Want to Help the Poor? Spend, Spend, Spend!

from JoeUser Forums

NOTE: This is a sort of sequel to my article on Christmas materialism. I'm hoping  to slowly help you, the reader, to understand the thought processes that were behind my transformation from hardcore socialist to Libertarian.

This is the time of the year when a lot of dicsussion centers on how to help the poor and needy in our community. The holiday season increases our awareness of their presence, and most of us, at the core, want to see the poor among us have a reasonable standard of living.

The best way to help the poor is to buy goods. It's as simple as that. You see, retailer X has a labor cost built into the budget. The more goods he sells, the more he has to spend on salary. He can either provide more jobs or provide better wages for the workers already in his employ. It's as simple as that.

Even big ticket items such as automobiles and SUV's help the poorest wage earners, even though the commissioned sales force that sells them could usually not be described as impoverished. You see, when Joe CEO buys a hummer, the salesman that sold it gets a commission. He takes that commission home, and spends it. The box store workers have jobs because of the money Joe CEO spends. It's the basic pronciple of trickle down economics, which DOES work, despite certain protestations to the contrary.

Consumerism is the fuel that drives the capitalist economy. It's why businesses put out bigger and better products, it's why "New! and Improved!" is a catchphrase that we hear on a seemingly basis. Although we take it for granted, consumerism has made our lives infinitely better.

Probably the best example I can give is the one you're sitting in front of at this moment. I personally have worked around computers for over 20 years now, ever since my dad got his (gack!) TRS-80...cassette loaded back in the early 80's. I have seen computers advance from the point where we were mesmerized by simple loop programs that put pixel "stars" up on the screen, all the way to what you see before you now...and more. My children have never lived in a time where there wasn't a computer in the household, albeit not always online. And those advances have been driven by the simple fact that there were people ready and willing to BUY the better product once it was released.

How you DON'T help the  poor is through handouts. Trust me on this. I've had to beg exactly ONCE in my life and I hope to never, EVER do it again. I would much rather have the opportunity to work to earn a living for my family. But I can't work unless there are jobs to be had, and there aren't jobs to be had unless there's money to be made, and there isn't money to be made unless those who HAVE the money, SPEND that money. That's the life cycle of a dollar in a rather small nutshell.

So, the next time someone argues that we can only help the poor through welfare programs, don't buy it. Trust someone who's been there that a FAR better way to help the poor is to help provide jobs through your spending. And enjoy that big screen TV knowing that in watching it, you are creating jobs.

 

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Reply #1 from JoeUser Forums Top
LW,

I think you know MY answer to this, but I'll clarify for those just coming to this page. If they won't work, the government has no obligation to them whatsoever. If private charities want to help, that's their choice. If individuals want to help, likewise, that is their choice. But it's not the government's duty to enable those individuals entrapped in the cult of victimhood.

While that may sound harsh, I believe that forcing people to learn to rely on themselves rather than enabling them over a lifetime is the ultimate act of compassion.
Reply #2 from JoeUser Forums Top
Increased spending is good so long as it is not charged. Personal debt is too high and will come back to haunt the economy.
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Reply #3 from JoeUser Forums Top

Very simplistic model, but accurate.  You see, Joe Salesman does not always spend his whole commission.  Part of it he saves.  Now that sounds EVIL, but in actual fact it is not.  for when big Box store wants to build a new store, they have to get the money from somewhere (contrary to popular belief, Big Box is not sitting on a ton of cash).  So they go to the bank.  And where does the bank get the money from?  Joe Salesman's savings! (or CDs)

So Big Box builds another store, and hires more people to staff it.  And thus the savings have now been converted into jobs as well!

Reply #4 from JoeUser Forums Top

Now that sounds EVIL, but in actual fact it is not. for when big Box store wants to build a new store, they have to get the money from somewhere (contrary to popular belief, Big Box is not sitting on a ton of cash). So they go to the bank. And where does the bank get the money from? Joe Salesman's savings! (or CDs)

And, in the case of a rather prominent big box, they also acquire money from the assets they hold from stockholders such as Joe Salesman, who bought his stock at a DEEP discount from the company.

Nice addition, Dr.

Reply #5 from JoeUser Forums Top

And, in the case of a rather prominent big box, they also acquire money from the assets they hold from stockholders such as Joe Salesman, who bought his stock at a DEEP discount from the company.
Nice addition, Dr.

I got a degree in this stuff.  I am very impressed with your grasp of it just from intuitive reasoning and deduction!  Kudos to you for a great article!

Reply #6 from JoeUser Forums Top

I got a degree in this stuff. I am very impressed with your grasp of it just from intuitive reasoning and deduction! Kudos to you for a great article!

Thanks, Dr.

Ya know, I was thinking...LW bills herself as the "poor woman's Ann Coulter". Perhaps I should start billing myself as "the poor man's Walter E. Williams...lol!

(actually, I owe a LOT of credit to Williams for my understanding of economics...credit I am NOT loathe to give him).

