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My wife is an accountant and she refused to listen to my stupid idea. Before I go and ask economists, I would like to ask Worldbuilding :)

CONTEXT:

As we hopefully are aware, increasing automation is going to make much of human labor obsolete, probably very soon (https://www.youtube.com/watch?v=7Pq-S557XQU). The solution to this is to make work optional, and to provide everybody with the things they need to be healthy and entertained. One such solution is Universal Basic Income, which has been tried a few places and generally, gets rejected by policymakers or citizens because they don't like the idea (Urecht, Finland, Switzerland et al.).

SOLUTION GOALS

  1. Allow people to enjoy life, with no job

  2. Allow employable people to continue working, if they enjoy doing so

So here is my imaginary solution: What if, let's say only in the USA, it is announced: "On October 1st, everybody aged 18 and over will receive one billion dollars." And the US government creates the money and deposits into people's accounts on the day. The broad effect being, the reduction in the value of money and thereby, flattening the distribution of cash wealth in the USA.

Note, I can't easily extend the concept to the entire world because of the numerous currencies, but the US is fairly isolated so the thought experiment starts there.

My imaginary short term outcomes include, in no particular order:

  • In the run-up to this distribution event, existing billionaires would clearly try to convince the populus to vote down the proposal. But this would never succeed. The unwashed masses would never be able to turn down a billion dollars when it came down to it.
  • Everybody will immediately pay off their mortgages and school loans. Anybody who was in debt in dollars will essentially no longer be. On the other hand, creditors and anyone who relied on debt income would be ruined overnight. For our purposes, that simply means that bankers are no longer needed and will not have to go to work.
  • Anybody who was already a billionaire is now only going to be only TWICE as rich as a poor person, rather than ten million times as rich.
  • The price of a loaf of bread may rise to \$10K, and small luxuries like a yearly iPhone subscription may rise to \$20M, but still, literally everyone would be able to afford either.
  • Consider our out-of-work banker in Manhattan with the \$4M mortgage on his apartment. Mortgage now paid off, he can now spend his days playing video games or making artwork.
  • All other citizens also have about the same spending power as our banker. So a truck driver in Abilene with a house worth \$40K in today's money could trade homes with him if they both agreed to it. In any event, neither one of these people needs to live close to work because neither of them have jobs.
  • Educated people would have no immediate advantage over the non-educated. Except there would probably be an underclass of people not so good with numbers, who might lose all their money in the first few weeks.
  • Obviously, somebody would still work in the ice cream shop; but they would be people passionate about ice cream and not simply people who needed the money. Salary there would still be the token $10/hour. Every remaining job would be reduced to something like a hobby or an artistic mission. Even today, look at the people who pick up trash for free. Even dirty jobs would get done and the workers would be respected for their passion.

The program will essentially be a combination of wealth redistribution (without ever taking anything away from the rich) and universal basic income (without having to identify any source of the funds).

Presumably, each subsequent October 1st, everyone would again receive another $1B. So everyone will know, money is going out of style.

My big question is: Would this program actually succeed in transitioning people to a non work based life?

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closed as too broad by Morris The Cat, Frostfyre, Cyn, Hoyle's ghost, kingledion Apr 10 at 19:46

Please edit the question to limit it to a specific problem with enough detail to identify an adequate answer. Avoid asking multiple distinct questions at once. See the How to Ask page for help clarifying this question. If this question can be reworded to fit the rules in the help center, please edit the question.

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    $\begingroup$ "The government creates the money" This has been tried in the past. The result is a disaster. All that happens is that the currency becomes worthless. $\endgroup$ – chasly from UK Apr 10 at 19:16
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    $\begingroup$ It would be helpful to know what the goals are in order to evaluate how the policy will fail to achieve them. Also, it would be good to clarify whether the "human labor is obsolete" bit is part of the context of the question or just part of the discussion that led to the asking of the question. $\endgroup$ – Craig Meier Apr 10 at 19:16
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    $\begingroup$ If you want an example of this very idea occurring in our real-world history, take a look at Germany in the years between World War I and World War II. Beyond that, though, "What could go wrong?" is too broad of a question for the Worldbuilding SE to address. $\endgroup$ – Frostfyre Apr 10 at 19:21
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    $\begingroup$ No, printing money won’t solve the United States’s debt problem - washingtonpost.com/news/wonk/wp/2013/03/13/… $\endgroup$ – chasly from UK Apr 10 at 19:25
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    $\begingroup$ Please report on here before you follow through on this so I can exchange all my money for toilet paper. It'll be worth considerably more after you finish. Proof: every socialist economy where they thought that giving people money would solve all their problems. $\endgroup$ – AndyD273 Apr 10 at 19:57
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This is a very bad idea. Printing 300 quadrillion USD and distributing it would massively disrupt the entire global economy in a number of ways.

