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This seems to come from the same place as the argument of "trickle down economics". Yea no, I've seen similar things done in Japan with abenomics (with one of t

• theturtletalks 4y ago
  His argument is that the government can do 2 things: 1. Interest-free money for businesses to launch, grow, and advance. This leads to more goods in the market and thus lower prices 2. Free money straight to the people which means more money in the market and thus, inflation, empty shelves, etc. His general point is that having interest-free money keeps existing players honest since newcomers can come in and start a competing business. Now that the money is drying up, existing players are increasing their moat.
  • ChuckNorris89 4y ago
    >1. Interest-free money for businesses to launch, grow, and advance. This leads to more goods in the market and thus lower prices We tried that. It all went into real estate and stocks and gave birth to a massive scam industry involving crypto and other get rich quick schemes as the world is full of stupid people and opportunists. The average joe didn't see much trickle down to him unless he was already invested in real estate or stocks. It was basically a wealth transfer. Housing is now about 30% more expensive than pre pandemic but take home wages are not. Giving away free money without any strings attached to individuals or corporations is a bad idea.
    • theturtletalks 4y ago
      I always thought "trickle-down" economics was about giving money to businesses via tax-breaks and that money would make it's way back to the people as wages. We know this doesn't happen and companies do stock-buybacks with that money. Here, we're discussing a different paradigm: interest-free money vs free money. The issue is that interest-free money has little to no use for individuals. They can't put that interest-free money into an existing business and reap the returns. That's why most people just use that "interest-free" money for stocks (margin trading) and even then it wasn't fully interest-free. The fundamental issue is how to give individuals interest-free money and have them see returns. Maybe using that money toward job training, or starting incubators that find small businesses and infuse them with money, mentorship, etc.
      • DeathArrow 4y ago
        > always thought "trickle-down" economics was about giving money to businesses via tax-breaks Tax-breaks doesn't mean giving money to businesses, they mean taking less money from businesses.
        • Jochim 4y ago
          Corporate entities are a societal construct. Their very existence is defined by what society chooses to give them.
        • theturtletalks 4y ago
          Tax-cuts for businesses and not individuals is effectively the government “giving” money to businesses no?
          • DeathArrow 4y ago
            Not really. And governments have tax-cuts for individuals, too. And that doesn't mean the governments are giving money to individuals.
            • theturtletalks 4y ago
              Yes, but I'm talking about corporate tax-cuts in leiu of individual tax-cuts.
    • klabb3 4y ago
      Exactly this. And it’s not anecdotal either. In the UK, 75% of that new money goes to asset purchases[1], that’s likely a similar number in the US. Chronically low interest rates is a wealth redistribution program to the ones who get the biggest loans (guess who). The legend of the honest guy who needs a tractor or a fishing boat may as well be a mythical creature. At least giving money directly to poor people is spent on things that can grow local economies. It is not perfect, but a lot more “stimulating” than giving money to institutions, corporations and rich people. [1]: https://fortune.com/2023/03/20/is-federal-reserve-too-powerful-inflation-quantitative-easing-richard-werner/ https://fortune.com/2023/03/20/is-federal-reserve-too-powerf...
      • DeathArrow 4y ago
        > Chronically low interest rates is a wealth redistribution program to the ones who get the biggest loans What's the mechanism? A big loan is a big risk. With a big risk you can have either a big reward or a big failure. Smaller loans, smaller risks, smaller rewards and smaller failures. It's proportional. Why do you think of wealth redistribution?
        • ChuckNorris89 4y ago
          >A big loan is a big risk. Big risk are if you use that big loan to start a new business, but not if you dump it all on stocks and desirable real estate in hot or future hot areas.
          • DeathArrow 4y ago
            Buying stock with borrowed money is a terrible idea. You can go under real fast. Buying real estate seems sound only because real estate has some good returns last years. But real estate can go down real fast like in 2008. Many people gambled money, be it stock, real estate, crypto. Some got very rich, some didn't, some went bankrupt, some will. I don't believe in speculation and gambling. The market can always can catch you on the wrong foot. I believe in hard work, well invested thoughts and patience. The results might not spectacular but I rather construct my future than gamble it. For every new billionaire who got lucky there are 100 new beggars who had bad luck.