Reply #7 from JoeUser Forums Top

Ya know, I was thinking...LW bills herself as the "poor woman's Ann Coulter". Perhaps I should start billing myself as "the poor man's Walter E. Williams...lol!
(actually, I owe a LOT of credit to Williams for my understanding of economics...credit I am NOT loathe to give him).

Since Walter E. Williams is my mentor (since my senior year in college), I would say you are a testament to his economic teachings! (If not his tongue in cheek soliloquy's about how he treats his wife! )

Reply #8 from JoeUser Forums Top
Hmm, while I still bow to Ms Ann's greatness, I do need to change that because I've pretty much abandoned the political forums, waiting for fresh blood to make it all new and exciting again.


It's a shame, LW...you have a very useful and unique perspective. But, you know the life cycle of JU, and we'll get some good newbies in and see some more of your stuff before too long.
Reply #9 from JoeUser Forums Top
I've actually re-thought this in the past few months, and realized that the very best way we can help our economy and the poor in our nation is to take care of our own family well. With some exceptions, if we all did this...properly providing for our own...there would be far less need for government assistance.

If my husband and I give our children the best life we can...providing for their needs...then no one else has to, and further, we've taught them to care for their own family as well so that no one else will have to support them, either.

So the idea is to put my own family first, even if that means that my children have things while other children go without. I am responsible for my own family, and at this point we don't have the ability to give much to charity without shortchanging our own children.

I don't see it as selfish so much as it is responsible.
Reply #10 from JoeUser Forums Top

I don't see it as selfish so much as it is responsible.

Exactly, Tex.

Part of my personal philsophy came about after reading the biography of Rich Mullins, a Christian music singer who passed away some years back and a huge inspiration for my life (his biography is titled "An Arrow Pointing to Heaven"--a recommended read if you get around to it). When he spoke about the sympathy he had for the poor, a friend told him that the WORST thing you can do if you want to help the poor is to remain poor...all you are doing then is easing your own conscience. The best thing you can do is to earn as much money as you can and use that money to help the poor.

Reply #11 from JoeUser Forums Top
'You see, retailer X has a labor cost built into the budget. The more goods he sells, the more he has to spend on salary. He can either provide more jobs or provide better wages for the workers already in his employ. It's as simple as that.'
Or ... he can take the extra money you earmark to be spent on salaries and buy a bigger car, build a pool, take a cruise, buy a holiday home etc. So no, it's NOT as simple as that.
Reply #12 from JoeUser Forums Top

Or ... he can take the extra money you earmark to be spent on salaries and buy a bigger car, build a pool, take a cruise, buy a holiday home etc. So no, it's NOT as simple as that.

And who builds those pools, cars or mans the cruises?  Other people not as rich as himself, so the money is not hoarded, it is going back into the pockets of the working class.  While socialist tend to decry conspicious consumption, the actual fact is that money makes its way into the pockets of the working class, and yes sometimes the poor.  As a demonstration of the stupidity of trying to penalize a rich guy for his spending, look what happened when congress slapped a luxury tax on yachts in this country.

The rich quit buying them.  Good right?  Not if you were one of the poor schmucks building them!  They lost their job!  Did it hurt the rich?  NO, they spent their money on something else or invested it.  And investing it accomplishes the same thing (see previous explanation).

But you fail to understand a fundamental of capitalism.  If you do not grow your business (in the stated case, hire more people), you will fall by the wayside and wither and die.  So mr. Rich Guy will pocket some of the money (it is called ROI), but invest most of it back into the business, and that investment is in people.

So it IS THAT simple.

Reply #13 from JoeUser Forums Top
Or ... he can take the extra money you earmark to be spent on salaries and buy a bigger car, build a pool, take a cruise, buy a holiday home etc. So no, it's NOT as simple as that.


Yeah, he can. But it IS as simple as that. He buys a bigger car, carmakers benefit. He builds a pool, the pool companies benefit, as do pool maintenance companies in perpetuity. A vacation? Travel agents, the airline industry, the hotel industry.

In short, we don't spend money in a vaccuum. Every dollar we spend helps someone else somewhere down the line. That's the essence of capitalism.

Thanks for proving my point better than I could, furry.
Reply #14 from JoeUser Forums Top
'Thanks for proving my point better than I could, furry.'

But it DOESN’T prove your point. All I've done is point out that a culture of runaway expenditure begets even more expenditure. There's a huge leap between that and the poor being any better off as a result.

The vast majority of the research I'm aware of suggests that, in the West (the undisputed bastion of rampant consumerism), the gap between rich and poor continues to widen. If your argument held any water, then surely the ranks of the poor would be diminishing before our eyes. I see precious little evidence of that; indeed, most of the the data suggests quite the opposite.

'Every dollar we spend helps someone else somewhere down the line. That's the essence of capitalism.'

It’s the way you tell ‘em, Gideon! The essence of capitalism is self-interest, not benevolence. Any suggestion to the contrary is merely a device to enable those who subscribe to and benefit from its creed to sleep a little easier at night.
Reply #15 from JoeUser Forums Top

The essence of capitalism is self-interest

It is self-interest that benefits all!  It is using the inherant nature of man for the benefit of mankind!  No one is denying that, nor can you prove otherwise.

