Free Money
December 6, 2023 1:26 AM Subscribe
What if the money you accumulated in life died with you? What if actuaries determined the amount of money people need to live a comfortable life, and earnings were capped there? What would a world look like in which the ardor of one’s work — not just luck and geography and privilege — determined a person’s wealth? from What If Money Expired? [Noema; ungated]
What would a world look like in which the ardor of one’s work — not just luck and geography and privilege — determined a person’s wealth?
The disabled, as well as other people shut out of work for whatever reason, will end up penniless.
Why hinge wealth on one specific attribute beyond "existing"?
posted by creatrixtiara at 4:01 AM on December 6, 2023 [46 favorites]
The disabled, as well as other people shut out of work for whatever reason, will end up penniless.
Why hinge wealth on one specific attribute beyond "existing"?
posted by creatrixtiara at 4:01 AM on December 6, 2023 [46 favorites]
What would a world look like in which the ardor of one’s work — not just luck and geography and privilege — determined a person’s wealth?
This is pretty much what we have now, with certain forms of labor being more highly valued than others, often radically and illogically so.
posted by Thorzdad at 4:17 AM on December 6, 2023 [4 favorites]
This is pretty much what we have now, with certain forms of labor being more highly valued than others, often radically and illogically so.
posted by Thorzdad at 4:17 AM on December 6, 2023 [4 favorites]
The immediate problem, which is mentioned in the article, is that the truly wealthy already don't use money to store wealth. The best option is something that will also gain you unearned income. So for a landlord, the asset itself appreciates in value as well as rental income, with stocks there's dividends etc. But even for just wealth stores, whether it's gold, fine art, land or whatever, the idea is that asset appreciation outpaces mere savings interest. More importantly, the real problem is this type of asset wealth is taxed at a much lower rate than cash income, so it is inevitable that those who already have the most will syphon off more wealth over time from everybody else.
So if the purpose is to increase circulation of money, by making it lose value over time, then it seems the same sort of idea as negative central bank interest rates. Which will absolutely fuel circulation of money, but will also fuel inflation - if people are too eager to spend (because money is a depreciating asset), then you can easily end up with too much money chasing too few goods, and prices go up. We've seen this the last couple of years in the UK where food price inflation has been around 20% (and up to 80% for some foods). A combination of Brexit, covid supply chain issues and energy cost spikes have meant shortages and big price hikes. Now, even though global food prices are now declining and have been for a while, food inflation is still significant and there is significant evidence of profiteering, also known as 'greedflation' - where prices have gone up further and faster than justifiable by supply costs, while companies recoup their profit margins that were hit by covid. Salaries of course have not risen anything like as fast in the same period, leading to a real crisis in the cost of living for millions of brits, because it's not like you can choose to just stop eating entirely, and energy costs have been similar.
So depreciating money seems like it would penalise small savers, those on low or no incomes would struggle even harder with price inflation, while those with large stores of asset wealth would if anything get richer as assets become even more valuable faster than income. So as a mechanism to boost circulation of money when the core problem is lack of confidence and investment, I guess maybe? But for actually addressing generational or circumstantial wealth inequality let's say I'm unconvinced.
A much better option of rebalancing inequality still seems to be wealth taxes. We try to fund the services we want primarily via taxing incomes; taxing stored wealth much more effectively (whether it's through estates taxes, reforms to capital gains, land tax, or straight up taxes on accumulated wealth) would be fairer, more efficient and free up vast sums just sitting there for more productive purposes (though obviously you need to account for those who are asset rich on paper but cannot liquidate it, e.g. home-owning pensioners). And then you could use that to e.g. fund UBI, and really help those who cannot work, or work in undervalued areas etc.
But given this would be against the interests of those who have the real wealth, much of the power, and very much want to keep their billions, I'm not going to hold my breath.
posted by Absolutely No You-Know-What at 5:15 AM on December 6, 2023 [13 favorites]
So if the purpose is to increase circulation of money, by making it lose value over time, then it seems the same sort of idea as negative central bank interest rates. Which will absolutely fuel circulation of money, but will also fuel inflation - if people are too eager to spend (because money is a depreciating asset), then you can easily end up with too much money chasing too few goods, and prices go up. We've seen this the last couple of years in the UK where food price inflation has been around 20% (and up to 80% for some foods). A combination of Brexit, covid supply chain issues and energy cost spikes have meant shortages and big price hikes. Now, even though global food prices are now declining and have been for a while, food inflation is still significant and there is significant evidence of profiteering, also known as 'greedflation' - where prices have gone up further and faster than justifiable by supply costs, while companies recoup their profit margins that were hit by covid. Salaries of course have not risen anything like as fast in the same period, leading to a real crisis in the cost of living for millions of brits, because it's not like you can choose to just stop eating entirely, and energy costs have been similar.
So depreciating money seems like it would penalise small savers, those on low or no incomes would struggle even harder with price inflation, while those with large stores of asset wealth would if anything get richer as assets become even more valuable faster than income. So as a mechanism to boost circulation of money when the core problem is lack of confidence and investment, I guess maybe? But for actually addressing generational or circumstantial wealth inequality let's say I'm unconvinced.
A much better option of rebalancing inequality still seems to be wealth taxes. We try to fund the services we want primarily via taxing incomes; taxing stored wealth much more effectively (whether it's through estates taxes, reforms to capital gains, land tax, or straight up taxes on accumulated wealth) would be fairer, more efficient and free up vast sums just sitting there for more productive purposes (though obviously you need to account for those who are asset rich on paper but cannot liquidate it, e.g. home-owning pensioners). And then you could use that to e.g. fund UBI, and really help those who cannot work, or work in undervalued areas etc.
But given this would be against the interests of those who have the real wealth, much of the power, and very much want to keep their billions, I'm not going to hold my breath.
posted by Absolutely No You-Know-What at 5:15 AM on December 6, 2023 [13 favorites]
> What If Money Expired?
Then the owners of real estate would return to their traditional roles as lords and masters of everybody else? People would hoard gold even worse than they already do?
