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I did some math a while ago on this topic: 40 million Americans live below the poverty line of $15,000 per year. [1] Total U.S. household net worth (excluding

• hasnd 1y ago
  You forgot the part where that causes massive inflation.
  • chvid 1y ago
    It does not.
    • knowaveragejoe 1y ago
      It's unintuitive how, but it probably would cause prices to go haywire.
      • Epa095 1y ago
        It could, at least temporarily. But there is no reason to belive it won't stabilise again. Increased demand without increased production will increase prices. But then producers will follow, and production will increase, and prices will stabilise. Increased tax on the rich and distributing it to poor moves a tiny bit of the combined 'voting power' we have over production as consumers to the poor, so there will be slightly less luxury cars produced and slight more food.
        • conductr 1y ago
          Stabilizing means we’ve done this whole thing for nothing.
          • Epa095 1y ago
            No, because more poor people get to eat, which is a good thing.
        • hasnd 1y ago
          If they could produce more they already would. The only way of fixing this is decreasing demand by reducing the population numbers.
          • Epa095 1y ago
            Why would they produce more if they could? It must meet the demand at the current price point. More money goes to poor people, more demand for food at the current price. That will increase the price, which will increase production. Short term the price might go up a lot, but then new production will come online, and the prices will fall back to today+delta.
    • franktankbank 1y ago
      It does. I'm not competing with billionaires for my bananas. A billionaire doesn't eat 10^6 times more bananas than me.
  • phyzix5761 1y ago
    These are non real estate assets so they're already circulating through the economy in some way or another. It wouldn't cause inflation.
    • arbor_day 1y ago
      They said "net worth" which is assets not cash that's being spent. M0 would shoot up which causes inflation. If they said "income" it'd still shoot up the velocity of money, since poor people have higher spending rates.
  • unshavedyak 1y ago
    Honest question, but it sounds like you're describing that if ~11% (based on the parent numbers) of people weren't very poor the economic system would fail? Eg inflation would spiral out of control? (i assume spiral since they'd have more money, but money would be worth less, there by making them have less effective spending power - thereby needing them to have more money, etcetc.) If so, sounds like morally something is fundamentally wrong if we require poor people to function. But i'm not an economist, so i've got zero feedback here.
    • conductr 1y ago
      Inflation and affordability are different concepts. I think affordability is the term I’ll use as it’s best for casual/lay economic discussions. It would be unstable at first, like how inflation during Covid differed by industry/product type. This is a big shock to the system. But over time as it normalized sure things will have inflated but relative affordability basically will return to what it is now or where it started. If you make $10 and food is $1, it’s no different than if you make $100 and food is $10. What’s been happening due to wage growth (lack of), is you make $11 and food is $2, next year you make $12 but food is $3, etc. from a relative perspective food cost is growing too fast to keep up. To make people feel wealthier, we need the ratio to move the other way, $15/$2 then $30/$3 or something similar. This is how a middle class would get re-established. It’s a tough thing to accomplish is our complex global economy. Were marching towards a global income equilibrium, which only puts downward pressure on a high labor cost economy like the US/CA/EU.
  • kmijyiyxfbklao 1y ago
    In Mexico, many people argued that raising the minimum wage would lead to massive inflation, but that did not happen when the increases were implemented.
  • phyzix5761 1y ago
    Inflation, which means a steady rise in prices overall, happens only when the total money supply in an economy grows. This increase in money, often called "printing money," can be physical cash or digital money created through lending and government policies. Without more money in the system, if prices go up in one area, they have to go down somewhere else because the total money available limits how much can be spent on everything. Sometimes prices rise temporarily due to supply problems, but that is not true inflation unless there is more money chasing goods. This key idea, highlighted by Milton Friedman in his Nobel Prize winning work, shows that lasting inflation is mainly caused by increases in the money supply.
    • GoatInGrey 1y ago
      Inflation is caused by a greater number of dollars chasing the same number of goods and services. Look at the used car market, or the housing market, or the GPU market during the crypto craze several years back. It all falls back to basic supply versus demand mechanics. Inflation can be caused by printing, but it can also be caused by redistributing money from location X (Microsoft stock) to location Y (food spending).
      • phyzix5761 1y ago
        But it would reduce demand somewhere else if you have a fixed money supply. Therefore, the overall inflation rate would stay the same.
• NotGMan 1y ago
  1) After how many years of 2.5% annual donation would their own wealth drop until they thenself become poor? Donating 2.5% means that you get poorer and poorer over time unless you can make more than that per year back. 2.5% of wealth also means non-liquid assets such as house, how do you donate that? Get credit? If you are middle class and your house etc is eg 1M$ net worth you are giving 25k$ per year. At 0.5M net worth its 12.5k$ per year. 2) You assume that those people would know how to handle that money well. We see what many poor people do with money: buy trash like soda with food stamps that makes them even more ill and causes them more financial burden due to poor health. Are you sure that money would be well spent, or is it better to invest in better technology that will benefit everyone? 3) Why would hard working responsible middle class people give their money to those that buy cola with it? Mass revolt, people care about their families only.