You are critically underestimating the concept of inflation, especially over time.

Look at real-life real-estate. If you give one person had \$1 billion, they could buy up a LOT of houses in the \$300k range ( approx 3 thousand of them) and own a lot of real assets. If everyone has \$1 billion, housing prices are going to go way up as many, MANY people try to acquire real value assets.

Housing cost increases will echo through the rest of the economy until things stabilize, but that might take a long time. An Iphone won't instantly jump to $20 Million, it will creep back up to a point where not everyone can afford it. The salaries of every engineer working for Apple will need to increase to keep them working there, and costs will increase to keep profit margins.

The end result will be some people that were able to leverage the sudden cash into real-value assets with advantageous positions, but most people will end up being more or less in the same boat they were before.

The biggest difference is you just destroyed the USD's stability and credibility on the open market, probably destroying foreign investments and triggering a shift to another currency as the global reserve.

You might have people paying off all their debts immediately, but new debts are always being created, and you just jacked up the cost of all of those new loans.

There is a lot of uncertainty of how everything would play out, because economies are chaotic systems. And you would be creating a LOT of chaos.

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    $\begingroup$ Everything correct, except for the USD no longer being the global reserve currency. The USD is the global reserve currency because that's the only currency accepted by petroleum exchanges, see petrodollar. You'd have to recreate a few hundred international treaties in order to change that $\endgroup$ – nzaman Apr 11 at 3:58
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    $\begingroup$ @nzaman thank you for your insightful comment. You are the first person to tie energy into your response. $\endgroup$ – Douglas Held Apr 11 at 16:28
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Money depends on there being some level of comparison between valuable items and the money. If you arbitrarily create more money, then the extra money chases the same amount of goods. The price of a loaf of bread isn't limited by any considerations of what it ought to be.

Zimbabwe bank note

How much money is it? 300 million people (ish). 1 billion each. 300,000 trillion. Or about 15,000 times the existing yearly economy.

Very shortly after the creation of that much, money would be worthless. Most enterprises, activities, and businesses would cease to operate. All banks would be wiped off the planet.

Your bank card will be worth more as fuel than for what you can get out of the bank account it's attached to. People will be reduced to barter.

The only thing that has ever interrupted such a process is war. Nearly always a war that is remarkably violent and horrible even as wars go.

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  • $\begingroup$ "money would be worthless" Only the US dollar ~ "Most enterprises, activities, and businesses would cease to operate" Only in the US ~ "banks would be wiped off the planet" Only those with significant US dollar holdings ~ OP said "only in the USA" & is only using the US dollar in his financial experiment. $\endgroup$ – Pelinore Apr 10 at 20:26
  • $\begingroup$ @Pelinore It's nice to think the U.S. economy has little or no impact on the world, but it simply isn't true. A big chunk of U.S. debt is owned by foreign countries. Most large U.S. corporations have foreign investment. Many foreign countries depend on U.S. trade. Almost all banks have significant dollar holdings. This action would bring the global economy down with it - and first in line are the seven non-U.S. countries that use the U.S. dollar for their own currency. These issues are taught in college macroeconomics courses. $\endgroup$ – JBH Apr 10 at 23:23
  • $\begingroup$ Hi Puppetsock. You made the same mistake I did when I first wrote my answer: I didn't count the zeros when I multiplied the two numbers. 300M * 1B = 300 quadrillion. The number is a breathtaking 3,406X the est. Gross World Product for 2019. $\endgroup$ – JBH Apr 10 at 23:37
  • $\begingroup$ 300,000 trillion is 300 quadrillion. $\endgroup$ – puppetsock Apr 12 at 14:58
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I can see several things that could go wrong with this

  1. Hyperinflation ( with so much new money in circulation everything will become more expensive because the value of the dollar will be less.)
  2. Workforce Loss ( many people in the short term will just quit their jobs because they believe they are rich. Creating a strain to keep basic services available. Even if some jobs can be automated not all jobs could be)
  3. Increase of the Federal Deficit ( The money will need to come from somewhere I assume this will increase our federal debt )
  4. Salary's ( Salary's of people still in the workforce will skyrocket as hyperinflation and workforce shortages takes effect )
  5. Offshore Scam's ( offshore scams will increase with the increase of available capital )
  6. World Wide Price Inflation ( US being such a large economy will no doubt influence our trading partners and will cause inflation in other countries maybe every country. The poorest of people in these countries will suffer and may find they cannot afford basic items.)
  7. Gold Hording ( Gold could be horded on unseen levels with hyperinflation taking effect Gold may safeguard your assets until the economy stabilizes )

I'm sure their are more things. In general this would be a bad idea overall it would provide a quick injection into the economy but it would be short lived. Just look at lottery winners many find themselves broke and re-entering the workforce after a few years.