Limitarianism of some kind is needed, but it has to involve actual redistribution of wealth, not just money.
posted by Aardvark Cheeselog at 5:34 AM on December 6, 2023 [9 favorites]
Then the owners of real estate would return to their traditional roles as lords and masters of everybody else? People would hoard gold even worse than they already do?
Limitarianism of some kind is needed, but it has to involve actual redistribution of wealth, not just money.
posted by Aardvark Cheeselog at 5:34 AM on December 6, 2023 [9 favorites]
The immediate problem, which is mentioned in the article, is that the truly wealthy already don't use money to store wealth
I'm not even that wealthy - just "comfortably middle class" without kids (yet) or parents who need support (also yet) and I don't have that much cash. I have a lot of stocks via 401K ("not money") and I have a house (not money). Similarly, my parents have a lot of stocks and bonds, and a house, and they're owed a pension from my Mom's past professional life in education. None of this is "money." And this has always been how the bulk of intergenerational wealth transfer happens - not simply with stacks of cash or numbers in a bank, but assets passed down. I don't mean "since Reagan," I mean, for pretty much all of human history. For most of that time "wealth" and "land" were almost synonymous; more recently shares of companies have entered the picture, and other assets have become more significant. But wealth has never mostly meant currency, virtual or printed.
Now, I can look at this one of two ways:
* It would be impossibly hard to ever pin down money in a way that could make it actually expire. This is all a complete waste of time. It's trivial to come up with ways to 'cheat' a system like this - you can buy Things that you expect to hold value (hilariously, gold comes to mind if you're in a hurry) and pass those down to your kids. Or, if you're a little wealthier/savvier, you do things like buying businesses and putting those in a trust or holding company that you own but also your kids do, and you leave them your shares. All of this, of course, is stuff people do today, trivially. This is a fool's errand and a waste of time to even discuss beyond disproving.
* This is a really good jumping off point for a larger discussion about how some people leave money to their children that is truly valuable for living a complete life - I live in a house I couldn't have ever afforded to buy because of money from a more-wealthy grandparent who died and left it to my wife... and some people leave money to their children that enables to them to be extra-super-rich. And now we're "just" back where we all started, knowing that it's toxic and bad for society for the wealthy to not just be wealthy but to enable their children (who didn't even "earn" the wealth as "legitimately" as their parents did) to be super-wealthy and therefore powerful. We'd need some kind of extremely aggressive system of that wealth getting yanked, violently (and I do mean violently, they can hire guards) from the rich. We'd need to truly redistribute all the wealth. And if we can do that at death, we can do it while they're living. And if we agree to do it at all, why not do it all the time?
And in the second case, well, we've just re-invented socialism. I'm all for it. But "expiring money" is a regressive concept that would do real damage to the modest inheritance of a working-class family and have almost zero impact on the intergenerational wealth transfer of the even modestly wealthy, who have almost no money day to day.
posted by Tomorrowful at 5:40 AM on December 6, 2023 [14 favorites]
I'm not even that wealthy - just "comfortably middle class" without kids (yet) or parents who need support (also yet) and I don't have that much cash. I have a lot of stocks via 401K ("not money") and I have a house (not money). Similarly, my parents have a lot of stocks and bonds, and a house, and they're owed a pension from my Mom's past professional life in education. None of this is "money." And this has always been how the bulk of intergenerational wealth transfer happens - not simply with stacks of cash or numbers in a bank, but assets passed down. I don't mean "since Reagan," I mean, for pretty much all of human history. For most of that time "wealth" and "land" were almost synonymous; more recently shares of companies have entered the picture, and other assets have become more significant. But wealth has never mostly meant currency, virtual or printed.
Now, I can look at this one of two ways:
* It would be impossibly hard to ever pin down money in a way that could make it actually expire. This is all a complete waste of time. It's trivial to come up with ways to 'cheat' a system like this - you can buy Things that you expect to hold value (hilariously, gold comes to mind if you're in a hurry) and pass those down to your kids. Or, if you're a little wealthier/savvier, you do things like buying businesses and putting those in a trust or holding company that you own but also your kids do, and you leave them your shares. All of this, of course, is stuff people do today, trivially. This is a fool's errand and a waste of time to even discuss beyond disproving.
* This is a really good jumping off point for a larger discussion about how some people leave money to their children that is truly valuable for living a complete life - I live in a house I couldn't have ever afforded to buy because of money from a more-wealthy grandparent who died and left it to my wife... and some people leave money to their children that enables to them to be extra-super-rich. And now we're "just" back where we all started, knowing that it's toxic and bad for society for the wealthy to not just be wealthy but to enable their children (who didn't even "earn" the wealth as "legitimately" as their parents did) to be super-wealthy and therefore powerful. We'd need some kind of extremely aggressive system of that wealth getting yanked, violently (and I do mean violently, they can hire guards) from the rich. We'd need to truly redistribute all the wealth. And if we can do that at death, we can do it while they're living. And if we agree to do it at all, why not do it all the time?
And in the second case, well, we've just re-invented socialism. I'm all for it. But "expiring money" is a regressive concept that would do real damage to the modest inheritance of a working-class family and have almost zero impact on the intergenerational wealth transfer of the even modestly wealthy, who have almost no money day to day.
posted by Tomorrowful at 5:40 AM on December 6, 2023 [14 favorites]
Making wealth have a half-life seems like it would increase the velocity of consumption.
I've been moneyed and poor ass. As a poor ass I would always spend my money on what felt like durable goods because when I am poor and weak people take money from me for things I don't want. Taxes. Fees. Fines. Health care. So I buy shit because it makes the money feel like it becomes mine.
When I have money I rarely act like that. I feel like I need more money and save and crimp and wear old tshirts and patch my jeans and stay home.
