U.S. Economy: Why Doesn't Increased Demand Bring More Supply?

Mises Institute ^ | 12/30/2021 | Frank Shostak

[4Liberty]

Where does the author do that?

I don't see the exerpt above showing any confusion between changes in demand / supply, and changes in quantity demanded /quantity supplied. For example, he writes "Supply shocks on account of the lockdowns have further intensified price increases..."

This article is basically about Say's Law (a Macro topic).

[4Liberty]

It looks like you two are talking about the article's title.

You are correct that a Demand shift does increase Q. supplied (not "Supply")

But this article is about which comes first in macroeconomic activity -- Aggregate Demand (as Keynesians insist) or Aggregate Supply (work effort and production of goods, those then allowing trades and "demand" in general to arise).

The latter is what Austrians and other free market economists argue. And it's true that government can destroy incentives to work, invest and be productive (meaning less Aggregate Supply is created).

[nicollo]

One of the biggest problems is that unstable, capricious, and arbitrary government makes it impossible for businesses and individuals to plan for the future

Indeed. Perhaps the greatest economic achievement of the American republic and its rule of law is the ability to measure corporate value over time.

Try valuing a Chinese, Nigerian or whatever company over 2, much less 10 or 15 years. We're descending into that economic Hell.

[AZJeep]

Exactly! That’s why socialism never works.
Regulated industries do not innovate and can even die, despite demand.
E.g. right now the coal industry is being killed by the government.
I remember when small plane industry was killed by liability lawsuits (they eventually passed some laws to rectify it).
Etc.
When gov. put its fingers into everything, nothing gets done.
That’s why Africa is poor, India, Arab states etc.
In India, they recently relaxed gov. controls and it is picking up!

[ProtectOurFreedom]

Meanwhile, the USA is headed to the trash heap of history with the suffocating, overbearing, and thoroughly unconstitutional federal government. Because the government has trained two or three generations of students in the wonders of socialism, it is very hard to turn back this tide.

One of President Trump’s greatest achievements was cutting the regulations in the Federal Register by one-quarter to maybe one-third. Gutting regulations results in economic dynamism, innovation, growth, and lots of new jobs.

Biden restoring all those regulations is resulting in the exact opposite outcome.

If only there were a way to permanently throw the Communist Dems onto that trash heap instead of our country.

[AZJeep]

Yes. The regulations are a lot worse that taxes.
I remember somebody took a car (some Ford if I remember) and calculated how much in it price is government regulation.
It came like over half of the price is just to satisfy millions of gov. requirements!

[Vigilanteman]

Correct and you get it.

The damnable homosexual Fabian socialist Keynesians argue that an increase in quantity demanded will automatically be followed by an increase in quantity supplied as production will ramp up automatically to chase those extra dollars.

The Austrian school (the supply siders, not the modern ones who follow the lockdown theories of the most infamous Austrian paper hanger) will not necessarily be the case if the supply chain is disrupted.

The Keynesians, if they are honest, will counter that while this may be true in the long run, it is the short term that matters because (to quote their guru) "in the long run, we are all dead."