Reply #36: Would you call John K. Galbraith a consrevative or Milton Friedman a liberal? [View All]

"Some of Galbraith's Ideas
In The Affluent Society Galbraith asserts that classical economic theory was true for the eras before the present, which were times of "poverty"; now, however, we have moved from an age of poverty to an age of "affluence," and for such an age, a completely new economic theory is needed.

Galbraith's main argument is that as society becomes relatively more affluent, so private business must "create" consumer wants through advertising, and while this generates artificial affluence through the production of commercial goods and services, the "public sector" becomes neglected as a result. He points out that while many Americans were able to purchase luxury items, their parks were polluted and their children attended poorly maintained schools. He argues that markets alone will underprovide (or fail to provide at all) for many public goods, whereas private goods are typically 'overprovided' due to the process of advertising creating an artificial demand above the individual's basic needs.

Galbraith proposed curbing the consumption of certain products through greater use of consumption taxes, arguing that this could be more efficient than other forms of taxation, such as labour or land taxes.

Galbraith's major proposal was a program he called "investment in men" — a large-scale publicly-funded education program aimed at empowering ordinary citizens. Galbraith wished to entrust citizens with the future of the American republic."
http://en.wikipedia.org/wiki/Supply-side_economics

Hence, economic liberals advocate government intervention in the economy.

Economic conservatives think that the market works magic:

"Supply-side economics is a school of macroeconomic thought that argues that economic growth can be most effectively managed using incentives for people to produce (supply) goods and services, such as adjusting income tax and capital gains tax rates. This can be contrasted with the classic Keynesian economics or demand side economics, which argues that growth can be most effectively managed by controlling total demand for goods and services, typically by adjusting the level of Government spending. Supply-side economics is often conflated with trickle-down economics.

The term was coined by journalist Jude Wanniski in 1975, and further popularised by the ideas of economists Robert Mundell and Arthur Laffer. Supply-side economics is controversial because its typical recommendation, reduction of the higher marginal tax rates, offers benefits to the wealthy, which commentators such as Paul Krugman see as politically rather than economically motivated.

Supply-side economics developed during the 1970s of the Keynesian dominance of economic policy, and in particular the failure of demand management to stabilize Western economies in the stagflation of the 1970s, in the wake of the oil crisis in 1973. <2>

It drew on a range of non-Keynesian economic thought, particularly the Austrian school, e.g. Joseph Schumpeter and monetarism.

As in classical economics, monetarism proposed production or supply is the key to economic prosperity and that consumption or demand is merely a secondary consequence. Early on this idea had been summarised in Say's Law of economics, which states: "A product is no sooner created, than it, from that instant, affords a market for other products to the full extent of its own value." John Maynard Keynes, the founder of Keynesianism, summarized Say's Law as "supply creates its own demand." He turned Say's Law on its head in the 1930s by declaring that demand creates its own supply. <3> However, Say's Law does not state that production creates a demand for the product itself however, but rather a demand for "other products to the full extent of its own value." More simply, it is only after we "produce" and have income to spend that we can "demand.""
http://en.wikipedia.org/wiki/Supply-side_economics