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Should we scrap benefits and pay everyone £100 a week? Watch

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    (Original post by Davij038)
    It should be noted that one of the original proponents of this was that noted Communist sympathizer Milton Friedman.


    The idea has merit. But you would need somebody with a huge degree of economic competence and respectability (As welll as being a household name) in order to sell it, ie a modern day Keynes otherwise they would get torn to pieces by the usual suspects.
    If this is sarcasm pls stop it cus people here take everything seriously
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    (Original post by DanteTheDoorKnob)
    If this is sarcasm pls stop it cus people here take everything seriously
    Humour is a wonderful means to educating people.
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    (Original post by Davij038)
    It should be noted that one of the original proponents of this was that noted Communist sympathizer Milton Friedman.


    The idea has merit. But you would need somebody with a huge degree of economic competence and respectability (As welll as being a household name) in order to sell it, ie a modern day Keynes otherwise they would get torn to pieces by the usual suspects.
    I do know someone who has the degree of competence and is a household name - they've also got a book on courage.
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    (Original post by Xelfrost)
    Normally I'd disregard this kind of thing as lefties being lefties, but I'll bite and take this on...

    Economics, when heavily simplified, is supply/demand. When something is in demand it is worth more than something in supply. This is also, at a very simple level, how currency value is calculated. It is a common argument among the left that the rich owning a disproportionate amount of wealth compared to the rest of us is an unjustifiable evil that is causing the very downfall of civilisation as we know it. In reality it's more of a necessary evil as it keeps a large amount of money from circulation and therefore raises the value of the currency.

    Now onto the subject of universal income. Firstly, I'm going to make an assumption that you support taxing the rich to fund this and I will base this entire explanation on this premise so keep that in mind. The population of the UK is somewhere between 64-65 million people, so to fund this we'd need at a minimum £6400000000 a week, which in a year is £332800000000. All of which will be put into circulation, this ties into why its a bad idea to print more money, as more money in circulation means less value per pound. So the extra 100 may not actually be as useful as you'd initially think.

    I'd go further but I need to get on with my lesson, perhaps later I'll add more to this if people have any questions.
    I'm sorry but your statement about rich people being good for money supply because they hoard cash is not a sound economics concept, i.e. it's simply not empirically observed. Most of the wealth of rich people is "locked in" into value generating assets (bonds, equities, property etc.). They are not hoarding liquid cash.
    The money supply is controlled by the central bank and it'e the BofE's job to regulate money supply to curb inflation. If money supply or the velocity of money got too high, interest rates would simply be raised thereby diverting wealth into interest generating products.

    On a side note, the interest rates are a more determinant factor for a currency than simple supply and demand, besides I'd argue that a weak currency is often required.

    I'm not a leftie but the lefties have it right that too much wealth controlled by too few is detrimental to an economy/society especially for a consumer spending driven one like ours in the UK. I'd suggest doing some light reading on the gilded age/1920's America/pre-Great Depression. Simply put, if too many consumers hold too little wealth due to gross inequality then a consumerist economy stagnates as spending is reduced to stimulate the economy and the multiplier effect is reduced, this leads to recession and to more flight of money and spirals downwards from there.

    On the point of basic income, the concept is to simplify the welfare system and replace benefits with a simple universal income. Also, not every single citizen is going to be paid a universal income to the best of my knowledge. It's the people already on benefits or low-paid workers who receive tax/child-tax credits etc.
    As an economist I think this is a good idea in theory but I would like to see empirical evidence to see how it actually works it practice and its unintended consequences.
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    (Original post by BaronK)
    I do know someone who has the degree of competence and is a household name - they've also got a book on courage.
    Somehow I doubt that would work out well

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    (Original post by Drewski)
    Fine, if you want to ignore that bit then focus on the other bit;

    The groups you de-selected it to already get benefits, so what is this going to change?
    the structure of benefits but also who would get them. So people earning below a certain amount would be able to live more comfortably, and obviously some people living off benefits may get less. Everyone basically gets the same amount each week, regardless of personal circumstances.

