Economy-wise, if you want money to circulate the best way to make it do that is to give it to poor people. That way the money gets spent. If you want money to be invested, you give it to Mustachians or to wealthier folks. If you want it to go overseas, you give it to the class of people who have offshore accounts.
I disagree. Yes, the poor will spend it, but they will spend it primarily on things like fast food, overpriced processed food, cheap Made in China products, etc. So the money will mostly be spent at big corporations and will be divided between the executives (the ones with offshore accounts) and the factory owners in the producing countries. All the while the government will come up with ways to extract more money from those who already pay taxes (such as Mustachians) in the name of spreading it around.
On addition to your thinly veiled disparaging of poor people, what exactly are you saying?
That cash transfers that favor the poor stimulate the economy more than giving more to the rich isn't really an opinion, it's a pretty established macroeconomic fact. Of course you run into issues of fairness, but it's no doubt that giving more to people who will spend it (and usually locally at that) is better at stimulating the broader economy than giving it to people who will pile it into equities (especially now with high valuations).
It's not disparaging to point out that the poor, in general, tend to spend their money in the way stated. The poor are not typically spending their money on locally crafted artisan goods or at the farmer's market. Sure some do, but that is the exception. Is this spending still good at a national/global macroeconomic level? Yes. Is it good for the environment or for the health of the poor? Probably not. Is it good for the local economy? I think that depends on the specifics - much of the revenue flowing into the big stores and franchises actually ends up at corporate headquarters.
I'm simply questioning the status quo and suggesting that giving out a bunch of money for people to spend may not be the healthiest thing. We should provide an essential level of minimum support for the poorest, but beyond that just giving away more to spend is like a sugar rush - it feels great in the moment but it's not a good long-term plan. I would rather have people saving and investing. Savings in bank accounts end up back in the economy as a result of fractional reserve banking. Investments in real estate, rentals, businesses, and stocks grow our local economy and create jobs. Even index fund investing means that people are pooling money in equities which increases liquidity and makes it possible to raise large amounts of new capital for startups.
Ah yes. Trickle down economics; working exactly as advertised since 1982..
What do you think is better: $1 being spent at Walmart which results in staff being hired and paid, sales taxes, business taxes to state and fed, property taxes etc.
Or $1 being put to Walmart stock. Which results in... 15% in dividend tax?
Which is better for Walmart?
Poor people buying food for their children is a "quick sugar rush"?
Depends on if you think buying food for their children is "essential".
Thanks for that.
Not that it really needs pointing out, but we have a massive obesity problem in the USA. A strong case can be made that sugary and processed foods play a large role in this. Walmart, Target and the other superstores do sell fresh wholesome foods but that's not how they make their profits and so they promote the processed stuff. It's certainly true that Americans don't buy enough wholesome foods and we overspend on unhealthy crap. In the news just this week -
http://www.latimes.com/science/sciencenow/la-sci-sn-ultra-processed-foods-diet-20160309-story.html Also, the poor have higher rates of obesity -
http://stateofobesity.org/socioeconomics-obesity/ - there are many reasons for this, but the way unhealthy food is pushed/promoted in the big chain stores and the prevalence of fast food in lower income neighborhoods are contributing factors.
Just to be super clear again: I have no issue with people buying healthy food or other essentials at the big chain stores, this is a good way to stretch a dollar. My family uses Costco for this, keeping to a strict shopping list of staple foods. But you don't have to look very hard to see that this is not the norm - Americans overspend on cheap and unhealthy foods and we overspend on cheap imported consumer goods - so satisfying in the moment, so disastrous in the long run - to our health, our environment, our finances. So to answer your question about the $1 spent: It ultimately depends on how it is spent and less on where. If we're talking about spending on wholesome food or other true essentials, that's great. Otherwise everyone would be better off if that $1 were invested instead.