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Author Topic: What would happen if everyone got 1000 USD every month?  (Read 7305 times)
neptop
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December 09, 2012, 10:46:41 AM
Last edit: December 09, 2012, 12:08:08 PM by neptop
 #1

Hey,

I didn't study economics, but I always was interested. With all the discussions about how fair things are these days I wonder whether a system where every single person would receive 1000 USD (like direct from the printing press) could improve things. I am not talking about minimum wage or whatever.

What I think (maybe I am completely wrong) could be great about this is that nobody can complain that someone else receives more, because everyone receive the same. Also it wouldn't have to come from other people's taxes, but from kinda devaluing the money making stuff more expensive and therefor causes working people, from the cleaning lady to the manager receiving more money. What I think would be nice too is that the 1000 USD could be exactly what you need to get the most basic things to survive. It will not be that much, because that's what everyone receives anyway. Every person that works will get additional money for luxury good or better survival stuff (better food, etc.).

I think it would be compatible with all kinds of ideology, because it's not raising taxes having anyone taking something away from working people (who would most likely earn more, because of inflation), but also not like we don't care about poor people.

What do you think?


EDIT: Looks like some people didn't read it. So a tldr: I am not talking about some weird for of socialism, where everyone just gets money or something like that, but where you print an additional 1000 USD for every citizen, no matter whether he is bill gates or living on the street. This isn't financed through taxes and doesn't change the social system, property or whatever. Money is being devalued, but not in a different way from the way it is printed now, just in bigger amounts.

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December 09, 2012, 11:12:38 AM
 #2

https://en.wikipedia.org/wiki/Criticisms_of_socialism#Reduced_incentives
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December 09, 2012, 11:28:31 AM
 #3

I think it would be much more efficient for the government to provide directly "the most basic things to survive" rather than just give out $3.6 trillion dollars to US citizens per year.  Most who don't really need it to survive.

I do think that if you choose to recieve these basic things, like government provided food, shelter, and healthcare, one should have to work for it.  Cleaning roadsides, maintaining parks, building shelters, serving in the military, public service type things.

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December 09, 2012, 11:42:52 AM
 #4

I was sat in a cafe recently and on the next table to me was what I call a "Mother Daughter". The mother was a pensioner (a senior). The daughter had travelled a couple of hours to catch up with her mum.

The mother spent most of the hour I was in there complaining that her pension did not go as far as it did in the past. Clearly she was struggling to maintain her standard of living.

Imagine what is happening here in macroeconomic terms.
She is being given, say, $1000 a month to maintain her standard of living. She is not expected to produce anything in return for this.
This is as per the OP's proposal.

The government in the UK has to print a considerable proportion of its spending every year to provide these "tickets" that we call pounds. You call them dollars in the US but it's the same thing !

In the UK the government deficit is about 10% so:

+ At the beginning of 2012 she receives $1000 a month and there are $X trillion tickets in the economy.
+ At the beginning of 2013 she still receives $1000 a month but now there are $X * 1.1 trilliion tickets.

(I am ignoring the measly 1% pension rise per annum they are getting are the moment).
If everything stays the same, she is poorer in terms of purchasing power by 10%.

Printing tickets and handing them out is no substitute for real goods.



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December 09, 2012, 12:02:31 PM
 #5


Looks like you didn't read my post. I am not saying everyone basically gets the same, like in socialism. I ask about people receiving an addition to whatever they earn anyways. Things would not change other than that. Please, either learn about what socialism is or read my post.

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December 09, 2012, 12:03:43 PM
 #6

I was sat in a cafe recently and on the next table to me was what I call a "Mother Daughter". The mother was a pensioner (a senior). The daughter had travelled a couple of hours to catch up with her mum.

The mother spent most of the hour I was in there complaining that her pension did not go as far as it did in the past. Clearly she was struggling to maintain her standard of living.

Imagine what is happening here in macroeconomic terms.
She is being given, say, $1000 a month to maintain her standard of living. She is not expected to produce anything in return for this.
This is as per the OP's proposal.

The government in the UK has to print a considerable proportion of its spending every year to provide these "tickets" that we call pounds. You call them dollars in the US but it's the same thing !

