What happens if everyone stops spending?
The pandemic has shown how when uncertainty leads to mass “saving for a rainy day” ... many governments were left with no option but to invoke economic stimulus packages, giving people disposable income for no other reason than to spend it and have it influx back into the areas of need and maintain industry/ keep retail afloat.
The government and economics at large relies on the exchange of money. Transaction is what is tangible and taxable . It seems strange that non essential “spending” would ever have to be “funded”.
So it got me thinking. What would happen in an extreme and mass psychological/ behavioural shift where people only spend on the absolutely bare minimum to survive - only essentials like food and water and shelter when previously they bought mostly luxury goods, non essentials and technologies.
Or even more extreme a scenario... if the money spent directly made people more and more self sustaining - ie farming and growing a good portion of their own food in whatever household or local allotment they have, rigging up with their own renewable energy sources etc and living as off the grid as is possible in urbanised areas.
How would the economy change. If all money was spent solely on maintenance of fundamental human rights/ survival how would the government generate the same revenue that it does at the height of affluent capitalism?
The government and economics at large relies on the exchange of money. Transaction is what is tangible and taxable . It seems strange that non essential “spending” would ever have to be “funded”.
So it got me thinking. What would happen in an extreme and mass psychological/ behavioural shift where people only spend on the absolutely bare minimum to survive - only essentials like food and water and shelter when previously they bought mostly luxury goods, non essentials and technologies.
Or even more extreme a scenario... if the money spent directly made people more and more self sustaining - ie farming and growing a good portion of their own food in whatever household or local allotment they have, rigging up with their own renewable energy sources etc and living as off the grid as is possible in urbanised areas.
How would the economy change. If all money was spent solely on maintenance of fundamental human rights/ survival how would the government generate the same revenue that it does at the height of affluent capitalism?
Comments (10)
Now, there's the rub (from an old thread).
What money? What you can't grow you must mine. If nobody makes some kind of profit, there's nothing left for wages. No wages, no money. No money, you must barter your time, talents, and treasures.
The world would be saved. Nature could recover from the numerous stabs, injections, cuttings, damage, and torture for getting questions about her. She would get the rest she needed on her sick bed, which is almost made her death bed.
Is that what the pandemic has shown? It seems to me the motive for stimulus was not that people were saving too much, but that the pandemic disrupted employment for many people. It thus threatened their lives and well-being, and threatened to kick off a global economic crisis by putting a massive damper on demand.
Some people who received stimulus (what proportion of them?) remained employed and continued to earn income at or above prepandemic levels. Many of them enjoyed a boost in disposable income from the stimulus due to the way it was distributed.
Quoting Benj96That's how things happen to be. But it's nothing like a law of nature.
Quoting Benj96What does this mean? There are all sorts of tangible asset. "Cash, cash equivalents, marketable securities", and "real estate properties, manufacturing plants, manufacturing equipment, vehicles, office furniture, computers, and office supplies", for example.
I suppose any damn thing is taxable if you can generate the political will to tax it. Property tax, wealth tax, and estate tax jump to mind. I believe corvees and military conscription are also considered forms of taxation.
Quoting Benj96And yet so many rich assholes do everything they can to avoid paying their fair share of taxes, so they can save the wealth they steal from the commons and spend the rest on nonessentials. And our society is structured to nurture that monstrous greed.
Again, check your argument. It was disrupted income, not too much savings, that led to the stimulus. A good question is, why was the stimulus distributed so broadly, even to households that didn't need it, and even to people whose earnings hadn't been disrupted? I expect the urgency of the ongoing disruption of income made it prudent to cast a wider net, and thus avoid the logistical and political obstacles to designing a more fine-tuned stimulus.
Quoting Benj96
Great question. I'm not sure anyone really knows the answer. Perhaps it would help to continue roughing out the relevant range of scenarios. To that end, I might ask, why assume the government would need to "generate the same revenue" in such circumstances?
While we're cooking up pipe dreams, what about nationalizing large shares of core assets and industries to maintain a minimum standard of living suited to a technologically advanced democratic society?
What about joining together in that effort with all the people of Earth to responsibly manage our global resources as one integrated community, instead of remaining a community of dipshits dragged by warlords from one conflict to the next, wasting precious resources on "defense spending" and other forms of inessential and destructive "economic growth"?
Could it be your post is about anti-consumerism?
Possible effects if your scenario happened -- economy would shrink, ownership would decrease, perhaps anxiety and neuroticism would decrease, local cottage industries and barter would increase, pollution of all sorts might decrease, education about maintaining and keeping homestead or land productive would increase -- oh yeah, each family would need land in order to do this.
We should create a laundry list of what we would have in our possession in order to be self-sustaining members of society.
My standard - one Big Mac, one Quarter Pounder with Cheese, and large fries once a month. No drink.