I think that if wealth or money expired it would make me feel and act more like former situation not the latter.
posted by MonsieurPEB at 6:10 AM on December 6, 2023 [3 favorites]
I've been moneyed and poor ass. As a poor ass I would always spend my money on what felt like durable goods because when I am poor and weak people take money from me for things I don't want. Taxes. Fees. Fines. Health care. So I buy shit because it makes the money feel like it becomes mine.
When I have money I rarely act like that. I feel like I need more money and save and crimp and wear old tshirts and patch my jeans and stay home.
I think that if wealth or money expired it would make me feel and act more like former situation not the latter.
posted by MonsieurPEB at 6:10 AM on December 6, 2023 [3 favorites]
Money does expire. That's what inflation is.
posted by flabdablet at 6:11 AM on December 6, 2023 [15 favorites]
posted by flabdablet at 6:11 AM on December 6, 2023 [15 favorites]
Only if my labor expires.
posted by 3.2.3 at 6:13 AM on December 6, 2023 [1 favorite]
posted by 3.2.3 at 6:13 AM on December 6, 2023 [1 favorite]
It would be impossibly hard to ever pin down money in a way that could make it actually expire.
I don't think it would actually be all that tough. We already have the concept of an inheritance tax; bump it to 100%, get rid of all deductions, and require next-of-kin to pay the same rate on the assessed value of all non-liquid assets. There'd still be ways to evade it, I'm sure, but it's not like that isn't already a cottage industry for wealth managers trying to elude the tax man.
The fact that we're treating a fairly simple policy decision as some sort of radical reimagining of the underpinnings of capitalism and the social fabric is both amusing and slightly alarming.
posted by Mayor West at 6:15 AM on December 6, 2023 [3 favorites]
I don't think it would actually be all that tough. We already have the concept of an inheritance tax; bump it to 100%, get rid of all deductions, and require next-of-kin to pay the same rate on the assessed value of all non-liquid assets. There'd still be ways to evade it, I'm sure, but it's not like that isn't already a cottage industry for wealth managers trying to elude the tax man.
The fact that we're treating a fairly simple policy decision as some sort of radical reimagining of the underpinnings of capitalism and the social fabric is both amusing and slightly alarming.
posted by Mayor West at 6:15 AM on December 6, 2023 [3 favorites]
Money does expire. That's what inflation is.
Yeah, the slogan is catchy but there's not a lot in here that makes sense if you understand what money is or how it works.
posted by mhoye at 6:49 AM on December 6, 2023 [4 favorites]
Yeah, the slogan is catchy but there's not a lot in here that makes sense if you understand what money is or how it works.
posted by mhoye at 6:49 AM on December 6, 2023 [4 favorites]
Money does expire. That's what inflation is.
posted by flabdablet at 6:11 AM on December 6
I kept waiting for the section that explained how the idea of a currency that loses value over time was different from inflation, in which a currency loses value over time.
I came away thinking the basic idea that money losing value slowly is good for the economy is sound, but rather than being revolutionary or even novel, it's an idea that's pretty universally accepted in economic circles, outside of gold standard/crypto enthusiasts.
posted by Pemdas at 6:58 AM on December 6, 2023 [3 favorites]
posted by flabdablet at 6:11 AM on December 6
I kept waiting for the section that explained how the idea of a currency that loses value over time was different from inflation, in which a currency loses value over time.
I came away thinking the basic idea that money losing value slowly is good for the economy is sound, but rather than being revolutionary or even novel, it's an idea that's pretty universally accepted in economic circles, outside of gold standard/crypto enthusiasts.
posted by Pemdas at 6:58 AM on December 6, 2023 [3 favorites]
I don't think it would actually be all that tough.
It would require the cooperation of every single nation on Earth, in ways that make the UN look comically easy. It would also require the destruction or total realignment of every conservative political party on Earth.
...so, yeah, go ahead. I'll wait.
In the meantime, let's see if you can also manage to solve a much easier problem, as something of a test run: redistribute Scottish land. More than half of rural Scotland is owned by only 432 people (amusingly, the government isn't even entirely sure of this), and plenty of people already want to redistribute it more equitably. 750,000 acres are owned in overseas tax havens!
So, try to fix that first, and only THEN will I ask you to destroy the South Dakota Trust system. Offshore banking, well, that'll come later.
posted by aramaic at 7:04 AM on December 6, 2023 [5 favorites]
It would require the cooperation of every single nation on Earth, in ways that make the UN look comically easy. It would also require the destruction or total realignment of every conservative political party on Earth.
...so, yeah, go ahead. I'll wait.
In the meantime, let's see if you can also manage to solve a much easier problem, as something of a test run: redistribute Scottish land. More than half of rural Scotland is owned by only 432 people (amusingly, the government isn't even entirely sure of this), and plenty of people already want to redistribute it more equitably. 750,000 acres are owned in overseas tax havens!
So, try to fix that first, and only THEN will I ask you to destroy the South Dakota Trust system. Offshore banking, well, that'll come later.
posted by aramaic at 7:04 AM on December 6, 2023 [5 favorites]
I like that some people think that they know money better than others when really it is about access to the tools of the elite and bourgeoisie that surround their captured wealth.
posted by MonsieurPEB at 7:14 AM on December 6, 2023 [4 favorites]
posted by MonsieurPEB at 7:14 AM on December 6, 2023 [4 favorites]
Money is an IOU. Inflation continuously tears up a bunch of these notes. We bitch about inflation while secretly adoring unfettered capitalism. The few constraints we put on capitalism are designed to promote further opportunities for capitalist endeavors. Our industries require constant expansion, meaning increasing consumption. This scheme requires the middle classes to gain more and more wheeborrows of money, yet they stagnate economically. The very wealthy get a larger share of the wealth every time inflation evaluates the dollar. So the rich get richer, the middle class stagnates.
The poor get poorer even if they can afford to buy cigarettes and cell phones because essential services like medical care and education become increasingly harder for them to purchase. A medium-priced auto nowadays costs five times what my sister paid for a tract home in a subdivision in 1958. A similar house today costs 30 times what she paid then.
