The Solution To Poverty?

Author: ethang5

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#1
ethang5
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What if every American was given a one million dollar account? Not cash, but on paper. They could use this account as they would cash. Transactions were recorded digitally.

What exactly would be the economic reasons this would not work? The only thing I can think of is paying for imports with other currencies than dollars.

Would this not be a solution to poverty?
#2
Buddamoose
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1m × 350m = 350 billion 🤔. That's alot of money and would require doing away with alot of already existent welfare programs. 

Would this be 1x? I assume it wouldnt be because though it would eliminate poverty immediately, there would be many who would squander that wealth and still be left in poverty. So you would have to do this regularly, but equality under the law would dictate you have to give that 1m to people who didn't squander it also. 

Then we come upon the fundamental philosophical issues at play. That being, will people still generally want to work and produce? Some may, I would hazard most would not, and so wealth generation, innovation, etc. would plummet imho. 

Revamping the tax system would have to be done too, as that money is gonna have to come from somewhere, and that chances are would be from big business. But how long until those businesses leave and HQ elsewhere, where there isnt such a tax policy? 

#3
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@Buddamoose
That being, will people still generally want to work and produce? 

They probably would.
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@Earth
Well, lets look at the closest equivalence in current welfare systems. Do they generally produce independence, or dependency? 🤔

Are the demographic groups with the highest proportions of population on welfare, a story of vast success, or one of relative economic stagnation and continuance of poverty? 🤔

#5
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@Buddamoose
Well, think about who is on welfare. Can they support themselves? Can Amazon proles pull themselves out of the hole?
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@Earth
Plenty of people pulled themselves "out of the hole" of subsistence farming and near nonexistent education, in the 1800's, without many of these measures in place to assist in accomplishing that, and in the face of far worse conditions. 

So yeah, I would say they damn well can 

#7
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If they could, these amazon workers can, as they are honestly facing far fewer obstacles to at least generating a semblance of wealth to pass on to your kids. 

Then they can take that +1 or +2 and turn it into +4 or more. Generational wealth isnt a short term game, its not about obtaining that wealth, its about passing on the tools and culture necessary to keep both obtain and keep what wealth is recieved from being squandered. 

Have welfare programs aided in establishing generational success, or established generational poverty? 🤔

#8
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@Buddamoose
> muh bootstraps


#9
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@Earth
muh bootstraps
Personal responsibility, work ethic, and the like may not be the only prevalent factor, but that doesn't mean its not a very large part of it. 

For example, can you guess when and where the most rapid economic growth of black communities was experienced in US history? It would probably surprise you to hear that it was during the height of segregation, in the Jim Crow south 🤔. Struggle should be channeled into perserverance and higher efforts, and it used to be channeled that way. Now though, were creating generations of people who whine and bitch about being dealt pocket 2's instead of pocket aces. When guess what, you can still win with pocket 2's. Shit you can still win with a non pair and unsuited pocket. 🤔

Is that fair? No, but "fair" is not the name of the game. It wasnt fair as someone who is 6'4 that I was put on the post in H.S. basketball to play against dudes who were far taller. But I nonetheless had to because I was the tallest one. So I stepped up to the plate, put the work in to get better and play to my strengths and take advantage of their weaknesses, and suddenly, oh shit, I was outscoring and out rebounding people who both outsized me and were far taller on a regular basis 🤔

Nor was it fair that I was put on Defensive End to face off against 250-300 pound lineman when i was only 185 pounds. But guess what? That didnt stop me from averaging 1.5 sacks a game, which is pretty dang good btw, despite being regularly outmatched 🤔


#10
Earth
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You understand people have bigger problems than people being taller than them right?

👏👏 Nice story though 👏👏 

#11
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@Buddamoose
$1 million x 350 million is $350 trillion, not $350 billion.

$350 billion actually would not be that much money for the government; we’ll spend much, much more than that on entitlements this year.  $350 trillion, on the other hand, is a HUGE amount; in fact, such a figure actually eclipses the wealth held by all 7+ billion people on Earth collectively.

As for why it wouldn’t work, look at any case of hyperinflation.  Pumping money into the economy by just “printing” money, (I realize it isn’t actually printing physical money, but it effectively is, of course.  Not all money is in physical form; a lot of it is just figures in a computer database.  But those figures still represent a USD, so even though that “figure” isn’t represented by a physical dollar anywhere on Earth, those add to the total number of U.S. dollars in the world economy) where the money added isn’t reflected in the addition of any resources with “real” value, is one of the primary causes of inflation/hyperinflation.  That and a lack of confidence in the value of that currency; printing more money will reduce the value of the currency, and that could reduce confidence in the value of that currency, potentially producing something of a positive feedback loop.

