A test

[kenberg]

So I see that we need a stimulus package and that 145 billion or so is being suggested. That works out to around $500 for every man, woman and child, on average. The idea is to keep the economy afloat and so, if this is to work at all, the money needs to go to people who will spend it. So, here is the test, in two parts:

Part 1:

I expect that many of you, like myself, would put the $500 in the bank. which will be nice for us but will not stimulate the economy. So are we OK with giving all or almost all of it to folks more likely to spend it? For example, people with kids who have a family income under the national median (which I think is around 60K but I don't know)?

Part 2:

It would be nice to not drive the deficit further up than it already is. Further, if my taxes had a one time surcharge of, say, $500 I would pay it from my bank account and go on as before drinking my overpriced caffeine at Starbucks. So, would you be willing to fork over $500 to the government to be passed on to the struggling families, simultaneously staving off (it is hoped) a recession while not driving up the deficit too badly?

 

It's a tough question I imagine, but it appears that there really will be a stimulus package, the shape of it hasn't been decided, and presumably our representatives really will be interested in whether we will still vote for them if the package is of no immediate direct financial benefit to ourselves.

 

I'll be very interested in various candidates opinions on Exactly where this money should go and, even more interestingly, Exactly where it should come from. I don't expect straight answers from politicians, especially about where it should come from, but perhaps my fellow bridge players would like to speak up?

 

I don't mean to sound rich and cavalier about $500, I'm neither rich nor cavalier, but the fact is I could pay it and it would not stop me from patronizing Starbucks.

[mike777]

Tax rebates never work. Take a look at 1975 rebate and the various follow up studies.

 

It won't hurt but won't help. If Bush wants to give the economy a dose of Keynesian, then go for it. Not this half baked measure.

[helene_t]

So the idea is to move some money from the rich to the poor in the hope that the poor will spend more of it so that the economy gets a boost.

 

One problem with this is that your opponents will say you are a communist.

 

Another problem is that the poor are not going to spend the money sponsoring your next election campaign, while some of the rich may punish you by sponsoring someone else's election campaign.

 

Except for that, I'm all for it. Not a miracle cure but better than most other government-finance proposals I've heard of.

[Winstonm]

Let's all hope the recipients don't squander this money on unnecessary things like food and rent - there are cheap, frivilous, unpurchased Chinese imports sitting lonely on WalMart shelves.

[kenberg]

Let's all hope the recipients don't squander this money on unnecessary things like food and rent - there are cheap, frivilous, unpurchased Chinese imports sitting lonely on WalMart shelves.

Here in Maryland the plan is to put in slot machines to prevent the sort of squandering that you refer to.

[sceptic]

In the UK, we have elected to do a similar thing, but for every £100 pounds given, there is 40% capital gains tax to pay and then, there is a 40% instant wealth tax deducted and a further 21% taken so that they can banish self funded political parties and all parties will have the money divided between them dependant on the amount of votes they received in the last election

 

Are not the Politicians great

 

One thing I can never work out is, where is the money coming from, future taxes? or are the governments so awash with money they don't have a national debt and all this money is in a bank earning interest

[Winstonm]

Let's all hope the recipients don't squander this money on unnecessary things like food and rent - there are cheap, frivilous, unpurchased Chinese imports sitting lonely on WalMart shelves.

Here in Maryland the plan is to put in slot machines to prevent the sort of squandering that you refer to.

Damn Right! Don't squander it. Put it into action.

[Winstonm]

One thing I can never work out is, where is the money coming from, future taxes? or are the governments so awash with money they don't have a national debt and all this money is in a bank earning interest

 

I heard that some guy named Ponzi is backing the whole thing - he's loaded, is what I hear - he may sober up by tomorrow, but for now, he is loaded.

[Fluffy]

To be real communist try this:

 

nationalice every land and enterprise and everything paying their owners the money they deserve.

 

next create a 10000% inflation, so money doesn't mean anything.

 

At this point every man has the same: nothing, and start over :P.

 

Funny thing about this is that since there are many more poor people than not poor, there should be a lot of people willing for it to happen.

[Winstonm]

To be real communist try this:

 

nationalice every land and enterprise and everything paying their owners the money they deserve.

 

next create a 10000% inflation, so money doesn't mean anything.

 

At this point every man has the same: nothing, and start over :P.

 

Funny thing about this is that since there are many more poor people than not poor, there should be a lot of people willing for it to happen.

I'm voting for Fluffy - only one I know who makes any sense.

[mike777]

To be real communist try this:

 

nationalice every land and enterprise and everything paying their owners the money they deserve.

 

next create a 10000% inflation, so money doesn't mean anything.

 

At this point every man has the same: nothing, and start over :P.

 

Funny thing about this is that since there are many more poor people than not poor, there should be a lot of people willing for it to happen.

Finally , a person I can vote for.

 

Fluffy for head of USA or the United Nations.

[blackshoe]

Andrew Carnegie once said, asked what he would do if he lost his millions "I know how to do it now. If I lost it all, I'd have it back in five years."

[mike777]

Andrew Carnegie once said, asked what he would do if he lost his millions "I know how to do it now. If I lost it all, I'd have it back in five years."

lol he started my company....with a grant/foundation thingy....

 

I never heard that saying from him...hmm cool can you cite it please.

[Winstonm]

I've always thought this quote showed the most wisdom about the importance of money.

 

"In the long run, we're all dead." - John Maynard Keynes

[Gerben42]

Funny thing about this is that since there are many more poor people than not poor, there should be a lot of people willing for it to happen.

 

But as soon as you are "the decider" you are automatically in a position where you no longer want it to happen. There's the catch.