I think a better option is providing a basic income for example

https://www.theguardian.com/world/2015/dec/26/dutch-city-utrecht-basic-income-uk-greens

instead of a large injection to everyone.

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  • $\begingroup$ thank you. I think your answer missed the point, likely because my question isn't worded clearly. Utrecht is already one of my counterexamples. Hyperinflation is assumed, workforce loss is actually a goal; the project would ease a transition AWAY from a money based society. Salary for instance, would be expected no to change; thereby the only people who would work jobs would be the ones who were entertained by keeping busy. I will think about whether my question can be fixed. $\endgroup$ – Douglas Held Apr 11 at 3:42
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Hyperinflation would destroy the economy. The loaf of bread may rise to \$10K, but cars would rise to \$140M and houses to \$1.2B. To see what happens, consider researching hyperinflation in the Confederate States of America and the Weimar Republic.

Debt You're assuming that banks would allow anyone to pay off their loans without first adjusting those loans for inflation. Injecting some 200 quadrillion in dollars unbacked by legitimate growth or intrinsic value means everything must be adjusted ahead of it. If banks didn't make those adjustments (basically increasing the debt value by 4,000X) they'd be out of business in a month.

Equalization of Wealth People advocating that the rich shouldn't be rich generally ignore the fact that one of the reasons they are rich is that they were very good at creating jobs. Giving everyone \$1B would be a temporary setback for people who know how to generate wealth. A lengthy discussion of why left-wing/socialist ideas of forcefully equalizing wealth don't work is inappropriate for this site. But research into the many reasons the Soviet Union collapsed is instructive.

It's worth pointing out that if this were to actually happen, the Trumps of the world would convert their U.S. dollars to anything else before it did, thereby guaranteeing that when the U.S. dollar's value against those other currencies tanks, they can convert it back and be just as far ahead as they were before.

Unwashed Masses Don't Turn Down Free Anything which is why promising free health care, free education, free cell phones, free wages, etc. is a powerful political motivator. The fundamental problem is that nothing is free. A price is always paid (continue reading about hyperinflation).

\$10,000 Loaves of Bread People may be able to afford them for a short while, but eventually everthing's either back to normal or worse off than before. (Remember: \$140M cars and \$1.2B houses and \$2.4M/month rent.) It's the reason minimum wages never permanently solve problems: spending money without increasing value simply devalues the money (and other things along with it, like education). Simplistically, you can't forcefully lift people out of poverty without devaluing the people who are affluent (either by taking their wealth via taxes or devaluing their wealth via arbitrary minting). You claim that everyone could afford a \$20M/yr cell phone contract. You're not doing the math. You've only bought people 50 years worth of cell phone coverage, which isn't particularly different to today when comparing to someone who is given \$250,000. 50 years of cell phone coverage, then the money runs out. You haven't solved any problem other than to force the prices up so that when the money runs out nobody can afford cell phone coverage.

Non-Cash Assets Most wealth is non-cash already. Even the Trumps of the world are wealthy due to stock, property, and other investment values — not simply the number of liquid dollars they have in a bank. Again, nothing's changed in your scheme, other than to make prices impossibly high when everything settles down. Think about it. Your house is worth no more to the next guy then than it is now. The difference is you and he have 4,000X the money to work with. You don't actually believe the average person will still sell their home for \$300K, do you?

Education As before (and as mentioned before), education will reign supreme. Those who know how to create wealth will eventually (faster than you think) end up with all the wealth and those who don't will end up without it. "A fool and his money are soon parted." You probably haven't thought through how foolish this idea is.

Conclusion

As with all social share-the-wealth programs, the "solution" will appear to benefit people temporarily, but will quickly prove insufficient because it doesn't actually address the underlying problems. An individual's lack of money has never been the problem. That individual's desire to create wealth through education, sacrifice, and work have always been the problem. I'm all for helping people become educated because value is being created through the expense. Ditto for helping people find work. But without that creation of value, solutions fail.

Do you want to know what the "unwashed masses" will do with that \$1B? They'll play video games, gamble, eat/drink/be-merry... almost anything other than become educated, invest, and solve their long-term problems.

IMPORTANT: I have not addressed what doing this would do to the rest of the world. The consequences would be devastating world-wide. If you think the rich get richer and the poor get poorer now, wait until you make the U.S. dollar worth nothing anywhere and everywhere else in the world.

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  • $\begingroup$ Comments are not for extended discussion; this conversation has been moved to chat. $\endgroup$ – Monica Cellio Apr 11 at 1:15

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