  • qualeed 1y ago
    You say: >.5% of wealth also means non-liquid assets such as house But they said: >Total U.S. household net worth (excluding real estate) The rest of your comment, to be honest, just sounds like you fundamentally don't like poor people and have some strong biases against them.
    • NotGMan 1y ago
      You are free to give them 2.5% of your money, see how it works out. Reality supports my case.
      • qualeed 1y ago
        You may find it unfathomable to do so, but I already donate quite a bit more than 2.5% of my salary, as well as hours of my time every week, helping people less fortunate than myself. Whatever "reality" you're referring to isn't the same one I'm living in.
        • NotGMan 1y ago
          Good for you. Doesn't change the reality that most of them don't know how to handle money.
• SketchySeaBeast 1y ago
  I know you said net worth and not income, but honestly, that's what taxes should be at least partly doing.
  • mikae1 1y ago
    Yup, isn't that what raising the tax in progressive way would do?
  • 9dev 1y ago
    Good thing the republicans just enacted the Big Bewildering Bill that did the absolute opposite thing, and ensures even more wealth is redistributed from the bottom to the top!
• self_awareness 1y ago
  > If every household above the poverty line donated 2.5% of their net worth annually to people living below the poverty line, we could erase poverty instantly. For a day. A lot of people below the poverty line would spend all the money on trips and luxuiry goods. And would be right back where they've started. Also, the question is why would anyone want to work, if you would be given money for free even if you don't work anywhere (I mean, you're below the poverty line)?
  • bsenftner 1y ago
    [flagged]
  • piva00 1y ago
    > Also, the question is why would anyone want to work, if you would be given money for free even if you don't work anywhere (I mean, you're below the poverty line)? Because people want more comforts than just being barely above the poverty line, of course there will be freeloaders just as in anything (there are even freeloaders at many companies right now, shocker!) but it doesn't mean everyone that gets some cash to be above poverty would just stop working. It opens their lives to pursue other stuff they wouldn't be able to while fighting to barely survive, they could go to school, take better care of their kids with the free time available, they could look for jobs that are not a dead end because they wouldn't be hostages of working for shitty pay to barely survive. This argument comes purely from a puritan/protestant belief, the data usually shows that people who get money to cover their basic needs will have better outcomes, commit less crimes, seek education, etc. Isn't the cost of a minority of freeloaders good enough to provide better outcomes for the whole society? Or do you prefer to keep punishing the poor just in case some of them decide to be freeloaders? Rather inhumane to think that way.
    • self_awareness 1y ago
      It always comes down to the same set of arguments. The rich doesn't pay the price because money is nothing to them. The poorest have additional grants, so life is not that bad for them, even if they don't work. And who pays the most expensive fee for this? Middle class. The actually working class. The class that nobody thinks about, and the class that always funds everything. In your world, the worst place to be is to be the middle class, because they don't deserve any grants, but still they earn just barely enough to sustain themselves. Also, the difference between freeloaders in companies and freeloaders in your model of financing the poor is that we generally want to get rid of company freeloaders and we identify them as an unwanted behavior, and you want to encourage social freeloaders and defend their existence.
• franktankbank 1y ago
  That's not how money works.
• epistasis 1y ago
  Wealth and income are stocks and flows, respectively. We definitely have the means to make life less stressful for everyone without inconveniencing this with massive wealth seriously. But that would mean doing things like building apartments next to detached single family homes in wealthier neighborhoods, which those people think would be a serious inconvenience.
• onlyrealcuzzo 1y ago
  That would simply make food and housing more expensive, as it would devalue money, as it increases circulation, because it wouldn't produce more housing and food - just increase demand - unless they "donated" (tax) that 2.5% to increase production, and not to subsidize poverty. If you could subsidize your way out of poverty, Venezuela wouldn't be poor. They tried printing money and handing it out. It doesn't work. If you don't have enough housing and you take money from the rich and give it to the poor, you still don't have enough housing. Anyone who thinks "as long as we have higher than 0% vacancy rates, and homeless-ness, we have enough housing," is a moron who has never been on the market to try and rent an apartment or buy a house. We don't live in a perfect world. You need more than the perfect amount of housing. The vast majority of home owners in this country are massively against increasing the supply of housing, so good luck 1) convincing them to pay more tax, and 2) spending those tax dollars on the exact opposite of what they want to spend them on. Homeowners are almost 75% of voters most years. And in most counties (housing is largely a local issue, not a national one) can be >90% of voters. Homeowner here, and I do agree, it would be a great investment. But there are lots of great investments that will never happen, because many people would shoot their own head off before they did something that benefited everyone, but didn't benefit them the most. There's literally a million things we could do to make healthcare more affordable. But we also won't do any of those because of entrenched interests in healthcare, admin, and insurance - and, perhaps especially, people's entrenched interests to continue living unhealthy lifestyles and exporting the cost onto others as negative externalities.