    I've been thinking and I actually do think that it would work better if everyone were to get it, even the super-rich. They go into that a bit too in the article. It's interesting and eradicates the problem you were talking about with regards to who would get it
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    (Original post by NabeelS)
    I'm sorry but your statement about rich people being good for money supply because they hoard cash is not a sound economics concept, i.e. it's simply not empirically observed. Most of the wealth of rich people is "locked in" into value generating assets (bonds, equities, property etc.). They are not hoarding liquid cash.
    The money supply is controlled by the central bank and it'e the BofE's job to regulate money supply to curb inflation. If money supply or the velocity of money got too high, interest rates would simply be raised thereby diverting wealth into interest generating products.

    On a side note, the interest rates are a more determinant factor for a currency than simple supply and demand, besides I'd argue that a weak currency is often required.

    I'm not a leftie but the lefties have it right that too much wealth controlled by too few is detrimental to an economy/society especially for a consumer spending driven one like ours in the UK. I'd suggest doing some light reading on the gilded age/1920's America/pre-Great Depression. Simply put, if too many consumers hold too little wealth due to gross inequality then a consumerist economy stagnates as spending is reduced to stimulate the economy and the multiplier effect is reduced, this leads to recession and to more flight of money and spirals downwards from there.

    On the point of basic income, the concept is to simplify the welfare system and replace benefits with a simple universal income. Also, not every single citizen is going to be paid a universal income to the best of my knowledge. It's the people already on benefits or low-paid workers who receive tax/child-tax credits etc.
    As an economist I think this is a good idea in theory but I would like to see empirical evidence to see how it actually works it practice and its unintended consequences.
    If you want some examples of it in practice, basic income pilots have been conducted in United States and Canada in the 1960s and 1970s, Namibia (from 2008) and in India (from 2011). In Europe there are political decisions in France, Netherlands and Finland to start up some basic income pilots. Switzerland will hold a referendum on the topic this year. I would recommend looking at Finland as it's truest to the principle of UBI.
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    (Original post by Davij038)
    Somehow I doubt that would work out well

    Uh excuse me. He solved boom and bust, guy's a national hero.
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    (Original post by BaronK)
    Uh excuse me. He solved boom and bust, guy's a national hero.
    Not a fan of Brown and Blair but New Labour's economic policies were just a continuation of Margaret Thatcher's policies. Basically, using deficit financing to run a neo-liberal economy (I'm simplifying it obvs). The deficit was acceptable in those days because this was the most popular economic theory of the day and it had worked until then. Obviously, Brown wanted some political credit so he went about bragging but many economists thought that we had indeed reduced the peaks and troughs of the business cycle. Ending Boom and Bust was an oversimplification meant for the masses.

    Also, the bank bailouts increased the deficit massively but the people seem to have forgotten that which is quite extraordinary. Besides, Osbourne may be worse and more incompetent.
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    (Original post by picklescamp)
    the structure of benefits but also who would get them. So people earning below a certain amount would be able to live more comfortably, and obviously some people living off benefits may get less. Everyone basically gets the same amount each week, regardless of personal circumstances.
    Yes, perfect. Let's make sure elderly and disabled people don't get enough help. Let's make sure kids in single parent households suffer. £100 is nothing.

    I've been thinking and I actually do think that it would work better if everyone were to get it, even the super-rich. They go into that a bit too in the article. It's interesting and eradicates the problem you were talking about with regards to who would get it
    Except that would bankrupt us. And cause inflation which would render the amount pointless and still leave those people worse off.
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    (Original post by Drewski)
    Yes, perfect. Let's make sure elderly and disabled people don't get enough help. Let's make sure kids in single parent households suffer. £100 is nothing.



