Reawakening The Giant

16 Pages 3958 Words

s. This prevented companies from borrowing too much, and therefore raising their prices on goods and services just to keep up with the combined burdens of expansion and interest dues. Then, companies would seek more private investment, which can have greater benefits than bank loans. For one thing, companies never need to pay private investors back (forgetting dividends). Additionally, investors who contribute large amounts of capital take have influence in the decision-making process. They want the company to do as well as it can, because as the company prospers, so does the stock price.
Secondly, Reagan urged Congress, composed of a Republican-run House and a Democratic Senate, to enact a 25% across-the-board tax cut. Milton Friedman, a well-known economist, said that, “Taxes have a depressing and inhibiting effect on the economy.” The tax cut would reduce that effect, and introduce the benefits of supply-side economics. Also, with the economy expanding, companies would charge less for their products and services then they wou...