Even if the baker had the money to buy a new bread machine that would double his output, he'd be foolish to spend it unless he could count on his market doubling. Unless the general economy in his neighborhood is already growing, he won't want to be the first to gamble on expansion, and that's the general problem with supply-side economics: Demand must precede an increase in supply. Doing it the other way round is a gamble that few smart businesspeople would take.

It's the businessmen who take the gambles before the results are assured that create the greatest successes. And, of course, the most spectacular failures. It's what separates entrepreneurs from the rest of the crowd.

Maybe the new bread machine lets him create more varieties, or lower his prices. Maybe he comes up with a new bakery item. Low-carb bread or something. Or maybe he takes the money and does something completely different.

The whole point of innovation is that nobody predicts it.

A big problem with a planned economy, including targeted tax cuts or targeted stimulus packages, is that by definition you can only aim at existing targets. This is especially bad when the planning is done by politicians who don't know much about technology, business, science, or a lot of other things.