Why should we not try to give our children a better shot at life than we were afforded? Coming from a culture of very poor folks, I am much better off than even my older brothers and sisters, but then I am a cultural fluke because my medical and pension was earned by getting fucked up while I was in the military. If I had merely retired after 20 years, I would enjoy about 70% of the benefits I now enjoy.
Many of my nephews and nieces are still stuck in various rungs of the many echelons of poor people. Although none of them followed in my and my parent's footsteps as migratory field workers, they struggle with dual incomes needed to make ends meet. Their healthcare needs are still problematic, and their children probably will never see the inside of a university campus.
I would love to see a system that would more equitably let people lead lives that afforded all a guarantee of a life free from deprivation. But what does that look like? The UBI seems like a good idea. But how is that even possible when our "market economy" is weighted to constantly devalue its basic tool: the dollar? Privatization of medical care is a major flaw for several reasons; one of them ie that we must then provide low-cost care by way of insurance and tax-funded medical care for those who can't afford a medical plan. The former creates yet another level of cash flow, while the latter must always be underfunded. Privatizing prisons is yet another layer of cash flow that has a negative effect by legitimatizing the warehousing of souls.
If you take away my ability to pass on my few assets and savings to my son, then you ought to take away the assets and savings of everybody. Is that even a good idea? If you divert money to provide a UBI to everybody, you must get that money from taxes. Good idea, except for the built-in necessity for a constantly expanding economy to keep the ship of state afloat, what with having to fund our infrastructure (roads and bridge and public schools), and the black box funding necessary to keep our military fit to meet all those existential threats that seem to keep popping up.
I can't imagine a version of capitalism that can do any of this.
posted by mule98J at 7:25 AM on December 6, 2023 [4 favorites]
The poor get poorer even if they can afford to buy cigarettes and cell phones because essential services like medical care and education become increasingly harder for them to purchase. A medium-priced auto nowadays costs five times what my sister paid for a tract home in a subdivision in 1958. A similar house today costs 30 times what she paid then.
Why should we not try to give our children a better shot at life than we were afforded? Coming from a culture of very poor folks, I am much better off than even my older brothers and sisters, but then I am a cultural fluke because my medical and pension was earned by getting fucked up while I was in the military. If I had merely retired after 20 years, I would enjoy about 70% of the benefits I now enjoy.
Many of my nephews and nieces are still stuck in various rungs of the many echelons of poor people. Although none of them followed in my and my parent's footsteps as migratory field workers, they struggle with dual incomes needed to make ends meet. Their healthcare needs are still problematic, and their children probably will never see the inside of a university campus.
I would love to see a system that would more equitably let people lead lives that afforded all a guarantee of a life free from deprivation. But what does that look like? The UBI seems like a good idea. But how is that even possible when our "market economy" is weighted to constantly devalue its basic tool: the dollar? Privatization of medical care is a major flaw for several reasons; one of them ie that we must then provide low-cost care by way of insurance and tax-funded medical care for those who can't afford a medical plan. The former creates yet another level of cash flow, while the latter must always be underfunded. Privatizing prisons is yet another layer of cash flow that has a negative effect by legitimatizing the warehousing of souls.
If you take away my ability to pass on my few assets and savings to my son, then you ought to take away the assets and savings of everybody. Is that even a good idea? If you divert money to provide a UBI to everybody, you must get that money from taxes. Good idea, except for the built-in necessity for a constantly expanding economy to keep the ship of state afloat, what with having to fund our infrastructure (roads and bridge and public schools), and the black box funding necessary to keep our military fit to meet all those existential threats that seem to keep popping up.
I can't imagine a version of capitalism that can do any of this.
posted by mule98J at 7:25 AM on December 6, 2023 [4 favorites]
Before money, people relied on bartering
No they didn't.
posted by asnider at 7:45 AM on December 6, 2023 [4 favorites]
No they didn't.
posted by asnider at 7:45 AM on December 6, 2023 [4 favorites]
The immediate problem, which is mentioned in the article, is that the truly wealthy already don't use money to store wealth
All the things people are describing as 'not money' have been considered money for literally thousands of years. Property, bank accounts, = these are all 'money'.
Money does expire. That's what inflation is.
Not really. Inflation is not a linear direct line (generally) upwards, and not all products get more expensive due to inflation, and inflation is not felt equally across all locations or income quadrants.
posted by The_Vegetables at 7:45 AM on December 6, 2023 [2 favorites]
All the things people are describing as 'not money' have been considered money for literally thousands of years. Property, bank accounts, = these are all 'money'.
Money does expire. That's what inflation is.
Not really. Inflation is not a linear direct line (generally) upwards, and not all products get more expensive due to inflation, and inflation is not felt equally across all locations or income quadrants.
posted by The_Vegetables at 7:45 AM on December 6, 2023 [2 favorites]
Not only that, hedonic adjustments (like mule98J) is talking about mean the value of money is not consistent across time ie: in many ways you have a better life than J Edgar Rockefeller even though he had enough money 100+ years ago to be considered wealthy today, even discounting inflation.
posted by The_Vegetables at 7:48 AM on December 6, 2023 [1 favorite]
posted by The_Vegetables at 7:48 AM on December 6, 2023 [1 favorite]
I have long supported a relatively low upper limit on inheritable wealth of any sort. A limit of maybe somewhere around median home price, for example; 100% inheritance tax on all assets beyond that.
posted by eviemath at 7:49 AM on December 6, 2023 [2 favorites]
posted by eviemath at 7:49 AM on December 6, 2023 [2 favorites]
the basic idea that money losing value slowly is good for the economy is sound
It's certainly good for the asset-owning classes, especially when those assets are debt-financed.
If you take away my ability to pass on my few assets and savings to my son, then you ought to take away the assets and savings of everybody. Is that even a good idea?
Seems to me that we ought to tax assets on a progressive basis with a tax-free threshold, in much the same way we currently do for incomes, and that such a tax should be phased in over time and eventually replace income taxes entirely. The amount you pay the State to protect your interests should depend on how big the interests you expect it to protect are, not how much work you do or how good you are at it.
