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by simonh
2457 days ago
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The economy isn't an undifferentiated lump of money, stuff and people. It is a complex structure. If most people have a lot more money, they will be able to afford a lot more of the stuff most people buy most of the time. So the inflation will be concentrated in staples and consumer goods simply due to greater demand versus supply. If prices stayed as is, it's hard to see why anyone would do a lot of the low paid to medium income jobs many people currently do. But those jobs would still need to be done, which would drive up wages, but where is the money for the increased wages going to come from? Well, businesses would have to charge more. That's inflation again. These effects would still happen, but might be mitigated by easing in a policy like this over time. I'm not convinced about taxing it to make it fiscally neutral. A wealth of evidence shows that increasing taxes on the wealthy doesn't significantly increase tax revenue. They just progressively take more and more of their wealth out of the economy off shore, or move off shore themselves, along with their businesses. Many governments across the world have tried this and it just doesn't work. |
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> inflation will be concentrated in staples and consumer goods
It would indeed raise prices unequally. That it would be in staples is not so clear; the US is not a place where many outside of childhood starve due to poverty. But whatever the next-most-urgent class of goods or services are -- home or car repairs, investments in health or education -- there would certainly be more demand for them. With greater demand comes initially an increase in prices. In the long term, in a competitive industry, an increase in supply that eliminates those excess profits. In oligopolistic sectors like education and healthcare, those rises in prices can somewhat persist.
In the long term, money are neutral while inequality is real. If you doubled the amount of money everyone had, prices would (eventually) double and nobody would be any better off. But if you give a fixed amount to everybody, you're muliplying the wealth of the poor by a much bigger factor than that of the rich. Prices will not adjust by enough to make the benefits to the poor outweigh the costs.
> If prices stayed as is, it's hard to see why anyone > would do a lot of the low paid to medium income jobs
Median income in the US is just shy of $60K today. US households routinely have both parents working multiple jobs. Almost nobody aspires to live on so little as $12K a year
Labor market outcomes would surely improve. A giant fraction of Americans currently don't have time to search as long as they would like between jobs; they've got to take an offer fast. The freedom to take, say, two months off to find a good match would not only help workers, it would make industry more productive.
> increasing taxes on the wealthy doesn't > significantly increase tax revenue
If that were true why would they be lobbying so hard against it?
There are, yes, a lot of loopholes in most tax codes. A rise in the tax rate that merely complicates it further will probably disappoint. But there are simple solutions. Equalizing tax rates across different kinds of income, for example, or imposing a wealth tax.