Letters to the Editor

In defense of supply-side economics

In the most recent North Kitsap Herald (Jan. 3) my letter to the editor, was dissected by Gene Bullock and James Behrend. My letter clearly touched a nerve, but the responses were quite interesting.

Gene Bullock claimed I was a proponent of a laissez faire economy. I had to re-read my letter and, to my surprise, Gene Bullock had made several assumptions that simply are not stated nor implied.

Mr. Behrend’s letter was a little more interesting. I understand that he favors a “Bismarck Care” form of health care. He is quite right about the governments that use this system, but he left out the fact that under such a system, physicians receive free education (unlike here), and are rarely sued (liability insurance being a major expense in health care). Rewriting the rules of the game while playing doesn’t seem fair to me.

I did as Mr. Behrend suggested and checked the GDP of nations that utilize “Bismarck Care.” Germany is one of the largest countries to utilize a Bismarck Care-style system and its most recent quarter was only a .3 percent improvement; this does not show robust growth.

As far as Henry Ford, his motives were simple: Why produce a product if no one could afford it? He doubled his workers’ wages so they could afford the cars they produced; he did so without government mandates.

If I understand correctly, Mr. Behrend feels that “supply-side” is what caused the most recent real estate failure. A key factor that caused the collapse of the real estate market is the policies of the federal government. In 1992, Fannie Mae and Freddie Mac were instructed to buy less-than-prime mortgages from banks; although this started under Clinton, it was accelerated under Bush.

Mr. Behrend stated that reinvesting doesn’t create economic growth and wealth. Then what does? It is surely not high taxes, mandates and excessive regulations.

Lastly, I would like to thank both Gene and James for the mental stimulation and, although they weren’t able to change my mind, it was fun.

Chris Jacobson


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