In the UK the government deficit is about 10% so:

+ At the beginning of 2012 she receives $1000 a month and there are $X trillion tickets in the economy.
+ At the beginning of 2013 she still receives $1000 a month but now there are $X * 1.1 trilliion tickets.

(I am ignoring the measly 1% pension rise per annum they are getting are the moment).
If everything stays the same, she is poorer in terms of purchasing power by 10%.

Printing tickets and handing them out is no substitute for real goods.




Very interesting write up, I did not know this before.

Can you explain more in depth how she is poorer in terms of purchasing power?
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December 09, 2012, 12:05:30 PM
 #7

Also it wouldn't have to come from other people's taxes, but from kinda devaluing the money making stuff more expensive
Same shit, different sack. If you don't understand why these are exactly the same shit, you've got more reading (or thinking) to do.

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December 09, 2012, 12:24:28 PM
 #8

Also it wouldn't have to come from other people's taxes, but from kinda devaluing the money making stuff more expensive
Same shit, different sack. If you don't understand why these are exactly the same shit, you've got more reading (or thinking) to do.

Okay, maybe that was a bit harsh, but here a few differences from socialism:

  • People don't have like food stamps or a different kind of money. (in some systems, like Cuba)
  • Neither the government nor the workers govern companies.
  • Money doesn't come from taxes that only rich people have to pay and so the system doesn't rest on their shoulders.
  • People will get a fixed amount of money, so a free market and value of stuff can adapt to it (there are no free markets in socialism)
  • The money will in the end go to working people
  • You won't be able to afford any kind of luxury, if 1000 USD are worth even less
  • Pays would therefor (I guess) be higher, so you won't have this "I'd earn as much, if I didn't work" thing
  • It isn't like a tax, because it's not bound to some specific thing (doesn't matter how rich you are)
  • It is no traditional minimal income, because it is added and doesn't depend on anything and isn't just for poor people/people who don't work

I know, it has an effect and if you really read what I wrote you think that it will act like a tax, because the devaluation is bigger for working people, right? Do you really think the effect would be the same even though the gap between working and none working people is probably even higher than now?

Also do you think it would maybe still be a better solution to have it like that rather to have this complex welfare system every country has now?

If you still think it's exactly the same would you mind telling me why you think it is?

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December 09, 2012, 12:28:10 PM
 #9

I was sat in a cafe recently and on the next table to me was what I call a "Mother Daughter". The mother was a pensioner (a senior). The daughter had travelled a couple of hours to catch up with her mum.

The mother spent most of the hour I was in there complaining that her pension did not go as far as it did in the past. Clearly she was struggling to maintain her standard of living.

Imagine what is happening here in macroeconomic terms.
She is being given, say, $1000 a month to maintain her standard of living. She is not expected to produce anything in return for this.
This is as per the OP's proposal.

The government in the UK has to print a considerable proportion of its spending every year to provide these "tickets" that we call pounds. You call them dollars in the US but it's the same thing !

In the UK the government deficit is about 10% so:

+ At the beginning of 2012 she receives $1000 a month and there are $X trillion tickets in the economy.
+ At the beginning of 2013 she still receives $1000 a month but now there are $X * 1.1 trilliion tickets.

(I am ignoring the measly 1% pension rise per annum they are getting are the moment).
If everything stays the same, she is poorer in terms of purchasing power by 10%.

Printing tickets and handing them out is no substitute for real goods.




Very interesting write up, I did not know this before.

Can you explain more in depth how she is poorer in terms of purchasing power?

I didn't write it, but I would say the reason is this:

Quote
In the UK the government deficit is about 10%

And maybe I should read up on UK politics. I just know that it's neither what it is in the rest of the EU, nor in the US, but while they have a nice currency they seem to still mess up more than both of them, when it comes to money <-> living, regardless of whether you are poor or rich, which is why I never got into that. Other countries seem to do better, but maybe they are just in between and have a good main street. jim618, are you living in the UK. Can you compare it with the US and/or the EU (I mean countries like, France, Germany, Italy, Austria, Finland, Sweden, Norway, not Greece, Spain or Italy). Already got so much to read up on and would be happy to know the rough differences. Wink

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December 09, 2012, 12:38:53 PM
 #10

I was sat in a cafe recently and on the next table to me was what I call a "Mother Daughter". The mother was a pensioner (a senior). The daughter had travelled a couple of hours to catch up with her mum.