Money is just like anything else in that, when the quantity of it relative to other “commodities” increases, it loses some of its relative value.  

You are essentially advocating for an artificial injection of 350 trillion U.S. dollars into the world economy, more than doubling the total amount of money on Earth.   This would cause hyperinflation, probably the most severe hyperinflation in the history of our species, and the dollar’s value would collapse to next to nothing.
#12
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1 million x 350 million is $350 trillion, not $350 billion.

Thanks, i appreciate the correction, need to stop trying to math in my head and just do it on paper 😂
#13
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@Aran55633
You are essentially advocating for an artificial injection of 350 trillion U.S. dollars into the world economy, more than doubling the total amount of money on Earth.   This would cause hyperinflation, probably the most severe hyperinflation in the history of our species, and the dollar’s value would collapse to next to nothing

This is true, had my math not been shoddy, wouldve said much the same lol 🔥😰
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@Buddamoose
I understand.  It’s all good. :)

I make silly mistakes all the time.
#15
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You understand people have bigger problems than people being taller than them right?

Yes, which is why I gave the Jim Crow South example. Unquestionably these laws, in large part progressive policies with the addendum of abject racism, were a detriment to these communities. Abortion? Created as a covert eugenics program. Minimum wage? Touted by dixicrats as a means to price blacks out of the workforce and limit the cost of discrimination. 

Just because race was removed from the equation in the 60's doesnt mean those policies stopped having those direct effects 😂. 

Again, from 1950-1970, wealth in the black community grew at its highest rate in history, one of the fastest growths actually, the middle class in that demographic was doing great, and the rates of single parenting were still reasonable(24%)

Then comes the 60's and now these communities have access to that welfare. Abortion clinics start being put en masse in minority communities(Sanger and her eugenics). Now what do we have? A demographic with single parenting accounting for 74% of households, and generational poverty in which mother's are dependent on the government, and fathers have eschewed their responsibility cause the government is handling it. This not to mention loads of other initiatives put into place by the "War on Poverty", which was never needed because between 1950 and 1970 poverty rates dropped by near half and have remained static around the 17% mark since. 

It appears that the generous welfare system allowed women to, in essence, marry the government -- and it allowed men to abandon their financial and moral responsibility, while surrendering the dignity that comes from being a good provider. Psychologists call dependency "learned helplessness" for a reason. 

Sounds to me like the obvious conclusion is that the solution to poverty does not lie in government and preferential programs. This is further reinforced by Affirmative Action, which tends to result in the student admitted due to said legislation dropping out because they arent keeping up with their peers who were admitted on merits. 

For example, if you have a student with a 650 SAT on their Math section, being admitted to a university such as MIT for a mathematics related degree, where students are usually in the 750+ range on that section. That student is likely to drop out, because they will percieve themselves as incapable, due to being of current lower capabilities than everyone else around them. Nor will the curriculum be at all conducive to them learning.

However, if say they were to be rejected, and end up say admitted to Boston College, a fine school in its own right, they will be around students who also scored similar on that section, which means the curriculum will be tailored for their current skills, and they are thusly all the more likely to persevere. 

But, as it stands, a vast majority of minority enrollments in university, particularly blacks, start out in STEM fields, but most end up either dropping out, or changing their major to a less stringent fields in the humanities, and angry at the system that set them up for failure, despite its noble intent to afford them the opportunity to study at a premier school. 


#16
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Welfare doesn't create success, it creates dependency. And the only decent argument ive seen regarding a universal basic income is eventually most jobs will be automated. But like, thats been said since the cotton gin was invented. 

Humanities greatest strength is in innovation and creation. As jobs get automated, new professions spring up as a result of those changes. I don't see this crisis point of near whole automation of all jobs happening anytime soon, if at all. 

I do however see the issue cropping up sooner rather than later, of most low skilled jobs dissapearing. Not all, but such issues could potentially be addressed in part by say, lowering intelligence standards for non-combat custodial positions in the military. As it stands, we have arbitrarily decided you can't clean latrines and work in galleys unless you are 85+ IQ 🤔.