I've argued elsewhere that such a policy could be used to counteract the otherwise inevitable tendency of wealth to concentrate in fewer and fewer hands over time, a tendency that clearly works to civilization's detriment. The only serious rebuttal I've ever seen to that idea makes the point that sometimes extreme concentrations of wealth are required to facilitate necessary innovation, but I'm sure it would not be beyond the wit of tax code policy experts to account for those cases should the overall tax environment ever shift to an extent that makes it necessary to do so.
posted by flabdablet at 7:58 AM on December 6, 2023 [2 favorites]
It's certainly good for the asset-owning classes, especially when those assets are debt-financed.
If you take away my ability to pass on my few assets and savings to my son, then you ought to take away the assets and savings of everybody. Is that even a good idea?
Seems to me that we ought to tax assets on a progressive basis with a tax-free threshold, in much the same way we currently do for incomes, and that such a tax should be phased in over time and eventually replace income taxes entirely. The amount you pay the State to protect your interests should depend on how big the interests you expect it to protect are, not how much work you do or how good you are at it.
I've argued elsewhere that such a policy could be used to counteract the otherwise inevitable tendency of wealth to concentrate in fewer and fewer hands over time, a tendency that clearly works to civilization's detriment. The only serious rebuttal I've ever seen to that idea makes the point that sometimes extreme concentrations of wealth are required to facilitate necessary innovation, but I'm sure it would not be beyond the wit of tax code policy experts to account for those cases should the overall tax environment ever shift to an extent that makes it necessary to do so.
posted by flabdablet at 7:58 AM on December 6, 2023 [2 favorites]
This system would work the opposite way ours does today, where money held over time increases in value as it gathers interest.
Does it work the opposite way, though? Someone hiding a $100 bill under their mattress is not gaining interest. Due to inflation, the value of their money is decreasing, in much the same way as the $100 that requires a $0.10 stamp each week to retain its value. At the end of the year the person keeping the Freigeld under their mattress will have paid $5.20 to retain the value, making that $100 bill have only $94.80 worth of purchasing power (sort of...it can still buy $100 worth of goods, but those goods will have essentially cost the mattress owner $105.20). Similarly, once that money has changed hands at the end of the year and has collected its full roster of stamps, it's useless, right? So who would accept it? Does it not, in effective, has $0.00 worth of purchasing power at that point?
Money doesn't inherently gain interest. It only gains interest if it's invested in something. Does the free money scheme actually negate this or does it just mean money loses value for average workers, much as it does today? Moreover, does it prevent said workers from accumulating wealth over time so that they can, for example, retire one day?
Unless we're talking about completely doing away with capitalism, I don't really see how this idea is revolutionary or even too different from what we've got today.
I'm not an economist, so maybe there is something I am missing, but it seems not as magical as the article makes it sounds.
Also, seeing Proudhon described as an economist instead of an anarchist is fun.
posted by asnider at 8:05 AM on December 6, 2023 [3 favorites]
Does it work the opposite way, though? Someone hiding a $100 bill under their mattress is not gaining interest. Due to inflation, the value of their money is decreasing, in much the same way as the $100 that requires a $0.10 stamp each week to retain its value. At the end of the year the person keeping the Freigeld under their mattress will have paid $5.20 to retain the value, making that $100 bill have only $94.80 worth of purchasing power (sort of...it can still buy $100 worth of goods, but those goods will have essentially cost the mattress owner $105.20). Similarly, once that money has changed hands at the end of the year and has collected its full roster of stamps, it's useless, right? So who would accept it? Does it not, in effective, has $0.00 worth of purchasing power at that point?
Money doesn't inherently gain interest. It only gains interest if it's invested in something. Does the free money scheme actually negate this or does it just mean money loses value for average workers, much as it does today? Moreover, does it prevent said workers from accumulating wealth over time so that they can, for example, retire one day?
Unless we're talking about completely doing away with capitalism, I don't really see how this idea is revolutionary or even too different from what we've got today.
I'm not an economist, so maybe there is something I am missing, but it seems not as magical as the article makes it sounds.
Also, seeing Proudhon described as an economist instead of an anarchist is fun.
posted by asnider at 8:05 AM on December 6, 2023 [3 favorites]
So who would accept it? Does it not, in effect, have $0.00 worth of purchasing power at that point?
And further, to respond to my own comment, I know that the money is supposed to expire. That's part of the point. But once it is near or at the end of its life cycle, who is going to accept that money as payment? If it's got 9 stamps on it already, I don't want to be the guy caught holding it in another month.
Obviously, experiments of this nature were tried during the Great Depression, but they seem to have worked -- in part -- due to the fact that, as the article says, "Some money is better than no money." And, yes, the money changed hands far more frequently and stimulated the economy quite a bit. But, again, once that money is close to expiration what happens? I'm pretty risk averse so I'd be reluctant to get paid in money that might be worthless by the time I'm able to spend it (or which might not be accepted by someone else for the same reason).
So, again, without a fundamental overhaul of the economy to something that, while presumably still market-based, isn't modern capitalism, I don't see how this works in the long term.
posted by asnider at 8:31 AM on December 6, 2023 [1 favorite]
And further, to respond to my own comment, I know that the money is supposed to expire. That's part of the point. But once it is near or at the end of its life cycle, who is going to accept that money as payment? If it's got 9 stamps on it already, I don't want to be the guy caught holding it in another month.
Obviously, experiments of this nature were tried during the Great Depression, but they seem to have worked -- in part -- due to the fact that, as the article says, "Some money is better than no money." And, yes, the money changed hands far more frequently and stimulated the economy quite a bit. But, again, once that money is close to expiration what happens? I'm pretty risk averse so I'd be reluctant to get paid in money that might be worthless by the time I'm able to spend it (or which might not be accepted by someone else for the same reason).
