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Merging Altruist And Capitalist Economics

pozessed
Posts: 1,034
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9/8/2014 8:38:32 AM
Posted: 2 years ago
I am curious of the economic outcome if America had a small happenstance in its economy. Please allow me to entertain your thoughts.

Consider Americas economy to have establishments that will give all its registered citizens $60 cash once per day.
Every day but holidays.
These establishments are as abundant as fast food places and gas stations.
All a person needs to do is show up and wait their turn in line to collect the money.
The money does not come from government funds.
The money being given is projected to reoccur for at least 10 years from multiple civilian contributions out of pure generosity.
However, the money is taxed and 25% to 30% of every dollar given went towards the recipients taxes and required dues.
Thus the $60 per day is only 70% to 75% of the persons total earnings.

If the establishment described above were a functioning entity today, and it serviced the majority of Americans. What effects would it play on the economy?
Please be a little detailed if you wouldn't mind.
suttichart.denpruektham
Posts: 1,115
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9/9/2014 1:32:24 PM
Posted: 2 years ago
At 9/8/2014 8:38:32 AM, pozessed wrote:
I am curious of the economic outcome if America had a small happenstance in its economy. Please allow me to entertain your thoughts.

Consider Americas economy to have establishments that will give all its registered citizens $60 cash once per day.
Every day but holidays.
These establishments are as abundant as fast food places and gas stations.
All a person needs to do is show up and wait their turn in line to collect the money.
The money does not come from government funds.
The money being given is projected to reoccur for at least 10 years from multiple civilian contributions out of pure generosity.
However, the money is taxed and 25% to 30% of every dollar given went towards the recipients taxes and required dues.
Thus the $60 per day is only 70% to 75% of the persons total earnings.

If the establishment described above were a functioning entity today, and it serviced the majority of Americans. What effects would it play on the economy?
Please be a little detailed if you wouldn't mind.

Well, one of the obvious flaw is that the generosity can't be systematically expected. In a perceived economic decline people will almost certainly not giving their money out of generosity - remember, recession occurred when people feel uncertain about their future and spend less in order to save more, if they are not even willing to spend for themselves they should be even less willing to spend for other. In other word, if people are capable of giving their cash freely, there will not be an economic recession at the first place. They don't even have to give it for charity, just keep spending like nothing happen and the world will go on as simple as that. However, the fact that it wasn't already happen now already prove my point.

If the economic is already good, there is less point to give things for charity. However it might be quite beneficial in some respects to the labour condition of the working class. The economic impact can be similar to most of the social programs, and state-sponsored healthcare. Although, you did specifically indicated that these money will come from a none-state factor out of pure generosity, the final economic consequent is not going to be that much different from government program. That's because when you gave those portion of money you have for charity, you also have less cash to spend for yourself, thus slowdown the economic process - less spending = less sales = less works. So in a sense, I think it isn't going to be a huge different from having the government taking it from you, or throwing it away yourself.

In the extreme case, such as in Soviet economy, massive non-economical spending will let to inflation - which even though the Soviet can afford to limitlessly print more money to facilitate its resources for "charitable", egalitarian purposes, the people will still have to pay for its even more through increasingly server shortage of goods and services. In Soviet Union, goods and services are almost literally given, however people will have to wait for longer and longer line in order to "register" to obtained their assigned item.
twocupcakes
Posts: 2,748
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9/9/2014 9:00:36 PM
Posted: 2 years ago
At 9/8/2014 8:38:32 AM, pozessed wrote:
I am curious of the economic outcome if America had a small happenstance in its economy. Please allow me to entertain your thoughts.

Consider Americas economy to have establishments that will give all its registered citizens $60 cash once per day.
Every day but holidays.
These establishments are as abundant as fast food places and gas stations.
All a person needs to do is show up and wait their turn in line to collect the money.
The money does not come from government funds.
The money being given is projected to reoccur for at least 10 years from multiple civilian contributions out of pure generosity.
However, the money is taxed and 25% to 30% of every dollar given went towards the recipients taxes and required dues.
Thus the $60 per day is only 70% to 75% of the persons total earnings.

If the establishment described above were a functioning entity today, and it serviced the majority of Americans. What effects would it play on the economy?
Please be a little detailed if you wouldn't mind.

Well, for every $60 received by someone there would be $60 lost by someone else (if it was self funded)

I imagine a lot of people would show up to get it, even if there was an hour line $60 an hour would be pretty good

60*365= $21,900 each year for doing nothing.

Population of USA is over 300 million, let's say 100 million claim the money (more prob would)

This results in 21.9 trillion each year given away

This is bigger than USA GDP...so even if everyone gave all their money away, it still would not cover the amount

People would have to go in debt to give this money away

This would result in low unemployment, increase in GDP and Increase in Inflation

Central Bank would tighten money supply and raise interest rates

Value of currency would appreciate

...The rest depends on who the "givers" borrowed money from, i it was domestic or foreign.