opponents argue these policies disproportionately benefited the wealthy and widened inequality. Critics also challenge the trickle down