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Middle Class in Decline
What are the ethical implications of supporting supply-side economics as a panacea for the elevation of the middle class?
Supply-side economics was dubbed "voodoo economics" by the first President Bush, who claimed that tax cuts for the rich do not increase government revenues and trickle-down prosperity for the rest of working Americans. His son, George W. Bush, however rejected this advice and made tax cuts for the wealthiest Americans the economic cornerstone of his Presidency.
With the benefit of hindsight, most Americans have not benefited from the recent five years of economic expansion, but now find themselves struggling to deal with the impact of recession -- losing jobs as the cost of food, fuel, and health care continue to spiral upward.
Trickle-down economics focuses on stimulating economic growth by cutting taxes for the wealthiest Americans because they will have the money and incentive to invest and expand their businesses, creating more jobs with high pay for the rest of Americans. The common objection to supply-side economics is that there's absolutely no guarantee that if you cut taxes on the wealthy, then they will use that money to invest in new business or that if they do, the businesses and jobs will be in this country.
Activity
Supply-side economics as practiced by President George W. Bush was championed first by President Ronald Reagan in the decade of the 1980s. Students will be able to better understand the economics of the present by learning more about the successes and failures of supply-side economics of that era.
Pathfinder: Click the 1980s icon > Reaganomics.
As part of your International Business Ethics Month activities, assign students to address the DBQ (Document Based Questions) by clicking the DBQ icon at the top: Summarize the principles of "supply-side economics" and evaluate its major criticisms.
Students should cite at least three resources in their essay of about 150 words.
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