The mother spent most of the hour I was in there complaining that her pension did not go as far as it did in the past. Clearly she was struggling to maintain her standard of living.

Imagine what is happening here in macroeconomic terms.
She is being given, say, $1000 a month to maintain her standard of living. She is not expected to produce anything in return for this.
This is as per the OP's proposal.

The government in the UK has to print a considerable proportion of its spending every year to provide these "tickets" that we call pounds. You call them dollars in the US but it's the same thing !

In the UK the government deficit is about 10% so:

+ At the beginning of 2012 she receives $1000 a month and there are $X trillion tickets in the economy.
+ At the beginning of 2013 she still receives $1000 a month but now there are $X * 1.1 trilliion tickets.

(I am ignoring the measly 1% pension rise per annum they are getting are the moment).
If everything stays the same, she is poorer in terms of purchasing power by 10%.

Printing tickets and handing them out is no substitute for real goods.




Very interesting write up, I did not know this before.

Can you explain more in depth how she is poorer in terms of purchasing power?

I didn't write it, but I would say the reason is this:

Quote
In the UK the government deficit is about 10%

And maybe I should read up on UK politics. I just know that it's neither what it is in the rest of the EU, nor in the US, but while they have a nice currency they seem to still mess up more than both of them, when it comes to money <-> living, regardless of whether you are poor or rich, which is why I never got into that. Other countries seem to do better, but maybe they are just in between and have a good main street. jim618, are you living in the UK. Can you compare it with the US and/or the EU (I mean countries like, France, Germany, Italy, Austria, Finland, Sweden, Norway, not Greece, Spain or Italy). Already got so much to read up on and would be happy to know the rough differences. Wink

Oh, I see. A 10% trade deficit means they owe other countries 10% more than they own, right? Or am I understanding this wrong?
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December 09, 2012, 12:40:33 PM
 #11

Can you explain more in depth how she is poorer in terms of purchasing power?

There are more tickets chasing the same number of goods so (everything else being equal) the price of the goods in terms of tickets goes up. This is pure inflation.


Imagine you run a local economy with your friends and you buy and sell things using tickets written on paper. Say I run an errand for you and you pay me me 1 ticket. I might then save up my tickets and buy a book off another friend for 10 tickets.
Imagine at the beginning there are 100 tickets in circulation (This is the total money supply).

Everything runs smoothly and there is a certain size to the local economy.

Imagine someone decides they are just going to print new tickets as they cannot be bothered to do some work in exchange for the existing tickets. Say I print 100 new tickets. (Money supply is now 200 total tickets).

I can initially outbid other people for services with my stack of new tickets. I am rich!
As the flood of new tickets enters the economy prices will soon adjust though. The price for doing an errand will soon increase to 2 tickets and the price of a book will be 20 tickets.

Previously if you had saved 15 tickets you could have bought a book and 5 errands, now you can only buy half as much.

Who gains ?
The person who printed the new tickets has taken buying power off all the existing ticket holders.


@neptop. Yes I am in the UK.
I think all the western countries as devaluing their currency at about the same rate (as the exchange rates USD V GBP V EURO are roughly stable)

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December 09, 2012, 12:59:35 PM
 #12

People don't have like food stamps or a different kind of money. (in some systems, like Cuba)
Makes no difference, since the market will give food stamps value (even if it's illegal to trade food stamps for cash, people will do it anyway).

Neither the government nor the workers govern companies.
Nor would they be if you weren't printing and giving away money, so how is that even relevant?

Money doesn't come from taxes that only rich people have to pay and so the system doesn't rest on their shoulders.
Instead, everyone has to pay, although the rich still pay more, for reasons I will explain below.

People will get a fixed amount of money, so a free market and value of stuff can adapt to it (there are no free markets in socialism)
The free market will adapt by making the money worthless. Supply and demand. The demand for money is fixed (since people can only produce so much stuff to sell), so if you have an ever-increasing supply, the value will inevitably plummet.

