(A) I like simplicity. But a little streamlining of welfare is a panacea for nothing.
(B) Considering the size of food-stamp program, progressive tax coding, etc., the $1000 size of the program is smallish. (I’ve proposed waiving SocSec on most or all of the first $18k of income; this would be like a 6% raise for min-wage workers without coming from employer, and is in the same $1000 ballpark.)
It’s not magical thinking to imagine that the Federal Reserve could print a bunch of dollars and hand them out. The reason not to do so is inflation and current law. But the OP’s proposal says that the payments will be reduced or eliminated if it causes inflation.
i’m still not seeing how this doesn’t fuel inflation. I don’t get any cash payments from the government right now, so if I suddenly get $10K, I’m likely to spend more, which increases demand and drives up prices. Anyone who isn’t getting government assistance is in the same boat, and there have to be more than a few of us.
Oy. From that thread, yes, Switzerland’s income can be whatever Switzerland wants it to be, denominated in Swiss Francs. So you absolutely can hand everyone thousands of Swiss Francs without raising taxes.
But that is devaluing your currency drastically, so the fat checks you were handing out at first turn into a pittance, even though the number written on the check is exactly the same. The goods and services you can buy with that money now somehow cost a lot more.
You’d be a lot better off just handing out the pittance from the start, that way you don’t have to go through the negative effects of inflation before you can hand out the pittance.
Yes, but we’re getting rid of the personal deduction on your taxes. We’re getting rid of unemployment. We’re getting rid of social security. And the nominal amount we tax your income at isn’t set in stone, we can raise or lower the % to get the revenue we need.
Obviously just printing thousand dollar bills and handing them out on streetcorners is inflationary, but we can set rates for handouts and taxes such that the average (mean) taxpayer doesn’t have any change in income. Of course we’d likely have to raise taxes overall to pay for this thing, if we want to pay at a rate to keep homeless people off the streets.
It’s not quite what the OP suggests, but fractional employment and a minimum living subsidy may be the only way forward from here… and the best way, to boot.
In the long run. Theoretically. If all else is equal.
But the natural experiment we’ve been performing for the last six years says that increasing the monetary supply by billions upon billions does not inexorably lead to short-term inflation under at least some conditions. Doesn’t it?
Yes, all landlords everywhere in the United States could all raise rents by $1000 a month.
But they could do that today. All landlords in the US tomorrow suddenly raise rents, and the rest of us have to pay higher housing costs.
Why can’t landlords do that? Because there are alternatives to renting, like buying, or sleeping on someone’s couch, or on the streets. Landlords are already charging as much as they can to rent housing, if they could raise prices unilaterally they would have already done it.
It certainly is true that if we pump lots of new money into the economy without a corresponding increase in goods and services then we get inflation, and rents will surely increase along with prices for everything else. But the $300,000,000,000 dumped into the economy every month isn’t going to be captured exclusively by landlords. Why wouldn’t liquor stores start charging more? Gas stations? Crack dealers? Grocery stores? Why do landlords get to raise rents and capture that sweet new money but car dealerships and phone companies can’t?
That’s because we’re not handing out billions and billions on streetcorners to poor people who will turn around and waste that money on food and shelter and clothing and cocaine. That money is (metaphorically) sitting in bank vaults but it isn’t being used. Money that isn’t being used doesn’t exist. If the government prints up trillion dollar bills and then digs a hole in the backyard and buries the money, those trillion dollar bills won’t contribute to inflation because they aren’t actually circulating.
Well, most of the money created after the crisis isn’t really circulating either. It’s sitting there but it’s not being spent. That means the money isn’t being used to bid for goods and services, which means the prices for goods and services aren’t being bid up, which means we don’t get inflation, since that’s what inflation is.
If that money starts trickling out into the wild, then yes we’ll see inflation. A banker with a billion dollars carefully saved in a bank vault doesn’t create inflation. A million poor people each spending a thousand dollars on food and iPods will.
I humbly submit that you’ve offered a perfectly good theory for why we haven’t seen inflation, but that it is entirely post hoc and certainly not proven. Many people did in fact predict massive inflation as a result of QE that has not materialized. And I think the bottom line is that we don’t entirely know why. I imagine you’re aware that there are other theories beyond the one you’ve offered here.
How do you arrive at that figure? There are 316 million people, of which only around 250 million would seemingly be eligible (approximately). That’s 250 billion a month, times 12 months is $3 trillion. It only works out to $1.5 trillion (per year) if you are only talking about half that number, or 125 million people eligible…which is less than half the population.
I guess my main issue here is what, exactly, are we trying to solve with this? I assume all of the existing social programs we are already spending money on will remain in place, we won’t be cutting anything out of the budget, so we’ll just be adding between $1.5-3 trillion to the annual budget and the majority of that money won’t be going to the poorest Americans, but instead to the working classes (who I guess can use a thousand dollars a month) and the upperclasses (who won’t even notice getting that extra money), at the expense of higher taxes somewhere down the line, since there is no free lunch, regardless of how you try and finagle how you pay for all of this.
Alternate proposal: give just me $100,000 a month. Think of how much we’d be saving by not giving money to all those other freeloaders! We can’t afford NOT to implement this right now!
The idea is to guarantee everyone a minimum income, without taking away an incentive to work. Hopefully, some people who hate their jobs would use the money to pursue other interests, opening up those positions for people who are currently looking for work. And of course, all the extra spending would generate demand, driving down unemployment. Involuntary unemployment might become virtually nonexistent.