    • DeathArrow 4y ago
      > We tried that. It all went into real estate and stocks and gave birth to a massive scam industry involving crypto and other get rich quick schemes as the world is full of stupid people and opportunists. You tried the wrong thing. You shouldn't hand money without conditions. Instead of letting speculative assets grow, you should only let productive bussineses borrow money with low interests. Businesses which produce tangible goods and are creating jobs.
  • lesuorac 4y ago
    > His general point is that having interest-free money keeps existing players honest since newcomers can come in and start a competing business I mean if you blocked companies from acquiring their competitors sure. Otherwise you just end up with the largest company treating acquisitions as an R&D expense.
  • glenjamin 4y ago
    The government can also buy things (like infrastructure) and employ people to provide public services, which directly injects money into the economy by paying it to the people who do that work. The current UK government has not been doing much of this.
    • DeathArrow 4y ago
      > The government can also buy things (like infrastructure) and employ people to provide public services, which directly injects money into the economy by paying it to the people who do that work We did that in comunism with the known results.
  • ClumsyPilot 4y ago
    government can directly invest in production capacity to produce stuff. Like they can build housing and windfarms, etc.
    • DeathArrow 4y ago
      We did that in comunism with the known results.
      • astrange 4y ago
        Communist countries aren't the only ones with publicly owned utilities. (The US actually has more public utilities than the UK.)
        • DeathArrow 4y ago
          No, but communist countries were the poster child for "public owned". To a degree you can do it, have the state own companies. But it will kind of be economically inneficient, high position employees and some politicians will steal money. No one will have the motivation to push farther.
          • ClumsyPilot 4y ago
            every successfull passenger rail in the world is designed and run by government
            • astrange 4y ago
              That's not an accurate way to describe HK MTR or Japan Rail and it's definitely not accurate for Brightline. Most US transit systems are bad because the government puts even more effort into stopping them from working (via bad land use, incredibly slow decision making, power-harassing Andy Byford) than it does operating them.
              • ClumsyPilot 4y ago
  • somenameforme 4y ago
    The US has had extremely low interest rates for a very long time, and yet effective competition is further than ever in many industries. Something I'd observe is how unreasonably difficult it can be to legally sell things in the US. For instance hitting on this topic (of food prices), why can't I simply start baking bread and selling it? You can make an amazing loaf of bread for a tiny fraction of what people pay in a grocery store, but somehow actually being able to legal sell it is painful, at best. By contrast I now live abroad in a developing country and it's quite amazing how ripe small business is. Want to sell bread? Okay, bake it and sell it. You can even get it stocked at "convenience marts" easily enough since a that's often just some guy's lower floor transformed in a shop. Talk to the owner, who's probably the guy at the counter, and make a deal. If people like your bread, you're now officially a baker - congrats. Make it easier for people to sell stuff, and there will be more stuff. And the prices of stuff will trend downwards. While money is a way around these issues, a regular joe who happens to make a great loaf of bread probably isn't especially keen on taking on 5-6 figures of debt just to see if selling his bread actually works, let alone being something he really wants to dedicate himself to.
    • mjevans 4y ago
      Safety, including healthcode safety, is a good thing. A level playing field ensures that everyone in the market is making safe, hopefully good quality, products for that market. Reviewing, streamlining, and creating easier for small businesses to follow guidelines about the regulations that exist in a given field also sounds like good ways of improving consumer choice and safety.
      • DeathArrow 4y ago
        > Safety, including healthcode safety, is a good thing. A level playing field ensures that everyone in the market is making safe, hopefully good quality, Sure, you can raise the standards so much that only multi billion companies will be able to comply. In fact that is what we witness today. How many mom and pop shops still exist compared to the '60s?
