Government money
Government money
119 comments
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True in the U.S. Except, of course, in Alaska. Somehow in Alaska, very red state Alaska, home to Sarah Palin, every state resident gets a dividend from the oil revenue. Not that I approve of the reason why considering no one should be making revenue by fossil fuels, but somehow Republicans are fine with that exception. I wish they were pressed on it occasionally.
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Conservatives love telling people that winning or losing is a personal failure, and hate government interference, but also love to make life as easy as possible for large corps.
They clearly understand that regulation works, and that governments working to stabilize a country can be really powerful, and then they go and do entirely the wrong shit about while swearing that regulation is evil and governments are evil. It’s all just feelings and whatever they hear first/whatever is oversimplified and yelled.
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To be fair, government bailouts are not just free money the government gives large corporations with no attached expectations. When the government bailed out GM, for example, the treasury gave GM $52 billion. $6.7 billion was considered a loan (with interest) which GM has since paid back. The rest was an investment resulting in a 32% ownership of GM by the US Treasury.
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There's also a shit tonne of people and other businesses that rely on a company like GM.
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It would be terrible for everyone involved, not just the economy but also for quality of life. Bailouts are bad, but not bailing out is worse. So what do we do? (Sorta) simple, legislation the prevents the amount of risks that banks are allowed to take. My proof is by counter example. The great financial crisis of 2008 was due to deregulation, mainly pushed by Regan era policy. Limits on banks force them to take their due diligence with each loan and decreases the risks of bubbles (crypto, housing, coins, etc.) forming in the first place.
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And there is a shit ton of people going bankrupt over medication costs, housing costs, and student loan debt. Do you care about those issue as much as you care about giving a car corporation more money to make oversized gas-guzzlers?
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On top of this, there is arguably avoidance of a huge negatives impact on workers in GM and elsewhere. So not only the shareholders who were benefiting. And even within shareholders there are regular people, pension funds, etc. Some bailouts make sense.
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No bailouts make sense ever. If you really want to give free money to people just give it to them. You don't need to make sure that their shitty employer is still shitty tomorrow.
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With obesity being a big problem, we could always frame UBI as being for individuals too big to fail as well.
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I'm ignorant, and maybe I shouldn't ask this in a meme community, but wouldn't a UBI become the new $0?
Like all the corporations now know we get x-amount more so now prices are adjusted to take a portion of that across all sectors, and now I'm back to not being about to afford the same things as before? Idk I don't have an econ degree.
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Not really. It's not magical money that just appears.
It's redistributed money.
Things may increase in price, not because of greed, but because supply and demand jumped dramatically. Think of all the people who now have money to buy random things like treats or toys.
That's not a bad thing! Suddenly, companies need to hire more people to increase supply, because people have resources to spend.
Expensive stuff still exists. No matter what. But the bare minimum quality of life increases dramatically.
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No because taxation would be adjusted so the average person is no better off.
It's about raising the lowest earners to a minimum level that they're able to live on, without making them jump through hoops or prove they are poor or prove they have been looking for work for 40 hours a week or some bullshit.
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The way I think about it is by creating a scenario. We give 100% of people $1000 dollars (just for sake of argument). Some people use this for groceries, others for car payments, others for investments. Some people don't even realize they got that money bc they were so rich. Some people can afford to pay for school supplies for kids. They key point is not everyone is using it for the same thing.
The reason it sounds like it should become the new zero is bc it does happen in some situations. If the government gave everyone that rents $100, then landlords will raise rent by $100 a month later. The main difference between the two is how specific the scope of the money is.
Yes, there would be economic changes (not necessarily downsides) such as higher inflation due to government spending, but also increased GDP which will stimulate the economy drastically. It will lead to higher unemployment, not bc people stop needing to work, but bc they can quit their second job or focus on taking care of kids full time (which that actually doesn't change unemployment, but it would change the workforce numbers).
I am not an economics major or anything, but I tried to give reasons to explain why we would expect these changes to happen in the real world.
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UK gave away a lot of money during the pandemic to support low earners, it backfired real hard.
Governments should invest into education so people can move to more productive jobs which pay more money. That will improve the lives of everyone. There should be no low skilled jobs in developed countries. Giving free money instead is always a bad idea.
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Those corporations would still be competing with each other to be the one we spend that $ at though.