The money will in the end go to working people
No it won't. There is no end. No matter how much money the working people make, the non-working people still keep getting their free money.

You won't be able to afford any kind of luxury, if 1000 USD are worth even less
True. And that is a bad thing. Why would anyone think that's a good thing?

Pays would therefor (I guess) be higher, so you won't have this "I'd earn as much, if I didn't work" thing
Guess again.

It isn't like a tax, because it's not bound to some specific thing (doesn't matter how rich you are)
It is bound to specific thing (your money), and therefore it does matter how rich you are. If your money is being devalued by (say) 10% every year, and you have (say) $100,000, then that's exactly the same as paying $10,000 tax per year. If you have $1,000,000, you're paying the equivalent of $100,000 tax per year.

It is no traditional minimal income, because it is added and doesn't depend on anything and isn't just for poor people/people who don't work
It is not being added, for there is nothing to add. As I said, the demand for money is fixed, so every dollar that you print is a dollar deducted from the collective purchasing power of everyone who owns dollars. By distributed those dollars to everyone whether they're working or not, you are stealing from everyone who has money (and presumably worked for it), and giving to everyone who doesn't (ie, those who aren't working).

I know, it has an effect and if you really read what I wrote you think that it will act like a tax, because the devaluation is bigger for working people, right? Do you really think the effect would be the same even though the gap between working and none working people is probably even higher than now?
The gap between the working and non-working people will decrease, not increase, and that's bad. It punishes people who work and rewards people who don't.

Also do you think it would maybe still be a better solution to have it like that rather to have this complex welfare system every country has now?
Better than what we have now isn't really saying much.

If you still think it's exactly the same would you mind telling me why you think it is?
It's not exactly the same. I neglected to mention that inflation, unlike taxation, is an invisible sack of shit. But it stills stinks, and everyone knows it stinks, though the uneducated can't tell where the stink is coming from.

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December 09, 2012, 01:01:03 PM
 #13

@neptop. Yes I am in the UK.
I think all the western countries as devaluing their currency at about the same rate (as the exchange rates USD V GBP V EURO are roughly stable)

Okay, now I wonder about whether you know how.

The reason is that there are countries in the EU, where you study for free while in the US you have to pay your debt all life long (so it isn't government debt), while the quality (aside from a small elite universities) appears to be the same. Same fir health care, etc. The standard of living appears to be better in Europe (subjectively, but I was at both places to visit friends, so not tourist are) and when I look at studies like from Mercer it seems to be better for you if you were born there.

I mean, it's awful what's going on in Greece for example, but then if you compare the average debts of EU and US it's not like they are doing worse.

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December 09, 2012, 01:17:59 PM
Last edit: December 09, 2012, 01:31:19 PM by jim618
 #14

The UK is interesting as it is about halfway between the US and continental Europe in its policies.
It still has a safety net for people but that seems to be getting weaker over time.
Student debt in the UK is a good example - you now have to pay (I think) £6000 a year tuition fees per annum. Most people I know end up with around £30,000 in student debt ($USD 50k) for a 3 year degree.

It has an enormous financial sector centred in London - when you look at the banking liabilities by GDP we are somewhere around Iceland levels.

Each country has its own foibles (eg I know healthcare in the US has become pretty difficult for the average worker whereas it is still free in the UK).   All the western countries seem to have a lot more "promises to pay" than "ability to pay".

This is the root problem of the OPs suggestion. It is a promise to pay everyone without looking in detail as to the society's ability to pay.

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December 09, 2012, 01:25:43 PM
 #15

Each country has its own foibles (eg I know healthcare in the US has become pretty difficult for the average worker) whereas it is still free in the UK.

The NHS is most certainly not free. It is paid for via forced expropriation - taxation, including the regressive National In$urance scam tax - and then, due to lack of customers, with being a state monopoly, goes on to waste more money on bureaucracy than actual doctors, nurses, etc.

Not that things in America are better: they have a mess too, but a different kind of mess.

Quote
All the western countries seem to have a lot more "promises to pay" than "ability to pay".

