Thy Neighbor's Supply Side
Nollson, John
"Thy Neighbor's Supply Side" John Nollson Aside from power and fame, everyone knows that money and sex are really where it's at. Recent scholarly advances in the study of both economics and...
...Unlike the rest of us, the Federal Reserve doesn't have to make anything...
...I asked, wondering why the governments involved, with all t h e i r o t h e r problems, would poke their noses into this corner of the private sector...
...Well," I answered, " t h a t ' s how it may look from your perspective as an industrial decision-maker, but what about the perspective of the people who operate the business...
...I never make a move without first checking with them," he said, "but sometimes my production engineer can't make it, so he gives me his proxy and I take it with me...
...What you want to be able to do is this...
...The minutes always show that the vote was unanimous.' ' "Why do you bring your accountant, though...
...Until about a year ago, the connection was hazy indeed...
...As soon as that happens, you're in trouble...
...It can just print as much as it wants...
...Hunt, hoping to corner the futures market...
...I knew what he was talking about...
...You name it, local, s t a t e , f e d e r a l . Even counties...
...Absolutely," he chimed in...
...Do you know what happens if you experience a liquidity crisis under such conditions...
...Then I meet with my accountant and my tax counsel and we decide how to cast it...
...As even thy own neighbor's wife will attest, it is possible both to supply and demand at the same time...
...I think I've heard about that...
...Recent scholarly advances in the study of both economics and sexology now provide us with a unique opportunity to examine the relationship between the two...
...I paid attention to the news and I knew all about Proposition 13...
...Or is she endowed only with those worn-out Phillips curves which, as we now know, mislead you about what is really going on under the surface...
...I wondered out loud...
...Her fertilizer spreading machine was not working properly...
...What is the rate of taxation in such an establishment...
...I mean, you can't afford a liquidity crunch...
...KI l ' ~ o w , " he continued, picking up his train of thought where he had left it, "the critical thing, of course, is monetary policy...
...Yes," I responded...
...You see, it's the furthest thing from a traditional free-market environment...
...But I knew that if I didn't quite understand what he was driving at, Howard Jarvis surely did...
...These are important policy questions...
...You get depreciated down to zero, and you are out of business...
...As I walked up the pathway to my door, I noticed, out of the corner of my eye, none other than my neighbor's wife, and looking quite fetching, too, as she spread Orthogro on her front lawn...
...He is the best person to ask, because he knows about such things...
...I mused...
...Well, as they say, one thing led to another, and my education in the New Economics was finally completed...
...Or should she just be written off altogether...
...The operator has to cope with a bewildering maze of regulations emanating from every level of government...
...NO use taxing yourself when you don't have to...
...Now all of us can understand it better...
...No," I answered in all truthfulness...
...I thanked the entrepreneur for his time and his insights and, an hour or two later, I returned home...
...Do you invest in her, so that she will return dividends in the future...
...he continued...
...Because, you nincompoop," he answered, " i t ' s illegal...
...Gentleman that I am, I volunteered to make some adjustments...
...And he helps me keep track of my cash flow...
...And not only my accountant, but my tax counsel and my production engineer...
...How rapidly should she be depreciated...
...Before you know it, you wake up and find that you're in the red, that you've spent all of your assets, and that you don't have any reserves to fall back on...
...They write you off...
...In an inflationary situation, you have to keep a sharp watch, so that you avoid the twin pitfalls of boom or bust...
...Middle America is caught up in the ferment which surrounds these critical issues...
...Consider the question of thy neighbor's wife...
...Hello, neighbor," I said, in my usual charming manner...
...Or do you try to maximize consumption over the s h o r t term...
...It has something to do with the rate of inflation...
...He is also a man of voracious appetites, but a firm believer in the principles of double-entry bookkeeping nonetheless...
...If you overtax your supply side, incentive drops off, and you end up generating less revenue than you would have if your rate of taxation was lower to begin with...
...As for her Laffer curves, does she have any...
...A real glutton, that Federal Reserve of ours, yes sir...
...Does she supply, or does she demand...
...I t depends only on your production function...
...Now, then," he said to me, " a t least twice a week for the last nine years, I have patronized massage parlors over in the seedy part of town...
...I spoke with this captain of industry in his spacious office...
...I asked, reaching for my notebook...
...That's the biggest reserve in the country, you see, and people are always trying to borrow from i t . " "How large are the reserves of the federal government...
...After your own reserves are exhausted, you want to be able to draw on the resources of the Federal Reserve...
...26 THE AMERICAN SPECTATOR JULY 1980...
...First of all, my accountant is an expert at juggling the books, if you know what I mean...
...If you engage in reckless spending, you'll start to run large deficits...
...Limitless, my boy," he boomed in response, "limitless...
...T h e r e , " he admitted, "you get into a tricky situation...
...Why is there so much government regulation...
...Do you plant t r e e s like Daniel K. Ludwig, hoping to reap a profitable harvest, or should you b e an opportunistic speculator like H.L...
...I asked, convinced that the right to privacy was protected by several Constitutional amendments...
...Then it taxes the rest of us so that it can have as much as it wants...
...That's why you have to keep a~ eye on the figures there...
...And I always bring counsel to advise me on when I might be overextended...
...She seemed vexed...
...Your accountant...
...I was not so illiterate as he had supposed, but I decided to feign ignorance, the better to draw out his real opinions...
...You have to keep a grip on things...
...The point is to reduce the rate so as to increase your supply...
...I always bring my accountant with me...
...Why is that...
...John Nollson THY NEIGHBOR'S SUPPLY SIDE Aside from power and fame, everyone knows that money and sex are really where it's at...
...In connection with some research I am doing, I had occasion to interview one such, a man of formidable commercial achievement...
...But I never go by myself...
...It's a real tangle...
...All of us have met, at one time or another, a dynamic entrepreneur, an economic animal, if we mayborrow a category from philosophy...
...Is she a consumer or is she a producer...
...Why do you think everyone wants to be a member of its Board of Governors ?" I had to admit, this was a wholly novel view of open market operations...
Vol. 13 • July 1980 • No. 7
