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>Eighteen months on, the researchers found that, as expected, the families who got the money used it to buy lots more food and other essentials. >But that was

>Eighteen months on, the researchers found that, as expected, the families who got the money used it to buy lots more food and other essentials. >But that was just the beginning. >"That money goes to local businesses," says Miguel. "They sell more. They generate more revenue. And then eventually that gets passed on into labor earnings for their workers." >The net effect: Every dollar in cash aid increased total economic activity in the area by $2.60. Amazing. This is almost like what happens when (poor) families receive a tax cut.

Red_Leaves_Flyy 7y ago
It has long been known that up to a certain point any extra familial income gets spent. Problems occur when the spent money is vacuumed up by mega companies that do not invest into the communities they operate in thereby depriving communities of the cash flow they need to survive. Companies are sitting on hundreds of billions of dollars in liquid currency. That stagnant money has a massive negative effect on the world. It's not a big deal when a family hoards 10k in cash. But when something like 8% the US GDP languishes in cash that's a whole lot of lost economic movement. What needs to be learned here is that extractive economic models have created so many of the problems that our cities face. There are real consequences measured in human lives and suffering when people extract labor to become billionaires.
- nickthemagicman 7y ago
  Privatize profits Socialize the consequences.
- Fjolsvith 7y ago
  > What needs to be learned here is that extractive economic models have created so many of the problems that our cities face. So, what would be an alternative to these economic models that would actually be beneficial to individuals, families and businesses? That would be the real lesson drawn from the education.
  - deleted 7y ago
    [deleted]
  - Red_Leaves_Flyy 7y ago
    As another comment noted in this thread companies privatize profits and socialize externalities. This should be reversed. I don't want to pay for the stupid lost bets, but everyone should reap the rewards when someone wins big. Investments are risks and investors have found ways to absolve themselves of risk by pushing the consequences onto everyone but themselves. I started writing a lot more. It was just a disjointed rant. Basically our economic system is a mess that screws most people over. We need to fix this by solving the problems the vulnerable face. Don't like it? Leave society completely. The cost of inclusion is helping your neighbors no matter how much you don't want to.
- s1k3b8 7y ago
  > Problems occur when the spent money is vacuumed up by mega companies that do not invest into the communities they operate in thereby depriving communities of the cash flow they need to survive. Feels like this is where government should come in and increases taxes on these corporations/wealthy and funnel money to the lower income. Which will incentivize corporations/wealthy to provide services to get the money from the low income. > Companies are sitting on hundreds of billions of dollars in liquid currency. That stagnant money has a massive negative effect on the world Shouldn't we start thinking about taxing wealth? Why tax sales, property (house) and income only?
  - chillacy 7y ago
    Some countries do have a wealth tax. But in practice it hasn't worked nearly as well as it should in theory, and a lot of European countries ended up canning their wealth taxes.
    - s1k3b8 7y ago
      The difference between US and "a lot of European countries" is that we have global financial power and they don't. If the US truly wanted to have a wealth tax, we can make it globally binding for US companies/citizens. Meaning you can't offshore it or hide it "legally" in foreign nations because we'd sanction both the individual and the nation. No tax haven or nation can afford to risk being banned from US markets and the international financial system which the US created and controls. But the US is a captive nation controlled by the wealthy, so I won't be holding my breath for a wealth tax.
      - chillacy 7y ago
        Even ignoring people offshoring wealth, it's still fairly expensive for the IRS to audit assets for the wealthy, especially things like art (how many expensive paintings do you have and what are they worth now?), private equity (how will series-A startup founders pay their tax?), or intellectual property (how much are Rihanna's songs worth?). Ultimately I'm skeptical, because there isn't a good model of it working well anywhere else, or even at smaller scales. If the argument is that it only works at the largest scales with 100% buy-in... that's an awfully risky policy. And among economists it's basically Saez and Zucman vs everyone else, not particularly promising. This is at least the most reasonable position I found, which is that it might work but we shouldn't rely on it to raise as much as we expect: https://www.project-syndicate.org/commentary/elizabeth-warren-wealth-tax-debate-by-jean-pisani-ferry-2019-10 https://www.project-syndicate.org/commentary/elizabeth-warre...
zaphirplane 7y ago
It is surprising to me at least. I expected (based on newspaper articles and interviews with economists) that when people (bellow a certain social economic threshold) are given Lump sum money via tax breaks or government rebates it is spent on big screen tv, iPads smart phones ... etc which clearly doesn’t stimulate the local economy. I didn’t expect it to be spent on essentials.

