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RE: What Would Happen if Everyone Were Given 1 Million Dollars?

in #money7 years ago

This is such a large and complex subject and I agree that most people lack the understanding to approach it properly.

Is the one million to every pocket a variation on the universal minimum income idea? I do agree that something like that is quite likely to cause inflation I've experienced hyper-inflation and I know it's an economic disaster first-hand. But one has to understand that what happens when a process like that gets triggered is that it's not the top 1% that are hurt by it. Whenever there is a crisis the ones with the most resources available (who usually also have a better understanding of the system as well) are the ones that find a way to position themselves in a way that doesn't protects them from losses and they usually ride the market movements for gains. I'm convinced that if everybody got a million dollars at the same time, the ones that would emerge even richer after the inevitable destabilization would be the generally the same people who were richer before it and the gap would most possible have become larger, not smaller.

If we leave things to the market forces, this is still what one would expect. The people with more resources could leverage them to get even more resources. Sure, some people may climb into a different strata and some member of the 1% might waste their wealth, but in the general case, the free market favors and widens this distribution.

While a cool million sent to every person out there is not something that has any chance of working, I personally think that a society should be set up in such a way that the gap wouldn't widen so much. You could do this by taxing the wealthier more instead of less and by using those additional taxes for public goods like free health care, free education, public infrastructure and so on. Of course, this is all easier said than done, but I think there are places around the world that have demonstrated working models. Much like communism has failed, so has trickle-down economics, so I personally think there is a point in making some changes.

Still, we don't have a better system than the free market to help prosperity, progress and humanity is certainly not ready for an idealistic Star Trek-like society which might turn out to be an impossible utopia. If you want people to do things, capitalism is the best way to motivate them and if we want to live better lives than the generations before us, this is our only viable option.

One loaf of bread for one car.

That's a bit of a falsity (or purposeful oversimplification of course) in describing a barter system and doesn't illustrate what's the main problem with it in my opinion. While you could barter a truckload of bread for a single car, it's extremely inefficient and extremely unlikely for the two people that need to be on either ends to be found. The problem is not really that things can't have value, but that it's extremely impractical, inefficient and non-conducive to large-scale enterprises. Money as an instrument to detach value from objects which allows for flexible trade and allows objects, goods and services to be viewed as abstractly valuable, not just as valuable in a limited, rigid and impractical barter transactions.

As far as your chemistry comparison, I'd say it doesn't apply that well to what you were talking about. People and their financial clout are not so rigidly affixed as elements are to their place in the periodic table of elements. People earn and spend millions all the time and this is what allows them to participate in the economy while elements participate in nuclear reactions really rarely and under special consequences.

Additionally, the tiers that are the elements have very different qualities from one another. While people become more financially potent while climbing the economic ladder, elements change their properties drastically and they become intrinsically a brand new thing.

Where your metaphor works a bit better, is in the claim that there are segments of the economy that more reactive than others. And this is indeed the case with people, some participate actively in the economy, speculate and interact with other agents while other hold on to some value but remain for most intents and purposes quite nonreactive.

What would happen if you added a proton to each atomic core out there would be violent destruction as everything will immediately become something else with very different properties. Pretty much all chemical bonds are going to fail immediately and each atom will rush to combine with a new partner forming brand new molecules, possible quite violently. This would create a brand new universe with a very different balance of elements (and a pretty strange one at that) but things will not be very likely to deteriorate back to the previous state and the balance of elements will remain drastically different despite some nuclear decay to be present after this major shift. (I assumed each proton to the core would be paired with a corresponding brand new electron)

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I'm convinced that if everybody got a million dollars at the same time, the ones that would emerge even richer after the inevitable destabilization would be the generally the same people who were richer before it and the gap would most possible have become larger, not smaller.

and still, people don't seem to get this simple fact.

You could do this by taxing the wealthier more instead of less and by using those additional taxes for public goods like free health care, free education, public infrastructure and so on

if you tax the wealthier then you widen the gap. The build up corporations, raise costs, drop salaries and fatten their bonuses to cover for the loss. The poor always pay the extra taxing of the rich. this is why they get richer.

That's a bit of a falsity (or purposeful oversimplification of course)

it was to show how things can get if money became a non-issue.

I like your answer about the proton. I will send you the 5SD once I get a payout.

if you tax the wealthier then you widen the gap. The build up corporations, raise costs, drop salaries and fatten their bonuses to cover for the loss. The poor always pay the extra taxing of the rich. this is why they get richer.

I'm not so sure I'm convinced of that, but I'm also not so sure it's the other way around either. I guess I think that the rich are likely to keep getting richer regardless of the exact tax burden they have to carry. What's important for a society is to keep as many people as possible out of poverty and a version of the free market that allows for upward mobility and larger middle class. Having a well-funded social programs, free health-care and education seems like a good way to go and there is no way to pay for something like that besides taxes. I for sure don't see a logical reason for the richer people to pay a lower tax rate. I also don't see a reason to think that anybody that's trying to pay as little taxes are they can is a villain or something as everybody acts and is expected to act in their own interest, so I'm certainly not saying screw rich people. But, yeah, that's a huge discussion and I certainly don't think I have all the answers ;)

I like your answer about the proton. I will send you the 5SD once I get a payout.

I'm very happy to hear that and it's an honor. :) A payment for just a comment under your post is a very generous thing! Or course, I would have commented either way as I really enjoy thinking about this issues and it's easier to start from an interesting post as a basisthan to come up with original stuff :P

You can search the law. Ask people who have corporations in America and they will reassure you.