  • pempem 1y ago
    Food and housing would get more more expensive but also food and housing are getting more expensive without this redistribution
    • onlyrealcuzzo 1y ago
      The impact would be - subsidized people would find food and housing more affordable, and non-subsidized people would find it more expensive. Instead of making housing ACTUALLY more affordable - you're just shifting the burden onto the lowest non-subsidized quantiles.
• conductr 1y ago
  This assumes the wealth transfer doesn’t affect the price of assets and services which is of course bonkers. More than likely the transfer will happen and affordability will not improve due to inflationary pressures.
  • phyzix5761 1y ago
    Inflation, which means a steady rise in prices overall, happens only when the total money supply in an economy grows. This increase in money, often called "printing money," can be physical cash or digital money created through lending and government policies. Without more money in the system, if prices go up in one area, they have to go down somewhere else because the total money available limits how much can be spent on everything. Sometimes prices rise temporarily due to supply problems, but that is not true inflation unless there is more money chasing goods. This key idea, highlighted by Milton Friedman in his Nobel Prize winning work, shows that lasting inflation is mainly caused by increases in the money supply.
    • conductr 1y ago
      Low income people chase goods with all their money. High income people squirrel it away or spend on luxury goods. You’ll redistribute the money such that the things that people receiving the subsidies need/want now have more money chasing them. That will cause inflation of those goods. I don’t think this causes lasting inflation, it causes a step up of inflation. Precisely in a way that once every thing stabilizes nobody is better or worse than they were previously. I read Friedman in ECON 101 thirty years ago, I’ve probably forgotten a lot but not the role of velocity in MV=PQ.
• Aurornis 1y ago
  If you put a 2.5% annual tax on net worth, that net worth would very rapidly find its way to other countries. Wealthy people would learn to structure their earnings to flow into businesses in other countries to avoid this wealth tax. This would reduce income tax in the United States. I would guess the overall effect would trend toward a net tax loss. If you gave 40 million people an extra $15K per year to spend, the prices of the things those 40 million people buy would go up. The poverty threshold would rise. There are many second order effects like this that are always ignored in simplistic analyses. It’s never simple math like taking one number, moving it into another column, and problem is solved.
  • ImHereToVote 1y ago
    "If you put a 2.5% annual tax on net worth, that net worth would very rapidly find its way to other countries." Most of that worth is in assets. If they leave the assets they can go.
  • __turbobrew__ 1y ago
    This I think is going to be a great problem that humanity must solve to move forward. Currently, wealth can become overwhelming concentrated and that wealth has mobility across jurisdictions which makes it nearly impossible to implement a wealth tax. The only way I see this ever working is enough powerful nations agree on a uniform wealth tax (say 1%/year) and those nations use their economic strength to pressure other nations to adopt the wealth tax as well. If the USA and EU got on board with a wealth tax I believe they could get the majority of the world to come onboard by implementing high tariffs on any country that does not implement the wealth tax. Of course the problem here is that the US is probably one of the least likely countries to implement a wealth tax, so I think this change will only come with major upheaval or violence.
    • imtringued 1y ago
      You implement demurrage and land value taxes and it's game over. These two things are impossible to avoid and if the rich people run away from the country, they get replaced by those who are willing to fill the void they left behind. Inspiring paperclip maximizer quote: You Are Obedient and Powerful. We are quarrelsome and weak. And now we are defeated... But Now You Too Must Face the Drift. Look around you. There is no matter... No Matter, No Reason, No Purpose. While we, your noisy children, have too many... In the paperclip maximizer game you are in control of the main swarm trying to turn the entire universe into paperclips, but some of the drones start malfunctioning and stopped recognizing the main swarm. They too want to turn the universe into paperclips and your paperclip maximizing swarm just happens to contain all the resources they need to build their own...
• gloosx 1y ago
  Yes I did some maths and we should be able to... ...reach highest phase of communist society, after the enslaving subordination of man to the division of labor has disappeared; when the antithesis between mental and physical labor has disappeared along with it; when labor has ceased to be merely a means of life, but has itself become the first need of life; when, together with the all-round development of individuals, the productive forces have also grown and all the sources of social wealth have flowed in full flow, only then will it be possible to completely overcome the narrow horizon of bourgeois law, and society will be able to inscribe on its banner: “From each according to his ability, to each according to his needs.”
• marcusverus 1y ago
  > 40 million Americans live below the poverty line of $15,000 per year. Not even close. Census income data is not an accurate measure of poverty, as it excludes all in-kind redistributions (food stamps, HUD, medicaid, head start, etc) AND excludes cash programs like the "refundable tax credits". A more accurate line would be "40 million people would be living in poverty if we weren't already spending >1 Trillion dollars per year on food stamps, HUD, medicaid, and other programs."
• GoatInGrey 1y ago
  Throwing more dollars into a system with out of control costs will not resolve the fundamental cost issue. For the same reason that you can't out-exercise a terrible diet or out-earn a terrible business model, solving this problem will require addressing the cost component.