So, again, without a fundamental overhaul of the economy to something that, while presumably still market-based, isn't modern capitalism, I don't see how this works in the long term.
posted by asnider at 8:31 AM on December 6, 2023 [1 favorite]
It's always fun to scheme, but no matter what scheme you come up with for redistributing wealth in your nation, people will find a way to shut you down or get around you.
posted by pracowity at 8:49 AM on December 6, 2023 [1 favorite]
posted by pracowity at 8:49 AM on December 6, 2023 [1 favorite]
What if in death we wore the chains we forged, link by link, in life?
posted by Horace Rumpole at 9:25 AM on December 6, 2023 [7 favorites]
posted by Horace Rumpole at 9:25 AM on December 6, 2023 [7 favorites]
It would require the cooperation of every single nation on Earth, in ways that make the UN look comically easy. It would also require the destruction or total realignment of every conservative political party on Earth.
I'm not arguing that there are any solutions that will instantly achieve 100% compliance. Clearly that's not going to happen, because rich people are bad actors with enough sway to stave off both legislative action and executive enforcement power. That doesn't mean we should throw up our hands and declare "oh well, we can't immediately do it perfectly, better just give up and return to our late-stage dystopian hellscape." Obviously the Waltons are going to find ways to shelter their wealth, regardless of how clever lawmakers are. But if there's a 100% inheritance tax on the books, folks are going to start looking strangely at the Walton's heirs in a few years when they strangely haven't lost any of their purchasing power. If you make it illegal to inherit wealth, then you're one step closer to making it immoral to be wealthy.
posted by Mayor West at 9:35 AM on December 6, 2023 [1 favorite]
I'm not arguing that there are any solutions that will instantly achieve 100% compliance. Clearly that's not going to happen, because rich people are bad actors with enough sway to stave off both legislative action and executive enforcement power. That doesn't mean we should throw up our hands and declare "oh well, we can't immediately do it perfectly, better just give up and return to our late-stage dystopian hellscape." Obviously the Waltons are going to find ways to shelter their wealth, regardless of how clever lawmakers are. But if there's a 100% inheritance tax on the books, folks are going to start looking strangely at the Walton's heirs in a few years when they strangely haven't lost any of their purchasing power. If you make it illegal to inherit wealth, then you're one step closer to making it immoral to be wealthy.
posted by Mayor West at 9:35 AM on December 6, 2023 [1 favorite]
I don't think it would actually be all that tough. We already have the concept of an inheritance tax; bump it to 100%, get rid of all deductions, and require next-of-kin to pay the same rate on the assessed value of all non-liquid assets.
Yeah, all you have to do is convince every single homeowner (19k houses will sell just today. A new homeowner or two likely got created as you read this sentence) in the US to vote to shoot themselves in their own dick. Better add in every single parent, homeowner or not, into that dick shooting category as well. By my rough calculations, only 100,000,000 Americans or so need to decide that giving every cent they have to the government instead of the people of their choice upon death is worth voting for. Not that tough at all.
posted by Back At It Again At Krispy Kreme at 11:10 AM on December 6, 2023 [3 favorites]
Yeah, all you have to do is convince every single homeowner (19k houses will sell just today. A new homeowner or two likely got created as you read this sentence) in the US to vote to shoot themselves in their own dick. Better add in every single parent, homeowner or not, into that dick shooting category as well. By my rough calculations, only 100,000,000 Americans or so need to decide that giving every cent they have to the government instead of the people of their choice upon death is worth voting for. Not that tough at all.
posted by Back At It Again At Krispy Kreme at 11:10 AM on December 6, 2023 [3 favorites]
why can't someone make a bitcoin that does THIS instead of pointless bad art of monkeys??
... What's the difference?
posted by pwnguin at 12:09 PM on December 6, 2023 [1 favorite]
... What's the difference?
posted by pwnguin at 12:09 PM on December 6, 2023 [1 favorite]
Total production is a function of labor inputs, capital inputs, and technology. If everything's consumed, there's no savings, and therefore you have less investment in capital and less future production. Metaphorically, you don't want to eat all your seed corn.
"In Gesell’s vision, banks would loan so freely that their interest rates would eventually fall to zero." Interest is an incentive to save: If interest were zero, there would be less savings and investment, which would reduce economic growth.
In a recession, there's a shortfall of demand, and you want people to spend more and save less. That's when we need a Keynesian stimulus of tax cuts and additional government spending. "Andolfatto recognized the potential value of an expiring money in times of crisis." [emphasis added] But typically, additional savings provides a net economic benefit.
"When small businesses take out loans from banks, they must pay the banks interest on those loans, which means they must raise prices or cut wages. Thus, interest is a private gain at a public cost." This is totally wrong: Businesses take out loans only when they think the benefits exceed the cost: That is, when the expected economic profits exceed the interest cost. For example, a manufacturer can take out a loan to buy a new machine that will allow them to cut prices and increase wages.
Economic inequality can be addressed much more directly through changes to taxes and spending programs.
posted by Mr.Know-it-some at 1:29 PM on December 6, 2023 [2 favorites]
"In Gesell’s vision, banks would loan so freely that their interest rates would eventually fall to zero." Interest is an incentive to save: If interest were zero, there would be less savings and investment, which would reduce economic growth.
In a recession, there's a shortfall of demand, and you want people to spend more and save less. That's when we need a Keynesian stimulus of tax cuts and additional government spending. "Andolfatto recognized the potential value of an expiring money in times of crisis." [emphasis added] But typically, additional savings provides a net economic benefit.
"When small businesses take out loans from banks, they must pay the banks interest on those loans, which means they must raise prices or cut wages. Thus, interest is a private gain at a public cost." This is totally wrong: Businesses take out loans only when they think the benefits exceed the cost: That is, when the expected economic profits exceed the interest cost. For example, a manufacturer can take out a loan to buy a new machine that will allow them to cut prices and increase wages.