      • Nifty3929 4y ago
  • DeathArrow 4y ago
    With interest free money, people will just borrow money and spend them massively which will raise inflation. Just what happened in the US with very low interest rate or in EU with negative interest rates.
    • adventured 4y ago
      Borrowing + consumption doesn't in particular generate inflation. Debt is a heat sink, which is why Japan failed to spur inflation for two decades despite pulling every spending lever they could come up with. Debt kills economic dynamism, robbing the economy of the capital it requires to invest, expand. To get to inflation out of borrowing + consumption, you need supply to not keep up. For most of the prior two decades for the US, supply kept up (courtesy of the China manufacturing juggernaut, which was a deflationary force for US consumers). The China effect has reached its end in terms of peaking, the next two decades will not see that kind of offset benefit (at least for the US). Over the coming decades, the US will see similar problems that Japan did in terms of being unable to spark expected levels of inflation, despite high spending and debt problems. The cause will be the same, more and more of the economy will be locked up in the freezer as debt (typically yielding ever lower interest, in a downward spiral).
• makingstuffs 4y ago
  Yeah, the reality is that this will always be the case as long as the national minimum wage (rebranded as the living wage) is in no way related to inflation or the GDP of the country. As long as execs and CEOs are free to reap the benefits brought by their staff without paying any of it back this problem will continue to be exasperated. Another contributing factor in the matter is the fact that politicians seem to be immune from the affects of their policies. This gives them very little incentive to actually help people at the bottom of the totem pole as their funding is coming from the very same people whom are essentially exploiting a desperate workforce. Is a shelf stacker in Sainsburys a high skilled job? No. Is it absolutely crucial in order for Sainsburys to have a working business? Yes. The same is true for the cleaner in a bank. If a bank is covered in dirt and stinks people are not going to bank there. Likewise with cleaners of trains and pretty much any other industry. When you pair the fact that governments are funded by the same people whom are also funding a divisive narrative throughout all media outlets you end up with a grim and bleak outlook for society. As someone that has come from below 0 to get a good job and try and get out of the council estate poverty cycle it really strikes a nerve when people act as though we get given handouts for nothing. My mother worked her damn arse off through my childhood and continues to do so now as a 69 year old woman with chronic health issues. She has been left behind and forgotten by society and ill informed people seem to lack any ability to see beyond the outliers in shows like benefits Britain.
  • DeathArrow 4y ago
    > This gives them very little incentive to actually help people at the bottom of the totem pole Err, votes are the biggest incentive for politicians. > Is a shelf stacker in Sainsburys a high skilled job? No. Is it absolutely crucial in order for Sainsburys to have a working business? Yes. Not really, they will soon use robots. > The same is true for the cleaner in a bank. If a bank is covered in dirt and stinks people are not going to bank there. Likewise with cleaners of trains and pretty much any other industry. I think in Japan cleaning is robotized already. > When you pair the fact that governments are funded by the same people whom are also funding a divisive narrative throughout all media outlets you end up with a grim and bleak outlook for society. Governments funded from taxpayers money.
• gspencley 4y ago
  "Trickle Down Economics" is a talking point of those who oppose whatever it is that they want to attack at a given moment. It can, and has at times, meant: - Corporate bailouts and "welfare" - Tax cuts - Deregulation - Lobbying / big money donations Sometimes it means some of the above, other times it means all of the above. But the point is that no one on the fiscal conservative side of the aisle has ever come out and used the term "trickle down economics." Their opposition uses that word because it is loaded and it speaks to their base. > Those spending never reaches the "lower classes" What spending are you talking about? The OP was talking about removing barriers to creating business and attributed these barriers to good intentions. We can probably safely assume that the OP is a fiscal-conservative who favours deregulation and a business-friendly environment. And for what it's worth I am not trying to take one side over the other, you just lost me at "spending." The OP is talking about the exact opposite of spending. They are taking a "private solutions over public solutions" position. One where you spend less by having less overhead and red tape standing in the way of those who want to produce goods & services thus creating abundance of supply which lowers prices in addition to more jobs which puts more money in peoples' pockets.