I went to an economic forecast briefing yesterday and they speaker made a comment that later lead to a discussion with folks in my office. He said that the economic stimulus check did not do anything for the economy. A few minutes later he stated that it was important that employees receive payraise.
The discussion we had was that some folks in my office felt that it didn’t matter where the money came from and that a 600 Dollar economic stimulus packet had the same effect for people as a 600 Dollar payraise.
I had a really hard time explaining to them that it does make a difference as the economic stimulus packet is money the government created. Not only that, but it was already taken from them in the first place through taxes. So it’s really just money the government stole from them and is now giving back, whereas a payraise has nothing to do with the government.
How would you explain this?
I’d say what you said. And when confronted by the fact that even such plain talk was too much for the ossified, lard-clogged brains of American boobs to get, then I’d go out in the parking lot and shoot myself.
Seriously, every time some dolt talks about the latest scheme for rebates, special savings accounts, EIC’s, deductions, SEPs, 401k’s, IRA’s, ad infinitum, I want to scream, “Just cut marginal rates!” five times in their face.
I think your colleagues beleive that the payment is what it says it is: a stimulus. They think that had they not been taxed, that money would have been “saved” and all this bad saving would hurt the economy. The $600 is a lump sum likely to be spent in one go, and of course “consumption drives the economy”.
When the government steals money from one person and gives it to another person against their will, overall they is no net gain. Anyone who can’t see that is seriously deficient.
But to answer your question, a pay rise comes about as an increse in your productivity. You produce more wealth, and more people can enjoy the fruits of your labour. You too are duly compensated. Everyone wins [Y]
A government cheque is a result of Rent seeking. You get free money even though there is no increase in productivity or goods behind it. A smokescreen, if you will.
The government printed money creating inflation. Just tell them if everyone woke up tomorrow with twice the amount of money they had previously, things would cost two times as much due to inflation.
Plain and simple.
And then tell them that in the real world, some people get the new money before others do, and thus get to spend it before the prices change to adjust to it.