Economic inequality can be addressed much more directly through changes to taxes and spending programs.
posted by Mr.Know-it-some at 1:29 PM on December 6, 2023 [2 favorites]
I often think that if I can leave my estate to my best friend so that she can take of her husband and kids, then I will have done at least one good thing with my life. And you would take this away from me?
posted by SPrintF at 1:42 PM on December 6, 2023 [3 favorites]
posted by SPrintF at 1:42 PM on December 6, 2023 [3 favorites]
Many people care about what happens to the world after they die. Taking measures to ensure that the welfare of one’s family and friends is attended to is a normal, natural, healthy, and socially productive urge. All of this is so obvious that it hardly seems worth saying, and yet the article seems to overlook it completely.
posted by PaulVario at 2:10 PM on December 6, 2023 [3 favorites]
posted by PaulVario at 2:10 PM on December 6, 2023 [3 favorites]
why can't someone make a bitcoin that does THIS instead of pointless bad art of monkeys
funny thing, this is a paradox at the heart of Bitcoin, it is designed deliberately to be deflationary, which makes it attractive to hold onto in hopes of getting rich but unattractive to exchange for goods
c.f. every early adopter who squandered a theoretical fortune on, like, a gram of MDMA from Silk Road (the only actually useful thing that could be done with Bitcoin at the time or maybe ever)
posted by atoxyl at 2:30 PM on December 6, 2023 [2 favorites]
funny thing, this is a paradox at the heart of Bitcoin, it is designed deliberately to be deflationary, which makes it attractive to hold onto in hopes of getting rich but unattractive to exchange for goods
c.f. every early adopter who squandered a theoretical fortune on, like, a gram of MDMA from Silk Road (the only actually useful thing that could be done with Bitcoin at the time or maybe ever)
posted by atoxyl at 2:30 PM on December 6, 2023 [2 favorites]
I often think that if I can leave my estate to my best friend so that she can take of her husband and kids, then I will have done at least one good thing with my life. And you would take this away from me?
Yes.
If you want to have done a good thing with your life, do it during your life.
posted by Rev. Irreverent Revenant at 2:49 PM on December 6, 2023 [7 favorites]
As many have already pointed out, money itself isn't the problem. Money technically doesn't expire, but it does lose value over time and the rich are perfectly aware of that so they don't hoard their wealth in bank accounts, they use it to buy things that increase in value over time. This adversely affects people in proportion to their wealth - people with less money can't afford to buy appreciating assets and the only way they can store money is as actual money (ie bank accounts) so, even if they don't spend it, it depreciates anyway. But they have to keep that money that steadily loses value to pay for necessary things like healthcare (which should be free), which steadily increase in price, multiplying their losses. People with wealth far in excess of what's needed to live comfortably and be safe are able to invest in things that not only appreciate in value, but can be used to take money from people that don't have it.
A perfect (ish) society would see every single person having the resources to live comfortably, keep themselves healthy and receive all the education they need, regardless of how society values their particular skillset. So, UBI and free healthcare and education are the minimum required to achieve that. The paradox is that the things that must be done to make an equitable society are the things that are anathema to those who have both power to change things and wealth they would lose by those changes. Without their support, no fundamental change can happen and, oh look, a flying pig!
posted by dg at 3:43 PM on December 6, 2023 [2 favorites]
A perfect (ish) society would see every single person having the resources to live comfortably, keep themselves healthy and receive all the education they need, regardless of how society values their particular skillset. So, UBI and free healthcare and education are the minimum required to achieve that. The paradox is that the things that must be done to make an equitable society are the things that are anathema to those who have both power to change things and wealth they would lose by those changes. Without their support, no fundamental change can happen and, oh look, a flying pig!
posted by dg at 3:43 PM on December 6, 2023 [2 favorites]
If you want to have done a good thing with your life, do it during your life.
Being a good person, my friend will not accept my estate while I'm alive. Also, while I'm alive, I need my house, which has value. I give to charities now, such as Oxfam and the local food bank, but giving everything away "during my life" means "ending my life." Is that what you recommend? If not, then your suggestion seems impractical.
posted by SPrintF at 4:55 PM on December 6, 2023 [1 favorite]
Being a good person, my friend will not accept my estate while I'm alive. Also, while I'm alive, I need my house, which has value. I give to charities now, such as Oxfam and the local food bank, but giving everything away "during my life" means "ending my life." Is that what you recommend? If not, then your suggestion seems impractical.
posted by SPrintF at 4:55 PM on December 6, 2023 [1 favorite]
People with wealth far in excess of what's needed to live comfortably and be safe are able to invest in things that not only appreciate in value, but can be used to take money from people that don't have it.
In a well-functioning economy, people forgo current consumption (saving), allowing investment toward future productivity (investment). They are rewarded with a share of the additional production that their savings helps create.
And with modern investment technology, virtually anyone can invest at very low cost (via Vanguard, Robinhood, etc.).
Now, there are many ways in which our economy fails. We need stronger regulations, labor protections, and social insurance, as well as higher, more progressive taxes. But we also need to encourage continued saving and investment.
posted by Mr.Know-it-some at 6:50 PM on December 6, 2023
In a well-functioning economy, people forgo current consumption (saving), allowing investment toward future productivity (investment). They are rewarded with a share of the additional production that their savings helps create.
And with modern investment technology, virtually anyone can invest at very low cost (via Vanguard, Robinhood, etc.).
Now, there are many ways in which our economy fails. We need stronger regulations, labor protections, and social insurance, as well as higher, more progressive taxes. But we also need to encourage continued saving and investment.
posted by Mr.Know-it-some at 6:50 PM on December 6, 2023
Many people care about what happens to the world after they die.
And there's absolutely no reason to think anyone's unilateral decisions about what happens to the world after they die will be good ones. Same is true while we're alive, too: wealth is collectively produced (including, importantly, through labour required to maintain conditions under which production can happen at all), but an inordinate amount is disposed of unilaterally, in a way that's manifestly not even compatible with maintaining stable conditions for future production. Underfunded education and healthcare, collapsing physical infrastructure, and very undertaxed rich people hoarding wealth they didn't produce in completely inefficient, unproductive ways or investing it in dumb fucking shit that's no good to anyone: talk about eating seed corn.