Red_Leaves_Flyy 7y ago

It has long been known that up to a certain point any extra familial income gets spent. Problems occur when the spent money is vacuumed up by mega companies that do not invest into the communities they operate in thereby depriving communities of the cash flow they need to survive. Companies are sitting on hundreds of billions of dollars in liquid currency. That stagnant money has a massive negative effect on the world. It's not a big deal when a family hoards 10k in cash. But when something like 8% the US GDP languishes in cash that's a whole lot of lost economic movement. What needs to be learned here is that extractive economic models have created so many of the problems that our cities face. There are real consequences measured in human lives and suffering when people extract labor to become billionaires.

nickthemagicman 7y ago
Privatize profits Socialize the consequences.
Fjolsvith 7y ago
> What needs to be learned here is that extractive economic models have created so many of the problems that our cities face. So, what would be an alternative to these economic models that would actually be beneficial to individuals, families and businesses? That would be the real lesson drawn from the education.
- deleted 7y ago
  [deleted]
- Red_Leaves_Flyy 7y ago
  As another comment noted in this thread companies privatize profits and socialize externalities. This should be reversed. I don't want to pay for the stupid lost bets, but everyone should reap the rewards when someone wins big. Investments are risks and investors have found ways to absolve themselves of risk by pushing the consequences onto everyone but themselves. I started writing a lot more. It was just a disjointed rant. Basically our economic system is a mess that screws most people over. We need to fix this by solving the problems the vulnerable face. Don't like it? Leave society completely. The cost of inclusion is helping your neighbors no matter how much you don't want to.
s1k3b8 7y ago
> Problems occur when the spent money is vacuumed up by mega companies that do not invest into the communities they operate in thereby depriving communities of the cash flow they need to survive. Feels like this is where government should come in and increases taxes on these corporations/wealthy and funnel money to the lower income. Which will incentivize corporations/wealthy to provide services to get the money from the low income. > Companies are sitting on hundreds of billions of dollars in liquid currency. That stagnant money has a massive negative effect on the world Shouldn't we start thinking about taxing wealth? Why tax sales, property (house) and income only?
- chillacy 7y ago
  Some countries do have a wealth tax. But in practice it hasn't worked nearly as well as it should in theory, and a lot of European countries ended up canning their wealth taxes.
  - s1k3b8 7y ago
    The difference between US and "a lot of European countries" is that we have global financial power and they don't. If the US truly wanted to have a wealth tax, we can make it globally binding for US companies/citizens. Meaning you can't offshore it or hide it "legally" in foreign nations because we'd sanction both the individual and the nation. No tax haven or nation can afford to risk being banned from US markets and the international financial system which the US created and controls. But the US is a captive nation controlled by the wealthy, so I won't be holding my breath for a wealth tax.
    - chillacy 7y ago
      Even ignoring people offshoring wealth, it's still fairly expensive for the IRS to audit assets for the wealthy, especially things like art (how many expensive paintings do you have and what are they worth now?), private equity (how will series-A startup founders pay their tax?), or intellectual property (how much are Rihanna's songs worth?). Ultimately I'm skeptical, because there isn't a good model of it working well anywhere else, or even at smaller scales. If the argument is that it only works at the largest scales with 100% buy-in... that's an awfully risky policy. And among economists it's basically Saez and Zucman vs everyone else, not particularly promising. This is at least the most reasonable position I found, which is that it might work but we shouldn't rely on it to raise as much as we expect: https://www.project-syndicate.org/commentary/elizabeth-warren-wealth-tax-debate-by-jean-pisani-ferry-2019-10 https://www.project-syndicate.org/commentary/elizabeth-warre...

zaphirplane 7y ago

It is surprising to me at least. I expected (based on newspaper articles and interviews with economists) that when people (bellow a certain social economic threshold) are given Lump sum money via tax breaks or government rebates it is spent on big screen tv, iPads smart phones ... etc which clearly doesn’t stimulate the local economy. I didn’t expect it to be spent on essentials.