Paul Krugman writing an Op-ed in the NYT 11-3-15 talks about the ills of austerity and references several noted economists who state that supply does not create demand. I’m not qualified to argue his issue, except 😷😷😷
In particular, quite a few economists seemed utterly unaware that Say’s Law – the proposition that supply creates its own demand, that shortfalls in aggregate demand were impossible – had been refuted three generations ago.
In fact, not only doesn’t supply create its own demand; experience since 2008 suggests, if anything, that the reverse is largely true – specifically, that inadequate demand destroys supply. Economies with persistently weak demand seem to suffer large declines in potential as well as actual output.
I maintain health care is the exception. Health care can and does create its own demand. Once you enter the system, you effectively lose control. An increasing supply of health care services does not create price lowering competition and most certainly does create its own demand.
Every new piece of equipment must be used, every new practice must have patients, every lab must perform tests and virtually no one uses any of these services voluntarily and typically moves from one service to another at the direction of the primary supplier.