More Give Everybody "Free Money" Idiocy
Mike Mish Shedlock
In a New York Times Op-Ed Annie Lowrey says Trump Should Just Give People Money.
Lowrey claims Trump should "shower people with money, no strings attached".
Lowery makes two blatant lies in her op-ed.
- Universal income is a method backed by extensive research.
- Universal income has a bipartisan pedigree.
Lesson in Scaling
Actually, there is zero research because it has never been tried in scale.
Free money was tried once in Canada. It seemingly "worked" only because everyone in Ontario gave "free" money for the benefit of residents of a single town in the province.
The town did benefit, but next up the scale would have been for everyone in the rest of Canada to give "free" money to everyone living in the province of Ontario.
Once you get to the stage of giving everyone in the country enough free money to abolish poverty, where the heck does the money come from?
Lowrey notes that Mark Zuckerberg, Hillary Clinton, the Black Lives Matter movement, Bill Gates and Elon Musk are just a few of the free money policy converts and supporters.
Under such a proposal, Uncle Sam would send every American $500 or $1,000 a month, likely eliminating other stingier and less-effective programs.
Lowrey cites an absurd study from the Journal of Poverty, a socialist organization that supports a negative income tax. Here is the pertinent snip:
A group of prominent welfare economists recently examined such a policy and concluded it could be funded by getting rid of programs including SNAP, T.A.N.F. and the earned-income tax credit. Adding it onto what the government already does would cost something like $200 billion or $300 billion a year, which could be easily financed by repealing the Trump tax cuts and closing loopholes for rich companies and individuals.
Wait a second, first, let's do the math.
The US Population is 328 million. Giving everyone $1,000 a month would cost $3.936 trillion.
Read that carefully. Yes, that is close to $4 trillion a year.
Let's assume Lowrey really meant $1,000 a year, not month, although that is not what she said.
Let's do the SNAP math.
126.75 * 12 = $1521.
Oops. To break even with SNAP we would have to give everyone at least $1521 a year.
And what about Earned Income Credit? Medicaid?
Fancy that, so ensure that no one loses under the program we might have to give everyone $2,000 or $3,000 a year.
At $3,000 per year, the cost would be a "mere" $0.984 Trillion. At $2,000 per year the cost would still be an unaffordable $656 billion.
One More Try
If we gave just those 43 million people living in poverty $12,000 a year, the cost would be $516,000 billion a year, assuming they all made zero, which they don't.
However, the suggestion does not coincide with Lowrey's Universal Basic income for everybody. And it does not factor in things like inflation and the incentive to not work.
If you are making $12,000 a year and can get $12,000 a year for doing nothing, there will be many millions more who elect to not work.
Returning to Lowrey's actual proposal of giving everyone $12,000 a year to live on, how many people would be scaling Trump's wall to get into the US?
In Europe's migration crisis, why did the migrants all scramble to get to Germany rather than stopping in Turkey, Greece, or Italy?
The obvious answer is Germany had the most free benefits.
There is no limit to demands for free money and services. Want more unborn, out of wedlock kids? Just give everyone in the US $12,000 a year and you will have millions more of them.
Math Challenged on Every Front
Are these "free money" advocates math challenged on every front? You bet.
They are also economic illiterates.
No Such Thing As Free Money
Returning to the initial absurd premise, there is no such thing as free money.
It has to come via taxation from productive members of society or via inflation from the printing press.
The latter has indeed been tried countless time with the same miserable results every time.
If everyone got a free $12,000 then rest assured $12,000 would be worth perhaps what $1,000 is worth today. The economic illiterates would then want $100,000 free money to "live on".
Dear Ms. Lowrey
Dear Ms. Lowrey please take a look at Venezuela, a socialist "paradise" in the midst of hyperinflation.
If you prefer, please take a look at Zimbabwe and check out what happened to Zimbabwe Prime Minister Robert Mugabe's monetary redistribution schemes.
In case you are too shell-shocked from this math to look it up, here is the answer: Human and capital flight in Zimbabwe led to hyperinflation.
Next, Ms. Lowrey, please ask yourself why the US has Google, Apple, and Microsoft, while France and the EU don't. Similarly, why is Italy a basket case in the EU?
The answer is the US lets businesses thrive. The EU would breakup Google, Apple and Microsoft.
Please think about Google for a second. Google has all high-paying jobs. Starting as a mere search engine, Google has spawned massive amounts of technology in use in phones and under development in self-driving cars.
Only economic fools want to tax growth engines like that.
And for what? For your mathematically challenged notion that people can thrive on allegedly "free" money.
Dear Ms. Lowrey, please get a grip on reality.
Mike "Mish" Shedlock