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I think one of the most common sources of confusion about economics these days is not drawing the line between a market corrupted by some price-fixing cartel, and a free market where actual competition takes place.
Lots of people just assume collusion in all markets. I think that’s a cartoonishly simplistic view of the world, but you gotta remember lots of people assume “capitalism” refers to the thing better called “a price fixing cartel”.
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They will, but then there are landlords who can jack up prices for no reason and you'll pay them because you don't want to be homeless. Landlords win, everyone else loses.
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Disclosure: I don’t have an econ degree either
I don’t think that mechanism you’re referring to automatically finds its new equilibrium right back where you started.
Let’s take rent for instance. All the current renters in lowest income bracket now have $1000/mo more to spend.
Next income bracket up now has $800 more to spend. Not because the UBI is varying, but because the tax people are paying into the UBI is varying. So this next bracket up is putting $200 into it as taxes and getting their $1000 check. At a certain point, there are the people who break even. And above that, people are paying more into the system than they’re getting back. That’s worth mentioning.
But focusing on this lowest income bracket as if it’s a little segmented, separate economy. Like a slice, to analyze it.
Town with 100 people. Let’s say there’s 105 units of housing, making for a teeny bit of pressure on landlords via competition. The landlords live elsewhere; ultra simple model here. Each of the 100 people gets $1000 more to spend. Fuck it, all they’re spending it on is rent. It’s the only thing they have to buy.
Well, there’s still competition between the landlords. If a landlord’s got an empty unit, he can offer it for $200 less than the other guy and get a tenant in there. Excess supply is good for consumer negotiating power.
But also, let’s say all units just go up by $1000/mo, and swallow up the UBI.
Then other developers now have a new equation in terms of the costs and benefits of building new housing.
Maybe now that you can charge $1500 for an apartment instead of $500, it’s worth it to build a new apartment building. It’s become more profitable.
So someone builds a new apartment building, and there’s 120 housing units for those 100 renters. Now you’ve got 20 desperate landlords (or one landlord with 20 un-rented units) willing to take say $1000 instead of $1500.
That pushes the price of rent back down.
Of course it doesn’t actually sway wildly like this. Every player thinks ahead about all the moves that can be made.
Like if your apartment building is profitable at $1500 but not at $500, what’s the cutoff? Maybe if rents drop below $1200 your new apartment building is going to lose money.
There’s some equilibrium point, and that’s what the market price settles into, as people finding themselves far from that point find it profitable to move toward it. (You make more money renting out five units at $1000 than you make renting out two units at $1500 - lowering the price is profitable here).
So now to crack this model open again, what is this “other place” where these landlords are coming from to invest new money in housing?
That’s where we bring in the higher income tiers, the ones who pay more into UBI than they receive out. The money is coming from up there. In those places, the people have less money than they did before, and so it is becoming less profitable to fulfill their needs. Maybe the amount you can get for a luxury apartment in manhattan drops from $50k to $49k per month.
Ultimately, resources used to fulfill demands, get slowly and steadily re-allocated to serve money’s new center of gravity, which is slightly lower than before.
Prices go up for poor people goods, but not enough to eat all the income. And the new amount of money flowing improves the offering, even at the same price levels, by bringing more investment overall into those industries.
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Getting money from the government is like the one thing that's classy to do if rich, but considered tacky if poor.
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Yeah there's that, then there's this:
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If it needs bailing out, it is not too big to fail.
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Then it needs to he nationalized if it fails.
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Yeah, gonna agree with this one 100%. That shit's dumb.
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Although I like the concept, I just don't see a world where UBI does anything helpful. Unless people are able to just not work and all goods are human free/automated. Otherwise companies' products and housing will rise to meet what they now know you have in income. Give everyone $1k and prices will rise to consume that $1k so you just end up feeding tax dollars into companies mouths. Pay for it by taxing the companies and they will increase prices till they hit the sweet spot intersection of cost/value, but people will still be at a negative because some of that resource pool gets eaten by government management of the UBI system.
May as well do what we used to and tax companies more and put that into social services, at least companies can't squeeze that from us.
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If governments had paid to cover mortgages instead of just hand outs to major corporations the GFC would not have been so bad.
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How about we stop spending so much money. The US is already in $36 Trillion dollars of dept.
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We could easily pay the debt down by taxing millionaires/billionaires appropriately. Or, since it's totally fine for a country to run a deficit, invest it back in to infrastructure and climate reinforcement.
