For those not familiar, supply-side economics assumes supply creates demand. People don’t know they want a certain good unless it exists, so innovation and creation—not existing demand—must drive production. For an example, consider automobile inventor Henry Ford’s famous quote: “If I had asked people what they wanted, they would have said faster horses.”
Bowie hasn’t released a new album since 2002’s Heathen, he hasn’t toured since suffering a heart attack after a gig in 2004, and his last major film role was in 2006’s The Prestige. London Olympic organizers offered him a spot in the closing ceremony, but he politely refused. Though not exactly a recluse—he’s made a handful of public appearances and is photographed strolling in New York now and again—by all accounts he’d settled into retirement and quiet family life. His performing and recording days, it seemed, were through—and though we fans never lost hope for a new album, we weren’t exactly signing petitions or pleading our case in record company focus groups.
But on January 8, something miraculous happened: A new Bowie single, “Where Are We Now?” appeared on iTunes out of the blue. With no marketing campaign other than a press release, a tweet on Bowie’s Twitter feed and a banner on iTunes, news spread across the Internet like wildfire, and within a day the song topped the UK iTunes chart. The simple existence of a new song drove a massive wave of demand—demand that really didn’t exist the day before.
And that, in a nutshell, is why the best economic policies are those that make it easiest and cheapest for people to innovate, create and sell their goods—all the fiscal and monetary stimulus in the world won’t do much to stimulate consumption without exciting new products for us to buy.
(And speaking of exciting new products, a new Bowie album, The Next Day, lands in early March.)