That's the essence of the debt crisis, and it was almost inevitable with fiat monopoly funny money, really.

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December 09, 2012, 01:28:16 PM
 #16

Each country has its own foibles (eg I know healthcare in the US has become pretty difficult for the average worker) whereas it is still free in the UK.

The NHS is most certainly not free.

Good point - I stand corrected.


edit: NHS = National Health Service for non-UK readers.

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December 09, 2012, 01:46:24 PM
 #17

Money doesn't come from taxes that only rich people have to pay and so the system doesn't rest on their shoulders.
Instead, everyone has to pay, although the rich still pay more, for reasons I will explain below.
The money will in the end go to working people
No it won't. There is no end. No matter how much money the working people make, the non-working people still keep getting their free money.
I am talking about the combination of these two. The 1000 USD, if devalued will be used up and therefor go to the working people, which use it to basically pay for the inflation. Not?

Quote
You won't be able to afford any kind of luxury, if 1000 USD are worth even less
True. And that is a bad thing. Why would anyone think that's a good thing?
[/quote]
Cause it requires people to work, in place of how it is now, where you can lie back and still have what you want.

Quote
Pays would therefor (I guess) be higher, so you won't have this "I'd earn as much, if I didn't work" thing
Guess again.
Devalued money, same work: Higher pay than what the difference between working people, who don't earn much money and people that live on welfare is currently

Quote
It isn't like a tax, because it's not bound to some specific thing (doesn't matter how rich you are)
It is bound to specific thing (your money), and therefore it does matter how rich you are. If your money is being devalued by (say) 10% every year, and you have (say) $100,000, then that's exactly the same as paying $10,000 tax per year. If you have $1,000,000, you're paying the equivalent of $100,000 tax per year.
I am not talking about fixing everything, but making it fairer than it is right now. You pay a different tax depending on how rich you are and receive a different amount of welfare (and that's what I meant with being bound to something) depending on what kind of illness you have, what job you are best at and whether you go to the army.

Quote
It is no traditional minimal income, because it is added and doesn't depend on anything and isn't just for poor people/people who don't work
It is not being added, for there is nothing to add. As I said, the demand for money is fixed, so every dollar that you print is a dollar deducted from the collective purchasing power of everyone who owns dollars. By distributed those dollars to everyone whether they're working or not, you are stealing from everyone who has money (and presumably worked for it), and giving to everyone who doesn't (ie, those who aren't working).

First off working power is not money. I know that, because I don't work a lot, yet receive way more money than people who do, just for sitting on my ass. I usually donate a lot of it, because I feel uncomfortable (seen that donate to EFF/get a humble bundle cheaper thread of mine? I basically donate to all the projects that are about putting power into people's hands (know something?)).

Second, it depends on your view of money. The US and China kinda had a competition (and that was in both Bush's and Obama's time) of printing more and more money to basically devalue their debts. So that already happens only that who receive it isn't evened out.

What I meant with being added is:
Non working guy: 0 + 1000
Working guy: 2000 + 1000

while minimal income, like a lot of countries have it (even if it's a more complex system) is like:

Non working guy: 0 + 1000
Part time worker: 800 + 200
Hard working guy: 2000 + 0

I think from this system you could better work away from stuff like health care, scholarships, family stuff, etc. into the direction where people can choose what's important to them. It also would make administration way easier and therefor make a lot of taxes unnecessary. That's what I am heading for and what I meant with the difference compared to socialism.

Quote
I know, it has an effect and if you really read what I wrote you think that it will act like a tax, because the devaluation is bigger for working people, right? Do you really think the effect would be the same even though the gap between working and none working people is probably even higher than now?
The gap between the working and non-working people will decrease, not increase, and that's bad. It punishes people who work and rewards people who don't.

Compared to the current system, even with money devaluation, really?

Quote
Also do you think it would maybe still be a better solution to have it like that rather to have this complex welfare system every country has now?
Better than what we have now isn't really saying much.
Well, I didn't expect this to solve all problems, just make things better would be a first step.

