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Supply Side policies (Interventionist (Types of interventionist supply…

- - - - Education
        
        Learning basic literacy and numeracy, is rewarded with large jumps in the incomes of those educated. Yet it also improves the skills and productivity of the workforce
      - Training
        
        This helps businesses find productive employees and thus should enhance economic growth
      - Health services
        
        In countries where public health is poor, it is difficult for children to regularly attend school, and worker absenteeism is chronic. Government efforts to improve healthcare can improve labour productivity in these situations
    - - This can be accomplished by public/private sector partnerships, as well as tax incentives for research and development.
        
        When the government hires or sponsors the hiring of scientists and engineers to work in a particular area, this government spending stimulates AD in the immediate term. When their work results in inovation, the entire productive capacity is enriched, pushing LRAS outwards
    - - Infrastructure is the building of large-scale public projects. This kind of spending most certainly increases AD in the short run, but should also expand the capital base of the country in the long term, increasing LRAS in the process
    - - Financial incentives
        
        The government can support the industry with reduced taxes, subsidized loans, and even direct subsidies. These all reduce the costs to the firms, and encourage more production
      - Outline
        
        Governments may support specific industries; perhaps an industry where the country has comparative advantage, or one with good long-term prospects
      - Protection for 'infant industries'
        
        For industries believed to be potentially competitive in the world market, governments can put down protective tariffs or quotas to keep foreign competition out until the firm is sufficiently large and developed.
- - - - Reducing income tax
        
        Lowering income taxes will increase the after-tax income of all workers
        
        According to Laffer, when taxes have grown too high a reduction would stimulate work to the extent that the greater income of workers would bring in increased tax revenue.
      - Reducing business taxes and capital gains taxes
        
        Reducing business taxes
        
        Encourages firms to produce more, shifting supply to the right, and possibly encouraging more employment.
        
        Reducing capital gains taxes
        
        Will make entrepreneurial risks more rewarding and encourage investment
    - - Deregulation
        
        Deregulation can be applied to a variety of situations in order to reduce bureaucracy as well as the required costs of complying with government rules.
      - Anti-monopoly regulation
        
        Monopolies, have the ability to restrict output and increase prices. Anti-monopoly laws seek to prevent or dismantle monopolies in the market.
      - Privatization
        
        Provides government controlled markets, to the private sector, creating a greater incentive for lower costs and thus prices.
      - Trade liberalization (free trade)
        
        Opposes tariffs, quotas, and subsidies that encouraged dependence on the government, while encouraging free trade, reduction of trade barriers and open competition.
    - - Reducing trade union power
        
        Restricting trade union power to organize or bargain collectively with employers would decrease their wage-setting power, increasing employment as a result
      - Reducing unemployment benefits
        
        Unemployment benefits create a disincentive for workers to accept jobs at lower wages during periods of unemployment, and thus prolongs the economy’s return to full employment.
      - Ending the minimum wage
        
        A price floor for labour, creates a surplus of workers who will not be hired at the government-enforced wage rate. Higher wages reduce the profits of business and thus lower supply, and may reduce employment even further.