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If you think of the fundamental concept of a trade. Person A has too many apples. Person B has too many oranges. Person A and B trade half of their produce, a
by q1w2 5y ago
If you think of the fundamental concept of a trade. Person A has too many apples. Person B has too many oranges. Person A and B trade half of their produce, and now they each have a healthier/balanced diet. Being healthier means their farms can produce even more, and the supply more produce to the local community. It's a win-win-win.
That's the fundamental basis of economy.
Theoretically, if you actually HAD a million starving people, then yes, feeding them from taxation proceeds (or even money creation), is indeed a net benefit to the economy, because they then are able to work, and bring their skills/labor to the market to further stimulate the economy.
In that way, events like starvation, plague, or even sudden economic downturns, can damage the economy beyond the initial scope of their impact by robbing the economy of labor, transport, etc... For this reason, "stimulus" makes sense in these transitionary times.
Of course, the negative effect of stimulus is to temporarily distort businesses by flooding certain resources at below market rates - causing a smaller scale damage to the overall disruption. You have to do the math to determine if it's worth it.
On the other hand if there's no sudden change - no crisis, then stimulus is just permanently distorting markets - which is costly in addition to damaging. If you're feeding literal "starving" people, that's one thing - but if you're sending them checks so that they can increase their discretionary spending - that may look like a good thing because spending is increased, but you're not really creating value as in the original example.
tldr: Feeding actual starving people (or paying for other critical non-discretionary spending) can be smart economic decision if well targeted. Increasing the money supply so that people can spend more on discretionary spending damages the overall economy.