Quote
If you still think it's exactly the same would you mind telling me why you think it is?
It's not exactly the same. I neglected to mention that inflation, unlike taxation, is an invisible sack of shit. But it stills stinks, and everyone knows it stinks, though the uneducated can't tell where the stink is coming from.
[/quote]
Uh, yep a Bitcoin based economy would be better. I think so too or a society where people are educated. Basically, because I don't think we would have a huge problem with non-workers anymore, but yeah that's why I made that thread. Want to know alternatives and steps to get there. I don't really care, if I am completely wrong with that. I didn't study economy and writing under a pseudonym, so I will at least know I am wrong.

I just consider inflation more fair than taxes, because it evens things out more than all the tax systems. I mean either it's unfair for people who simply were like born into a poor family or something and even if they had potential and will to become workers will end up not getting education and stuff and for society that means that they'd lack a Stephen Hawking, because he had the bad luck of being disabled.

I also think that it would make a difference to the current system, because I think what really makes people work is society. I mean, no matter who you are you are still a human and extremely influenced by the society you are in. Be in Germany in the wrong time and wrong family and you will very, very likely be a Nazi. I mean same thing basically happened in Rwanda only that nobody intervened, because they were no real threat like Germany. Anyway, just making a point on how big the influence of society. You could say the same about the kind of music you listen too, football team you support or the words you use. And if you want to be different you do the opposite. Still influenced by it.

So basically you wanna be rich for society. Be it for your family, for being able to wear nice clothes or to follow your hobbies (if you really hate society).

I don't think strong socialism really was killed because of that. I mean, see Cuba (my standard example on this forum). They support US students and African countries, doing much better than other countries in that area, while having the strongest super power as enemy and being financially sanctioned by it. I think that would kill every EU country. Also from documentaries it's kinda weird. Poor people work and are super happy and rich people are like sitting in their villas living there for free and off the state. Seems to work and from people I know from there the poor ones don't just pretend to be happy. Don't saying Cuba is a good country. It actually sucks in most ways, but given these facts I don't think that the criticism from earlier is like completely true and I think the reason actually is society.

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December 09, 2012, 02:34:20 PM
 #18

The idea is called Basic Income Guarantee and is apparently more popular in Europe and especially Germany than in the rest of the world.

Even hardcore liberal Milton Friedman proposed a proportional/progressive income tax that could be negative for those with too low or no income, essentially resulting in the same.

An argument often made for this idea is especially the increased rise of automation and computers, making more and more jobs superfluous, while the standards of living remain at least the same.

In my view, if (and only if) we want to continue with a similar system to today's with a central state, it is an idea which implementation is long overdue. After all, what we have today with big banks and corporations is that profits are privatized, and losses are socialized ("too big to fail", bailouts etc). Thus, to be fair, also profits must be socialized, resulting in some kind of social dividend of the economic growth.

Now on the other hand, from the perspective of the market libertarians which most are here, in a properly functioning free and fair market, more automation would simply mean falling prices. And without all the bureaucracy we have to today, people could simply choose to work less, say two days a week, while still covering all their basic needs and more. Maybe this approach is really better than to trust a potentially corruptible central authority redistributing wealth.

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December 09, 2012, 04:07:56 PM
Last edit: December 09, 2012, 04:37:50 PM by DeathAndTaxes
 #19

OP it is still socialism and it is still paid for (mostly) by the rich.  
It is a indirect form of wealth confiscation and transfer.  Not materially different in the outcome of using taxes to fund welfare or other programs.
The fact that you make it universal doesn't really change anything other than how it is implemented.

Quote
Hypothetical scenario.

Population is 1 million people.
Total GDP: $50 billion.
Most modern economies have a velocity of ~1 so lets assume monetary base (pre "print & give") is ~= GDP = $50 billion
We will call this the "pre print & give economy".

Now lets compare two example persons in this economy:
Quote
homeless man
Income of $5,000 annually (odd jobs, panhandling, crime, etc).
The $5K has $5K of purchasing power in the "pre print & give economy"

small business owner
Income of $250,000 annually.*
The $250K has $250K of purchasing power in the "pre print & give economy"
* Technically the the SB owner would pay taxes and thus his post tax income would be lower however it doesn't materially change this comparison so for simplicity it has been left off.