Or, you know, charity. The greatest proportional contributions to charity causes came pre FDR and the New Deal and subsequent welfare state that created and has since grown tremendously. Its no surprise that happened, cause well, if the state is already handling it, why should anyone give any more than the taxes they pay into the system, independent of religious/ideological adherence? Funny, this belief of helping the poor from progressives doesnt extend to charitable contributions, of which religious groups still comprise a vast majority thereof. Surely that couldnt have anything to do with what I just said. 

Surely people dont tend to follow the path of least resistance and effort. No, certainly not, look at the world today and you see almost everyone striving to their maximum capacity and never cutting corners if they can reasonably not face any consequences from it 🤔
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#17
ethang5
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This would not be welfare, and would not represent any physical wealth anywhere. Why would it lose value?

The only people who would have a reason to reject this form of payment would be people needing physical cash.

Inflation is imaginary. With a digital IOU system (not money) there would be no inflation.
#18
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Inflation is imaginary. With a digital IOU system (not money) there would be no inflation.

Inflation is when there is so much of something its virtually worthless. For example, sand, or dirt. Those are naturally inflated commodites. 

What we have is a digital system of IOU's already. Most "wealth" is not physical. Commerce, is already mostly digital, it still however counts towards currency totals and overall value of that currency. Not adding physical currency isnt going to avoid the rapid drop in value due to the increased supply. 

Even if we removed fiat currencies, or currency in general, people will still trade commodities, and those commodities will still have values that will be compared to the values of other commodities. You are mistaking currency as some sort of arbitrary unecesssary thing, when the whole reason its around is it gives people a convenient measuring bar for the value of commodities. 

Instead of X chickens = Y goats in value. It is instead, X chickens, Y goats, and a myriad of other things, equals (B) dollars(or whatever currency is in prevalent use). 

That money isnt itself a commodity, its representative of commodities, so you dont have to cart around 20 chickens to be able to trade for other commodities you might need. Instead you sell the chickens for (B) dollars. It allows for greater flexibility in investment and diversification of commodities(wealth). 





#19
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While also adding efficiency to commerce because now you dont have to argue with each individual as to what a chicken is worth, instead you can point to a standard currency and go, "chickens are going for (B) dollars on average and goats are going for (C) dollars on average."

*voila* you have a starting point that otherwise would have to be painstakingly negotiated with every individual you would do commerce with on a regular basis 🤔
#20
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@ethang5
You ignored every word of what I said and just pulled your argument out of thin air.  If you want to be taken seriously, provide some actual evidence and a legitimate rationale for your position.


$14 trillion USD, of which only 11% is in physical form.  That means over $12 trillion dollars exists as only digital currency.  They aren’t physical, but they are real U.S. dollars.

Where is the $350 trillion going to come from?  If you just make it out of thin air, you will get massive levels of inflation.

”Inflation is imaginary”.

Lol?  

I defy you to find a single economist who says that.  I mean, inflation has literally brought down governments.
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#21
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@Aran55633
You ignored every word of what I said and just pulled your argument out of thin air. 
Untrue. I don't want to thread the tired worn out path of econ 101. I asked a question. It is a thought experiment. I did not say it would replace money. How would people behave?

If everyone was given such an account, each unit in the account would start out having the same value as a dollar.

Where is the $350 trillion going to come from?
You haven't told me why it has to come from anywhere. It doesn't have to. Try to think out of the box for a minute.

you will get massive levels of inflation.
No. We get inflation now because our money represents real physical wealth. A digital IOU system will not suffer that stress. It isn't tied to any physical wealth.

I defy you to find a single economist who says that.
Only because the convoy so far has been about traditional forms of money.

I mean, inflation has literally brought down governments.
I did not say inflation doesn't exist. Inflation, like fear, doesn't need to exist.
#22
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@ethang5
If you simply credit each person with one million dollars, you get hyperinflation. It's basic supply and demand. Increase the supply of money, when the demand for goods and services remains the same, and prices go up. And you are talking about a 10-fold increase in the money supply. It gets even worse, because the demand for goods and services would not stay the same. Many people would spend some of the money right away, which would result in an increase in the demand for goods and services, pushing prices even higher.

Money represents the allocation of resources, and resources are finite. Increasing the amount of money does nothing to change the amount of resources. You still have limited resources to distribute among the population. Viewed this way, a dollar represents a fraction of all resources. A 10-fold increase in the money supply would amount to each dollar buying 1/10th as much.
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#23
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@Stronn
If you increase the supply of money, then even if the demand for goods and services stays the same, prices go up.
This has some truth to it. But I think the market would fight this trend. Why would I now tolerate a 100% increase in say eggs just because I have more money? But generally, you are right prices would go up because demand would go up. But they would quickly stabilize.

