Comment by asdff | Hacker News Reader

Comment by asdff | Hacker News Reader

Parent Full thread

But again, follow the money. Where is that exact dollar that would have gone to that business had there not been any coronavirus?

The economy is a circular river system. If it stops one day, there is going to be areas of drought in places, as well as huge reservoirs protected by dams. Money does not disappear, it only moves. You lose money on stocks, someone else on the other side of the world made money with their short position.

Perhaps that dollar is held up in some whale's cash account after they closed their positions. You would tax that whale for that cash, and redistribute it to the working class to afford food and shelter.

In any recession, the big stall is capital being too skiddish to pay for labor, resulting in lowered consumer spending, justifying less demand for labor, and creating a worsened financial crisis due to even lower consumer spending levels. If you are able to keep the working class afloat, you can conceivably keep consumer spending afloat, and therefore keep the economy afloat, even if capital is fearful.

> The economy is a circular river system.

The economy is the collective action of people producing the goods and services that you and I consume - food, haircuts, medicine, video games. Money is a claim on some portion of that stuff that has been or will be produced. Redistributing money is not going to suddenly make us productive again when most people are only leaving their house once a week to stock up on groceries.

If the business is providing no services or products, then it cannot afford to pay its employees. This is because the economy is built around mutually beneficial exchange, which only happens when people can work.

Example: I go to a clothing store and give them an amount of money that I value less than the clothes they give me in exchange. We are both better off because we have made that mutually-beneficial exchange. If the exchange doesn't happen because the store is closed, then there is no revenue (let alone profit) to divvy up.

The only way to simulate that transaction in a way that gives money to employees is to literally take it from customers who receive nothing in return.

What I'm saying is there is still money even if it's not currently circulating. In your example, you go to the store and it's closed, the money remains in your pocket; it still exists.

My solution would be to tax you redistribute that money from your pocket to the people who need food and shelter, the same people who stimulate consumer spending, because you are unable to currently do that yourself due to shelter in place orders and/or perceptions of the state of the economy.

You are not acknowledging the core economic problem which is that the productive capacity of the economy is going to be destroyed if this doesn’t end soon.

What you are describing is essentially how to ration the dwindling supplies of goods during the epidemic.

Enacting arbitrary taxes where the government simply appropriates funds from entities that have it and gives it to those who don’t is unfair, dangerous, and will undermine trust in the rule of law. It will be ripe for abuse and predatory behavior. It is also a system that loses the critical information market mechanisms provide, instead replacing with “command” based allocation which is a dangerous precedent.

The way to achieve what you propose that is not at odds with civil society is for the government to “print” new money, and distribute it through moderately means based criteria.

The US has unlimited capacity to increase its money base as a sovereign entity. Normally this is done through the Fed buying bonds from the treasury. The treasury has the authority to create money directly if they choose.

This has the effect of devaluing the currency as a whole. By distributing the new currency ti citizens that need it, it is effectively a transfer of wealth that is distributed throughout the economy in a decentralized and proportional way.

It is only necessary to target those who need help, opposed to harder problem created when the need to target who can “afford” to sacrifice their savings is added.

This doesn’t address the problem of productivity lost, but it allows what productive output there is to be more fairly rationed.

It also less subject to being the legal and political nightmare your suggestion entails.

Where is all the stuff that we use in our day to day lives going to come from while the economy is 'paused'? Who is going to make the food, distribute the food, sell the food, drive the trucks, etc?

There are two sides of our society; production and consumption. If we aren't producing, how are we continuing to consume?

Well, there's inventory of various essential goods in a variety of places, and all the essential services you note, as well as power, plumbing, etc.

Instead of going to a restaurant, I make a sandwich, instead of buying a new shirt, etc. GDP has indeed dropped, and some people have no cash flow (fixable), but I'm not seeing physical (excluding the abstraction of the banking system) reasons why this can't be sustained for months if necessary.

Reply on news.ycombinator.com