What is the voodoo economy?

Voodoo Economics is a derogatory term used to describe the economic process known as the economy on the part of the offer. The deadline was used by the then presidential candidate George Herbert Walker Bush in his fight against Ronald Reagan for nomination for the Republican nomination in 1980.

The economy on the offer side focuses on increasing the supply of goods and services. According to some economists, you will increase the supply supply. This may seem contradictory, but it is often true that the market will cause lower prices for consumers because companies are competing for business. The voodoo economy has largely spun around tax reduction to support the higher range of offerings.

Theoretically higher taxes discourage work because they reduce the amount of domestic rewards after taxes. They also reduce savings because the amount after taxation in the savings account is lower. Reducing taxes to work afterIt leads to more rewarding houses and also means that employers can reduce wages lower, because workers will be satisfied with a higher percentage of money they take home after tax. Reducing taxation taxes, such as capital gains and interest taxes, will be more attractive because your money will earn more. Theoretically, the voodoo economy should lead to an increase in work, employment and savings.

Unfortunately, in practice, the theory had mixed results. During the Presidency of Ronald Reagan, the combination of laws greatly reduced taxes for those in the highest tax belts. The intention of this was to encourage more investment by those who could afford it, but the benefits for lower income holders were marginal. Proponents argued that despite tax reduction, tax revenues would actually increase because employment would increase significantly due to new businesses. This effect never reality has occurred and the economical rates actually dropped during rEagan's Presidency.

The main purpose of the voodoo economy was to reduce inflation and emphasize the towering state debt. Using the principles of the economy on the Reagan offer, insisted that tax cuts would not only stimulate the offer, but created so many income due to increased employment and production that the country would lose money instead. With a triple promise of lower taxes, higher employment and cheaper products, it is easy to understand why Voodoo Economics was theoretically attractive design.

Some still say that the economy on the offer of the offer is working in properly controlled situations and points to the increase in economic growth during Reagan's Presidency. Critics point out that growth was not the result of tax cuts, but rather a natural recovery from the enormous recession of the previous decade. Probably the biggest factor in the Voodoo economy is excessive for the productivity of workers. While tax reduction can create new jobs, it cannot cause thisE people work more hours or longer weeks.

The unintended consequence of the voodoo economy was a major increase in state debt and the loss of what many consider to be essential social programs, had to be reduced in response to tax cuts. The branding system as "voodoo" was an attempt to indicate that the theory of the economy on the part of the offer was based on magic and imagination rather than on realistic expectations that have been made of solid theory. The concepts on the offer of the offer still have many supporters, but it seems that many of the resulting facts about the United States experiment with this form of expenditures are not good for its success.