    Except that would bankrupt us. And cause inflation which would render the amount pointless and still leave those people worse off.
    Inflation is going to be fought though, primarily through the raising of interest rates and the multiplier effect would raise output, so real GDP would rise. Inflation would only ruin us if there was no regulation. Besides our GDP growth rate is pathetic right now and has been for years so Inflation would not be a concern right now and will actually help to meet the BofE's target. I suspect that Universal Basic Income would mean that other benefits would be cut/reduced.
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    (Original post by NabeelS)
    Inflation is going to be fought though, primarily through the raising of interest rates and the multiplier effect would raise output, so real GDP would rise. Inflation would only ruin us if there was no regulation. Besides our GDP growth rate is pathetic right now and has been for years so Inflation would not be a concern right now and will actually help to meet the BofE's target. I suspect that Universal Basic Income would mean that other benefits would be cut/reduced.
    Can you put this in Layman's terms please.
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    (Original post by BaronK)
    Can you put this in Layman's terms please.
    Umm, The Bank of England would try to curb inflation by increasing the benchmark interest rate. So it would become costly (opportunity cost of holding cash is high) to hold money and people would seek out interest generating products (deposits, ISA's, bonds etc.). This would mean that there is less money floating around and inflation would be reduced because now people hold less money.

    Since the economy is in the shits right now and has been for a while, it would be a very good thing to just hand people £100 pounds to spend, this would simulate the economy and increase output/real GDP. Our inflation rate is 0.5% right now, well below the target rate of 2%. So, short term inflation would be a very useful thing to have right now as this would indicate a growing economy. When we reach the target and approach 3%+ inflation then the Bank of England would raise interest rates to cut the money supply and reduce inflation.
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    i'd like a free £100 a week currently earning 7-8x that but going back to uni in a few months with no grants =(.
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    Could we do this and hence abolish "benefits" and theoretically save on the bureaucracy and administration costs.
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    (Original post by Xelfrost)
    Normally I'd disregard this kind of thing as lefties being lefties
    http://con4lib.com/policy-proposal-u...-basic-income/

    http://www.adamsmith.org/blog/welfar...a-basic-income
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    (Original post by NabeelS)
    Umm, The Bank of England would try to curb inflation by increasing the benchmark interest rate. So it would become costly (opportunity cost of holding cash is high) to hold money and people would seek out interest generating products (deposits, ISA's, bonds etc.). This would mean that there is less money floating around and inflation would be reduced because now people hold less money.

    Since the economy is in the shits right now and has been for a while, it would be a very good thing to just hand people £100 pounds to spend, this would simulate the economy and increase output/real GDP. Our inflation rate is 0.5% right now, well below the target rate of 2%. So, short term inflation would be a very useful thing to have right now as this would indicate a growing economy. When we reach the target and approach 3%+ inflation then the Bank of England would raise interest rates to cut the money supply and reduce inflation.
    Well then explain why we're not just handing out "£100 pounds" to everyone to spend?
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    (Original post by That Bearded Man)
    Could we do this and hence abolish "benefits" and theoretically save on the bureaucracy and administration costs.
    Yeah, pretty much
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    (Original post by BaronK)
    Well then explain why we're not just handing out "£100 pounds" to everyone to spend?
    Because 'it would never get through parliament' perhaps
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    (Original post by BaronK)
    Well then explain why we're not just handing out "£100 pounds" to everyone to spend?
    It's obviously the political aspect of it. I don't know how a politician would be able to explain that every citizen, no matter how lazy/incompetent should get £100 for doing nothing because it benefits the economy and the vast majority of the society. A lot of people simply don't understand that it is far cheaper to give everyone £100 then have them not contribute to the exchequer and/or have problems that burden the rest of us when they fall ill or are unemployed etc.

    The conservative in power right now would probably be against it on idealogical grounds so this won't happen on their watch unless their is solid evidence to suggest the Universal Income is the best option and they ditch their idealogical hangups.

    I should say that we did hand out a huge load of money to the failed banks during Quantitative Easing in the hopes that this would simulate the economy but all that did was create a massive asset bubble that will collapse sometime soon. But God forbid that we give money to the normal public who might spend the money in more beneficial terms for the local economy.
 
 
 
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