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The US is already in $36 Trillion dollars of dept.
People have said, "the U.S. is already ___ dollars of debt" my entire 46 years as if that means something. What does it mean? Sometimes the economy goes up, sometimes the economy goes down. Debt keeps going up. It doesn't seem to be changing anything.
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That debt means nothing on its own. Correctly managed debt is a great way to earn a lot of money.
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Government debt is not the same as individual or corporate debt. Most of the US's debt comes in the form of issuing Treasury Bonds, and most of the debt is owed to the American people. The US also controls its own money supply in which that debt is denominated.
Also, spending is only part of why debt goes up. A huge portion of the US debt has been created through tax cuts, e.g. the $1.5 trillion Ryan-Trump tax cut for high earners early in Trump's presidency
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Who cares if most of it is owned to rich Americans. If anything it is all worse because you are creating a totally non-thinking investment, an easy way for the rich to keep their money instead of them trying stuff like starting new ventures. Ever heard of the crowding out effect?
Yes the US controls its own money supply in very vague sense of the word "control". If the fed tried printing it's way out of debt inflation would cause collapse.
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Do neither and lower my taxes
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Only if it can get lowered into the negative
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It's funny how people don't realize this is the actual solution and are downvoting. In reality lowering taxes for everyone achieves the exact same thing. Yet people would rather have a set of money each month given to them, despite the incredible bureaucracy that it requires, with it probably eating up 30% of the funds then.
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How does this work for the disabled, the partially disabled, those who can barely get by on low income etc? Honestly we'd be better off with universal healthcare and removing employers from the health insurance system. They often pay tens of thousands of dollars in premiums, and the employees still have to pay premiums often.
That would give companies way more freedom to hire, less incentive to force near full-time part time jobs, and would allow people the freedom to move from job to job without any effect on medical services. The companies may very well not pay more. Plus the government would have the buying power to essentially price fix most medication and care.
Edit, addition:
This will never work though because of profit incentives. If I'm CEO of a fortune 500 I'm going to do absolutely whatever it takes to be profitable, and more profitable each quarter. Literally the legal obligation of a publicly traded company. It's a fiduciary duty under law. When most of the investment is top 0.1% plus other publicly traded corporations and private equity firms the people will never benefit proportionally. Even well of working class tech workers making bank, really aren't when you look at how little they actually have of the overall pie. If taxes go down for me, yeah I'd have more money to spend, so everyone has more money to spend, but 30% of crumbs are still crumbs, plus we lose a bunch of social services and things like Medicare and Medicaid which are already essentially damage control. Fundamentally, the incentives determine the outcomes. Capitalism, especially or current chrony implementation, is fundamentally tied to incentives that benefit wealth accumulation at the top.
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No it's not, the money you have monthly might be the same for a lot. But there's a big differences psychologically and socially, that you don't have to work just to survive. I can quit my job without having to fear how I'll survive. I can decide to get further education without having to think about how I'll do that financially (at least in Europe). Etc.
It's very big difference compared to just lowering taxes (granted we're not talking about negative income tax which may indeed result in the same thing as UBI).
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Let's just have 0% taxes! Then everyone will be rich!
No one's road will get paved and their house fires won't get put out, but lowering taxes is the solution, so eliminating them altogether must be the ultimate way to lift everyone out of poverty!
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It probably costs much more money for a government to do UBI in the long term.
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Not when you factor in the productivity and social harmony of a healthy citizen population.
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Until by the next year rent has universally increased by the UBI.
I'm fully in favor of UBI, but unless we can get a government that will actually crack down on price gouging all it will do is funnel right back to the crooks at the top.
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Hope you're right then. I really wanna see UBI implemented, I'm just worrying it will backfire.
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119 comments
Hell, it doesn’t even have to be UBI, just some assistance during Covid would’ve been nice. That one random $1500 check was treated like it was a king’s random and it was probably less than one month’s rent for alot of people.
Some will argue (and I do not know if it is true) that that is what triggered inflation now. Well, that, plus business loans during covid.
Others will argue that corporate greed was the cause of inflation, and they'd point to plenty of companies making record profits while raising their prices.
Those people are wilfully ignoring the 3 trillion pumped into the market to prop it up when it crashed in 2020, which absolutely dwarfs the pittance handed out as stimulus.