A school of thought within the economics profession emphasizing that
the main source of a country's economic growth is constant improvement
in the efficiency with which resources
are allocated for production. While the policy recommendations of the
rival Keynesian school tend to focus almost entirely on what
government can do to stimulate or restrain aggregate demand in the short-run
so as to even out the business
cycle, supply-side policy analysts focus on barriers to higher
productivity -- identifying ways in which the government can promote
faster economic growth over the long haul by removing impediments to
the supply of, and efficient use of, the factors of production. Supply-siders
believe that unwise provisions of the
tax laws (and especially high marginal rates of personal and corporate income taxation) produce very damaging incentives that lead people to work less
and to invest less (and to do both less efficiently) than they
otherwise would. Supply-side policy recommendations typically include
deregulation of heavily regulated industries, promotion of greater competition through lowering protectionist barriers to
international trade, and measures to repeal special subsidies and tax
loopholes targeting particular industries in favor of lower and more
uniform tax rates across the board. Supply-side economics became
particularly well-known to the general public during the 1980s because
of its advocacy by one influential faction of economic policy-makers
in the Reagan administration, leading to the use of the term
"Reaganomics" to denote many of the ideas of the
supply-siders. Supply-siders played a much smaller role in economic
policy-making under the Bush administration, as the focus of attention
shifted toward controlling the size of the budget deficit and away from the
earlier "Reaganomics" preoccupation with accelerating the country's
rate of economic growth.