I want there to be robust physical and social infrastructure when I die. Everyone lucky enough to have some accumulated wealth upon their death hoarding it or unaccountably funding an unfocused chaotic ecosystem of charities is not going to make that happen. Civilisation is maintained via mass collective decision-making and some version consciously pooling resources to get important shit done.
Also your kids and my hypothetical kids don't deserve anything someone else's kids don't. I know that's a hard one for everybody but that's life. Most people's kids are better off if we're pooling the inheritance than if we're not, but it seems to be a struggle to maintain awareness of this fact, mostly because the exceptions to that rule are good at bullshitting and are loud.
posted by busted_crayons at 5:51 AM on December 7, 2023 [2 favorites]
"In Gesell’s vision, banks would loan so freely that their interest rates would eventually fall to zero." Interest is an incentive to save: If interest were zero, there would be less savings and investment, which would reduce economic growth.
This is also not completely correct - we have a real time example of interest rates even being negative in some places, not including inflation adjustments! Savings rates (the interest rate a person receives for their money) are regularly negative when including inflation rates.
People save when they have excess money, real interest rates don't really factor in. Also, again there are two sides to the economy - production and consumption, and increases in consumption due to lower interest rates can overwhelm production such that business investment grows even with low interest rates. In other words, the financing is a function of economy but it's not the only function.
posted by The_Vegetables at 8:34 AM on December 7, 2023
This is also not completely correct - we have a real time example of interest rates even being negative in some places, not including inflation adjustments! Savings rates (the interest rate a person receives for their money) are regularly negative when including inflation rates.
People save when they have excess money, real interest rates don't really factor in. Also, again there are two sides to the economy - production and consumption, and increases in consumption due to lower interest rates can overwhelm production such that business investment grows even with low interest rates. In other words, the financing is a function of economy but it's not the only function.
posted by The_Vegetables at 8:34 AM on December 7, 2023
High interest rates generally favor those with extreme excess savings already, so that "If interest were zero, there would be less savings and investment, which would reduce economic growth." is almost completely incorrect.
High interest rates also tamp down on innovation (which can be a good thing - Knight Rider joke: they spent $100m on a car but is it out there fighin' the commies? Hell no, we're helping people's whose horses have been poisoned) which damages the economy because a marginal investment has to return a higher rate of return than interest alone, which as rates get higher, is harder to do.
For example: if the profit margin for your average company is 8%, how much innovating do you think they are going to do at borrowing rates of 7% vs 3%? Less. The answer is less.
posted by The_Vegetables at 8:41 AM on December 7, 2023
High interest rates also tamp down on innovation (which can be a good thing - Knight Rider joke: they spent $100m on a car but is it out there fighin' the commies? Hell no, we're helping people's whose horses have been poisoned) which damages the economy because a marginal investment has to return a higher rate of return than interest alone, which as rates get higher, is harder to do.
For example: if the profit margin for your average company is 8%, how much innovating do you think they are going to do at borrowing rates of 7% vs 3%? Less. The answer is less.
posted by The_Vegetables at 8:41 AM on December 7, 2023
Absolutely true that we want to encourage investment, and that companies can invest more when interest rates are low. But "The interaction between the supply of savings and the demand for loans determines the real interest rate and how much is loaned out." So to encourage a low interest rate, we want to encourage savings. Restricting interest is a price control which would drive down savings, driving up the market rate for investment.
Also true that rich people benefit most from returns on investment, but you can target those returns through a progressive tax on capital. That will drive down savings to some extent - by more than liberals claim (that is, not zero effect) and less than conservatives do (it won't collapse the economy).
posted by Mr.Know-it-some at 10:53 AM on December 8, 2023
Also true that rich people benefit most from returns on investment, but you can target those returns through a progressive tax on capital. That will drive down savings to some extent - by more than liberals claim (that is, not zero effect) and less than conservatives do (it won't collapse the economy).
posted by Mr.Know-it-some at 10:53 AM on December 8, 2023
To be clear, I do not advocate SPrintF nor anyone else ending their lives in an effort to do "at least one good thing", which wording in their post suggested to me a prediction that they might not do any other good things. While that outcome seemed unlikely (and the followup shows that they are doing good things already), I wrote to encourage good-doing during life, while feedback is available and can be acted upon.
What I do advocate is what SPrintF claims already to be doing: good things (including charity donations) while still alive. They are more enjoyable that way :)
posted by Rev. Irreverent Revenant at 4:08 PM on December 8, 2023 [1 favorite]
What I do advocate is what SPrintF claims already to be doing: good things (including charity donations) while still alive. They are more enjoyable that way :)
posted by Rev. Irreverent Revenant at 4:08 PM on December 8, 2023 [1 favorite]
The good person gives away at death the things they hoarded in life.
Nah. This is too complicated. I gave money to my favorite political party, but I also occasionally buy a Happy Meal for that guy with Help Me sign who sits with desperate patience with his small dog near the entrance to the mall.
I never get tired of the irony, the ever-evolving sense of equity that makes sense for moments at a time before some complication slips in, and I rethink my priorities. My thoughts always come back to our fundamental and abiding belief in the Church of Ever-Expanding Capitalism. Please regard me as a firmly entrenched athiest.
posted by mule98J at 9:52 AM on December 9, 2023 [2 favorites]
Nah. This is too complicated. I gave money to my favorite political party, but I also occasionally buy a Happy Meal for that guy with Help Me sign who sits with desperate patience with his small dog near the entrance to the mall.
I never get tired of the irony, the ever-evolving sense of equity that makes sense for moments at a time before some complication slips in, and I rethink my priorities. My thoughts always come back to our fundamental and abiding belief in the Church of Ever-Expanding Capitalism. Please regard me as a firmly entrenched athiest.
posted by mule98J at 9:52 AM on December 9, 2023 [2 favorites]
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posted by dorothyisunderwood at 2:23 AM on December 6, 2023 [1 favorite]