Money represents the allocation of resources, and resources are finite.
Traditional money. Not this. The IOU's are not pegged to anything.

Increasing the amount of money does nothing to change the amount of resources.
Untrue. So many buyers with so much disposable income will spur business. Resources can be skills and expertise too.

You still have limited resources to distribute among the population.
We are NOT allocating resources. 
#24
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@ethang5
Inflation is imaginary. With a digital IOU system (not money) there would be no inflation.
Sorry, but the only word for such a statement is ignorant.

In the 1960's you could buy a gallon of milk for 49 cents. Today, a gallon of milk costs $3.50. That is not imaginary.

A digital IOU system is what we have now. Only about 8 percent of the world's money is physical. The rest exists only on computers. Yet there is still inflation.
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@ethang5
This has some truth to it. But I think the market would fight this trend. Why would I now tolerate a 100% increase in say eggs just because I have more money? But generally, you are right prices would go up because demand would go up. But they would quickly stabilize.
It's not a matter of toleration. What choice do you have? There are a limited number of eggs, and everyone wants theirs.

Traditional money. Not this. The IOU's are not pegged to anything.
That is pretty much the definition of money: an IOU not pegged to anything.

Untrue. So many buyers with so much disposable income will spur business. Resources can be skills and expertise too.
Actually it would have the opposite effect. Many people would quit their jobs if they got a one million dollar windfall.

We are NOT allocating resources. 
Of course we are. Money is how we measure the value of resources.
#26
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*wins lottery*

*blows it all on scratch offs*
#27
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Well, if the average employee and small business owner suddenly had one million dollars, probably 2/3rds of them would just cease everything work-related and spend the next 5-10 years living off that sum. In the blink of an eye you'd have catastrophic shortages in almost every basic good and service required by human beings. The result would be utter chaos.
If you just give people a butt ton of money out of nowhere, they're gonna blow right through it, because they didn't earn it and thus have a lesser ability to appreciate its true value. And in the long term they'll be even worse off.

And as other people have pointed out, to print that much money would result in hyperinflation. The current GDP per capita is about $50,000. 50,000x20=1,000,000. So it stands to reason that from that point on the average good would be 20 times as expensive. Buying milk at the store would cost $50. After you used up your million bucks, you'd find it extremely difficult to afford anything on a normal salary (assuming all establishments where you might possibly find employment haven't already ceased to exist). A new car which might cost $10,000 today would be $500,000 under this scenario, or more expensive than a reasonably large and nice house (which can often take decades to pay off).
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#28
ethang5
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@Swagnarok
Well, if the average employee and small business owner suddenly had one million dollars, probably 2/3rds of them would just cease everything work-related and spend the next 5-10 years living off that sum.
5 to 15 years? A person would be happy to live in poverty for 15 years if given a million dollars?

...to print that much money would result in hyperinflation.
Sigh. No money would be printed. It isn't money. It is not pegged to any physical wealth.

The market itself would correct inflation. As demand for some goods increased, supply would increase to meet the demand, and many more people would have the means to add to supply.
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#29
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@Stronn
In the 1960's you could buy a gallon of milk for 49 cents. Today, a gallon of milk costs $3.50. That is not imaginary.
Because there is only so much milk, and the number of people has increased. Giving people money does not increase the number of people, and allows many to start a dairy business.

There are a limited number of eggs, and everyone wants theirs.
That pertains now. How does more income change that? More people can now buy eggs, so note people use their one million to supply eggs. The market balances.

That is pretty much the definition of money: an IOU not pegged to anything.
Untrue. Money is pegged to the wealth of the country. That is how it's value is calculated. What I propose is NOT money.

Money is how we measure the value of resources.
I know. You said it was not pegged to anything. Money is. This is not money. It isn't resources. It is not pegged to the country's wealth.

Many people would quit their jobs if they got a one million dollar windfall.
Some would, but most people who would quit do not actively contribute to the economy. How many scientists, doctors, researchers, professors, would quit? More people would go to school. The market would quickly compensate and balance.

What I suggest has nothing to do with the country's resources.
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#30
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@Mopac
Lol. 

At the very least, those people will have little reason to gripe about their poverty.