Supply-side ideology is deeply entrenched in the political common wisdom of how to deal with the economy. It's so deeply entrenched that many policies, even Democratic ones, no longer recognize their supply side bias.
Macro-economics can be characterized by a fairly simple equation that regular market activity always tends towards making true. Capital or resource investment + Labor costs + profit margin = demand. Supply-side ideology assumes either that the right hand side of the equation, the demand side, is always really larger than the left hand side of the equation, the supply side, so the supply side needs subsidy in order to meet the demand side.
Republican ideology accepts the supply-side rubric, and seeks to subsidize the capital or resource investment component of the supply side. Democratic ideology, such as there is one, for the most part, accepts the supply-side rubric, and seeks to subsidize the labor component as well as the capital or resource investment component. Of the two, the Democratic approach is least pernicious, because subsidy of labor makes its way in some small part to the demand side of the equation. Workers make more money or have more benefits, and thus can demand a greater variety of goods and services.
But insofar as both ideologies accept the assumption that the demand side of the equation is always bigger than the supply side, they will be at a loss when it comes to being able to recognize economic events where the demand side is smaller than the supply side. Even worse, there is a conceptual incoherence between supply-side ideology and the free market. Paying producers more than what the market can bear for their products stifles competition and innovation. Subsidy of oil and coal producers adds an additional hurdle for alternatives like solar, wind and nuclear to overcome before they can be adopted.
In order to articulate an opposing ideology, it is necessary to lay out the principles of that ideology. These principles will be numbered below.
1.) When the demand side of the equation is bigger than the supply side, the supply side will always scale to meet the demand side. Subsidy of production is unnecessary, because higher demand means higher profits, which are their own incentive. Subsidy of the demand side when that side of the equation is already bigger than the supply side only increases the incentive to meet that demand, and makes it easier for competitors and innovators to enter the market. Subsidy of production when the production side is smaller than the demand side favors those who are already in the market, and encourages consolidation to maximize the impact of the subsidy on the bottom line, encouraging monopolization.
2.) When the demand side of the equation is smaller than the supply side, subsidy of the demand side is necessary. When demand drops off, so does capital investment and labor investment, and since labor is the only source of income for most people to be able to use to demand products, this results in a vicious cycle that only subsidy can break. Further, as capital investment and labor investment drop off to meet the level of demand, profit drops off more slowly, resulting in a greater overall return on capital investment initially and a concentration of capital. Eventually, the greater return drops away as the equation becomes balanced again, resulting in great sums of money chasing ever diminishing returns.
3.) The general trend of innovation works to constantly diminish the labor component of the supply side. Since the labor component is the only effective input for the demand side, a general subsidy for demand is necessary.
4.) Markets are distorted by supply-side intervention but not by demand-side intervention. Demand-side stimulus or restriction through consumption taxes only work to increase or decrease the relative size of the market. The overall shape of that market remains the same. Supply-side stimulus is not guaranteed to either increase or decrease the size of a market, but distorts its shape. Existing producers who receive the supply-side subsidy are favored over new entrants into the market who do not yet receive that subsidy. Further, the uneven application of production subsidization and the role of business lobbyists in crafting subsidy legislation make a supply side approach highly susceptible to corruption.
5.) Demand-side subsidies subsidize the activities of consumers as consumers. Instant and mail-in rebates on purchases, fully refundable tax credits based on size of household, unemployment insurance, Social Security, Medicare and Medicaid are examples of demand-side subsidies. They either bring otherwise unaffordable options within the budgets of consumers, or they increase the budget consumers have to demand a variety of goods and services. Tax cuts on capital gains and the income of the very wealthy are not demand-side subsidies, because the very wealthy do not increase their consumption with the extra money, rather, they increase their savings and investments, which grows the supply side of the equation.
The advantages of adopting an explicitly demand-side position are immense. The vast majority of businesses are not looking for a subsidy in order to gain an advantage over their competitors, though they'd no doubt take one if it were offered. Most businesses want more customers, and they want their customers to be able to afford to pay more for the goods and services they offer. More importantly, they want fairness in the marketplace. They don't want a competitor to get an unfair advantage because of a subsidy they're not eligible for.
Further, subsidy of consumers directly benefits the voters, who are more likely to associate that benefit with the political party that gives it to them. This is where the Bush tax cuts were such a brilliant political move. They included a tax rebate which was a minor, but appreciated, consumption stimulus, while masking over the much larger and much more damaging supply-side stimulus.
Finally, a demand-side approach overcomes much of the political resentment that stands in the way of adopting greener, more renewable technologies. Consumers resent elaborate price-fixing schemes and mandates forcing them to choose the greener option, which is more often than not more expensive up-front, even though it saves more money in the long run. But those same consumers will happily bear the higher up-front price of green alternatives when they can afford to do so and when they really will save them money in the long run. Consumers appreciate choices, and only a demand side subsidy can reliably increase their realm of choices. Supply side solutions almost invariably reduce their realm of choices to those predetermined by either government or corporate bureaucrats to be the best.