 

At this point every man has the same: nothing, and start over smile.gif.

 

You'd be surprised how little difference it would make.

[sceptic]

for every man or woman here that has a house and savings, would you sell your house to help the poor? would you give all your savings away to help the poor? would you substantially give away a major proportion of your wealth?

 

 

No, I would not and I doubt most of you would either, for a little amount of people to have a lot a a lot of people have to have a little and thats the way it has always been and always will be. (unless you know of a new social system that needs to come into being)

 

We can consider ourselves lucky, we can get on line in a nice safe rich environment, the ones that have nothing do not frequent the forums, they have more important things to do like beg for medicines and rely on handouts from the fat westerners who squander thier wealth of excess or even scratch around rubbish dumps for some food

 

How many of you actually lose any sleep over the poor, how many of you that have exotic holidays in Mexico, Thailand or numerous other countries, actually do anything tangible to change the poors life, all we seem to do is come back from these places and say we have seen poverty (we are ok, lets hide our eyes from the problem)

 

In fact how many of you actually give a flying f*** what happens to the poor?

 

I do not see people starving to death in this country or america, the american poor are just not as poor as some people, th epoor in america are voters and that would seem to me the only reason the politicans care, which has nothing to do with kickstarting the economy as all that does is protect the rich :) (I define rich against some people that do not live in the squallor in Brazil or Thailand etc etc, people with nothing may think someone is rich as they are using them selves as a yard stick, we may consider someone rich by a different set of standards)

 

RANT over

[Winstonm]

Depends on your definition of poor. In many industrialized countries, the poor are more of a relative than absolute poor.

 

I woud define the absolute poor as those who cannot afford the basic necessities of healthful live, such as safe food, clean drinking water, shelter, etc.

 

For the absolute poor, I would be willing to pay 15% more in taxes if - and a big if - 90% of that could be ensured as direct aid to the absolute poor.

[helene_t]

Spot on, Wayne. Former Danish politician Riskjaer said, when asked whether he gave a flying f**** about the poor: "Yes, I believe it's less fun to make money if people are lying in the street outside your door, starving to death".

 

He was a promising politician until he went to jail for financial fraud.

[kenberg]

Scep, you are of course right about the limitations of my concern for my fellow man. If I took the money I spent on coffee and wine in a year and gave it away it would probably feed a family, maybe several families since I really like wine, in Africa. I am not Mother Theresa, true enough.

 

But my test question was far more limited and conceivably could be answered affirmatively by selfish bastards such as myself. If I were convinced that it would help the poor and help the economy (I see Mike disagrees that it would help the economy, perhaps so, I am not prepared to ague the point) I think a stimulus package that gave some money to people, especially families, at the lower end, with some charge to myself (hopefully a larger charge to the many who have a lot more than I have) to keep from worsening the deficit, is something I could support.

 

I phrased it narrowly with exactly your thoughts in mind. Few of us are willing to give up everything to help the poor. The question was short term: If, in the next few weeks, Congress and the President come together on a stimulus package that takes some money at the upper end, where upper end is not just Bill Gates and Sergei Brin but rather many of us playing online bridge, and gives it to folks at the lower end. would we be OK with that?

 

Sure I wish that the people who represent us were people I had more trust in. But they aren't all crooks or idiots and with decent leadership this might work.

[Winstonm]

The trouble, Ken, is that we simply cannot trust the poor - why, they are likely to squander this windfall on frivilous items such as rent or food.

[sceptic]

in the Uk, you can get welfare (aid, call it what you will (I believe it is a family credit)) if you earn under the paltry sum of approx £60,000 joint income.................... Sometimes, I think politicians do not have a clue what a poor person is and they certainly have no idea how many extra beers someone on an income of £50,000 plus can get with the money they give them each month......... Systems are made by the governments and they come into place to win votes. what a sad state of affairs

 

giving everyone £500 ( or what ever to boost the economy is great), but to spend it the only people that profit are the ones with the goods to sell or the money to enjoy it. these are definatey not the poor

 

all it is for is to appease the whinging rich lobbyists who are worried they may only make 1.9 billion profit not the 2 billion they projected for thier companies

[Winstonm]

all it is for is to appease the whinging rich lobbyists who are worried they may only make 1.9 billion profit not the 2 billion they projected for thier companies

 

Exactly. And this "downside earnings surprise" will cause their stock price to fall, causing even more grief to the well-heeled. Probably have to give them some more supply-side tax breaks just to stop the whining.

[Codo]

I really love this questions.

And to come back to the original theme:

 

1. If I would receive an additional 500 € from my governement, I won't spend more money, so this won't stimulate the economy.

 

2. My governement try to stimulate the economy with all sorts of subsidies. I believe that they would stimulate the economy if they are able to direct theses subsidies to the right receivers. But this is just a fealing, I have no background knowledge, whether this ever happened to have success.

 

Some further comments: A big school of thinking in economy says that it is great if the governement takes credits to spend money. The more money they spend, the more the economy will grow. And a bigger economy pays more taxes so that they will earn money in the long run. The theory is great, but I lack to see that this works.

I believe that they should spend just the money they have. But maybe I am just old fashioned.

[Al_U_Card]

Can you say, "Value for money"? As in = supply vs demand - speculation.

[Al_U_Card]

With the vast majority of world-wide financial transactions being exchange related, a lot of our inconsistencies come from traders pushing different currencies to make a buck. Determine standards of living etc. and base the currencies on non-speculative metrics. Better yet, determine value in terms of time worked (or services rendered) and use that as the medium of exchange. Confused yet? You wouldn't need to be if people couldn't get rich by chipping away at the value of your assets.