Now lets look at the "post print & give" economy.
Quote
Now the govt prints an additional $10K and gives it to every person so that increases the money supply by $10B.
No additional wealth has been created.  Money is merely an accounting system.   You now have more slips of paper (physical or digital) which can be exchanged for the same amount of goods and services.
We would expect to see ($10B + $50B) / ($50B) = 20% price inflation.

So lets go back to our two persons.
The homeless man now has $5K + $10K = $15K in income.  
However prices have increased 20% so his purchasing power (in pre "print & give" dollars) is $15K / 1.2 =  $12.5K annually.  
An increase of 150%.  Remember nominal numbers are irrelivent.  If tomorrow your central bank doubled the effective money supply you would expect prices (including your wages) to double however you wouldn't be any richer
or poorer.  Adjusted for inflation (in real terms) you income and wealth would be exactly the same.


The business owner now has $250K + $10K = $260K in income.  
However prices have increased 20% so his purchasing power (in pre "print & give" dollars) is $260K / 1.2 =  $216K annually.  
An decrease of 13%.

You have taken wealth from one person and given it to another.
Note that for these two people you could acheive the exact same goal (transfer of wealth from rich to poor) via a tax funded welfare program.  
Say instead of operation "print & give" you had instead given $7,500 in welfare to anyone below the poverty line and paid for it with a tax increase of 13% on the income of everyone above it.

Under that scenario:
Homeless man.  $5K in income + $7,500 govt handout = $12,500 in income (money supply not expanded) An increase of 150%.
Business owner.  $250 income - (13% tax = $33K tax) = $216K in income (money supply not expanded) A decrease of 13%.
Exactly the same outcome (in inflation adjusted dollars = purchasing power) as the "print & give".

Money isn't wealth.  Increased money doesn't result in increased wealth.  Money is merely an accounting system.  Increased Productivity results in increased wealth.   You can't produce wealth by merely changing the accounting "rules".  All you are doing is moving wealth from one person to another.  The net effect is zero.

Also to expand your mind a little a similar though process ... a government with control of the printing presses doesn't even need to collect taxes (or borrow).  They govt can simply print enough money to cover operations and thus "tax" people indirectly via inflation.  For example the US govt spends roughly 25% of GDP.  The govt could simply print 25% more money each year and collect no taxes and issue no treasury bonds.   Someone making $100K would simply be "taxed" $20K because the price of all goods and services would rise 25% and thus $100K would only buy what $80K bought the year prior.  Government choose taxation over monetizing operation costs because it allows them to influence (manipulate) via tax policy.  With indirect "taxation" via inflation the effect is universal (i.e. solar panels rise in price as much as crack cocaine does).


The reverse is also true.  In the US there has over the years been a proposal called the "fair tax" it would be a flat sales tax to replace all other forms of taxation in the country.  One criticism of sales taxes is they hurt the work (especially the working poor).  The "fair tax" system would use a prebate.  If the sales tax is 20% and you wanted to in effect make the first $30K in income "tax free" the government would simply (in this case via collected funds not via printing) send $30,000 * 20% = $6,000 to every person.    So a family making $50K  would have $50K + $6K = $56K.  Lets pretend they save nothing and spend it all.  They would pay 20% * $56K = $11K in taxes at the cash register - $6K prebate = ~$5K in taxes for an effective tax rate of 10%.  Someone making $30K would have an effective tax rate of 0%.  Someone making (technically spending) $1,000,000 would have an effective tax rate of 19.4%.  Someone making $200M would have an effective tax rate of 19.997%.
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December 09, 2012, 04:42:49 PM
 #20

Note the idea of a BGI isn't new and it isn't necessarily bad.  I personally would be for a BGI IF it replaced various other handouts (welfare, medicaid, foodstamps, disability, HUD homes program, low income housing subsidies, etc).   It would be less "corrupt" and less open to misuse and abuse.

Still pretending it is different than taxation and welfare is intellectually dishonest.  It is the confiscation of wealth from one group and the transfer of that wealth to another group via the government's monopoly of violence.  Don't pretend that away.

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