Question: Who pays for all that free stuff that
people get?
Answer: You are probably referring to the line "necessities are free to all,
as needed" that is part of the ten principles of the new money. But you
should remember that not only necessities are given but also capital goods
and services. The only things that this new money can buy are goods and services
designated as "luxuries." That means that everything else from timber
and ores through trucks and hammers to bobby pins and broadcast towers are
not paid for at all. So there is really a lot more to be explained than just
who is paying for that hamburger than Joe is eating.
The first and most obvious
answer is that the Payers are
paying for all that stuff.
They even are paying for the
luxury goods and services.
But that is just a surface
answer and is not really addressing
the underlying question. Why
should anyone give property
to someone else without getting
money in return from that person?
We are so used to two-party
interactions when we think
of money that it is difficult
to think of any other kind
of economic activity. But this
new money uses three-party
interactions. Yes, when property
owner Oscar gives an item
of property to someone else
there is a third party involved
in the payer: Pat. If Roger,
the receiver of that property,
benefits from having that property
or if Roger does something
with that property which benefits
others, then Pat increases
the amount of money in Oscar's
account. This means that Oscar
is giving his property to Roger
in the expectation that he
(Oscar) will get money as a
consequence of that action.
For Oscar this is exactly
the same situation as when
today he sells something to
someone else. He gives up some
item of property (or provides
some service) and gets money
in return. The difference for
Oscar is that the money is
not coming from the person
to whom he gave the property
or service but from a payer.
For Roger this is like getting
something for nothing. But
if he wants to keep on getting
things for nothing he must
either benefit from the property
himself or see to it that others
benefit (and thus earn Roger
money as well) or he may not
get any more property for nothing.
For Pat, this is like shopping
for the best deal. Pat is in
this free market to buy the
most net benefits he can. He
wants to have people who have
goods or services to offer
(producers) provide the
most good consequences they
can so
Pat tries to pay all the Oscars
fairly. If Pat pays
too much, Oscar uses his resources
unwisely by producing too much
of some good or service. If
Pat pays too little, Oscar
produces too little. So Pat
must pay enough to keep Oscar
producing at just the right
rate. (That is a lot easier
than it sounds, as it turns
out.)
But does Pat have an unlimited
supply of money to use? No.
The supply of money is equivalent
to the supply of goods and
services for sale. As more
luxury goods and services are
produced, the supply of money
increases. As luxury goods
and services are bought, the
supply of money decreases.
Therefore, the supply of money
the Payers (millions of Pat's)
can deposit in accounts corresponds
to the increase in luxuries
available.
The payer organization has
no incentive to pay less than
the total supply of luxuries.
That would not make people
happy. They also have no incentive
to pay more than the supply
of luxuries. That would make
people mad. Since the Payers
can't have either the money
or the luxuries, they don't
have a motive to keep them
for themselves.
So who is paying? Well, everyone
and no one. It doesn't cost
the Payers anything to pay
and it doesn't cost any producer
for some other producer to
be paid. The situation is not
a zero-sum game.
All benefit and all lose together.
If Oscar
is getting rich it is because
lots of other people are benefiting
from Oscar's actions. If Oscar
fails, then everyone is the
poorer. If we are considering
necessities, there are enough
for everyone and more besides.
It doesn't deny me food for
someone else to eat. Necessities
are not scarce in an industrial
economy unless people stop
working. Besides, what business
is it of mine what someone
else chooses to do with their
property? If we are considering
capital goods, what right do
I have to tell someone else
what to do with their property?
I presume that the capital
owners want to make as much
money as they can so that others
will cooperate with them in
the future. That means that
they will give capital to me
if I can show that I will use
it well. They have no motive
to have the capital sit idle.
When it comes to luxury items,
I can buy whatever I can afford
if the owner chooses to sell
to me. The owner will be
compensated by the Payers,
not by my money
since that ceases to exist
when spent. Therefore,
luxury owners who choose to
sell don't
really care what the price
is. They get paid for their
service to me as a buyer. They
are on my side.
So it really doesn't matter
who pays for all that free
stuff. Even if you are a payer,
it won't cost you anything.
It's only money.
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