Reply #16 from JoeUser Forums Top
The vast majority of the research I'm aware of suggests that, in the West (the undisputed bastion of rampant consumerism), the gap between rich and poor continues to widen.


I have to dispute the research, furry. I've lived poor in America, I've seen others live poor in America, and I will tell you that most poor families I know (and yes, I mean POOR have television sets, indoor plumbing, electrical power, phones, and a fair number of them even have internet equipped computers. I make less than HALF the median household income and am raising five children and I have all but the internet access out of my house...although I DO have a good computer. I find it hard to believe that a country whose poor average $500 per YEAR could be said to enjoy a higher standard of living than us.

You argued about my position that the left are sheep, yet here you are pulling statistics out of your ass without a shred of hard support...reaffirming my position nicely.
Reply #17 from JoeUser Forums Top
'It is self-interest that benefits all! It is using the inherant nature of man for the benefit of mankind! No one is denying that, nor can you prove otherwise.'
At least you agree with me that the essence of Capitalism is self-interest, and not benevolence. But it's not up to me to 'prove otherwise', Dr. Guy. It's up to Gideon - as the author of this thread - and you - as a supporter of this position - to back up your assertion by means other than mere anecdote or statement of belief. I am not 'denying' your position, but I am DISPUTING it.

'I will tell you that most poor families I know ... have television sets, indoor plumbing, electrical power, phones ...'
Not relevant, Gideon. My point was about the GAP between rich and poor.

'here you are pulling statistics out of your ass without a shred of hard support...'
Very nice, Gideon - if in doubt resort to insult. I would point out that I didn't quote a single statistic. As for finding 'hard support', I'm sure it's not beyond you to use a search engine, but here are a few examples just to give you the general idea ...
http://news.bbc.co.uk/2/hi/uk_news/politics/4564458.stm
http://www.usatoday.com/news/opinion/editorials/2005-08-15-high-gas-prices-edit_x.htm?csp=N009
http://www.theage.com.au/articles/2003/10/28/1067233171873.html?from=storyrhs
http://www.lse.ac.uk/collections/pressAndInformationOffice/newsAndEvents/archives/2005/LSE_SuttonTrust_report.htm

'You argued about my position that the left are sheep'
Did I buggery! I asked you why you made general statements about both 'the left' and 'the right' immediately after having posted a thread in which you argued that these were inappropriate labels that should be droppped from use. Still, don't let a little thing like the facts get in your way.

In conclusion, it appears to me that both the left AND the right agree that the gap between rich and poor is widening; they just disagree on whether or not this is a good thing.
Reply #18 from JoeUser Forums Top

At least you agree with me that the essence of Capitalism is self-interest, and not benevolence. But it's not up to me to 'prove otherwise', Dr. Guy.

No, it is not up to anyone, for the proof is in the data.  It is said that in an ideal world, Capitalism is the worst form of government.  However, since Man is not perfect, in an imperfect one, it is the best.

My challenge was for you to prove that capitalism does not work.  You cannot, so it was just rhetorical.

Reply #19 from JoeUser Forums Top
'No, it is not up to anyone, for the proof is in the data ... My challenge was for you to prove that capitalism does not work. You cannot, so it was just rhetorical.'

You didn't 'challenge' me to prove it, Dr. Guy - you told me I couldn't. And I'm not particularly interested in disputing your claim, for many reasons - e.g. how do you define 'work'? - but primarily because that was never the point I was making.

Go back to the thread, Dr. Guy. Gideon claims that runaway spending benefits the poor. I maintain that he has not demonstrated a causal connection between the two. The burden of proof is upon him. That was, and remains, my point.
Reply #20 from JoeUser Forums Top

Go back to the thread, Dr. Guy. Gideon claims that runaway spending benefits the poor. I maintain that he has not demonstrated a causal connection between the two.

Oh, but he has.  He but has to cite history and facts.  The burden is then on you to disprove it.

Reply #21 from JoeUser Forums Top
'He but has to cite history and facts.'
Fair enough, but he hasn't done so. Instead, Gideon has offered personal anecdote and opinion. There is a big difference. I don't disagree with you that 'the proof is in the data', but Gideon has not supplied any.
Reply #22 from JoeUser Forums Top
First, let me apologize for getting a bit off topic and personal. That being said, let's steer the conversation back, shall we?

It’s the way you tell ‘em, Gideon! The essence of capitalism is self-interest, not benevolence. Any suggestion to the contrary is merely a device to enable those who subscribe to and benefit from its creed to sleep a little easier at night.


Now here, furry, you are 100% correct. Joe millionaire does not spend thinking of how his dollar is helping joe working class. But the fact that he doesn't think of how it impacts those people doesn't change the fact that it DOES, in fact, impact those people in a VERY positive manner.

Go back to the thread, Dr. Guy. Gideon claims that runaway spending benefits the poor. I maintain that he has not demonstrated a causal connection between the two. The burden of proof is upon him. That was, and remains, my point.


OK, focus here, furry. Job creation benefits the poor, right? You can create jobs in two ways: either through government forfeiture of private monies (taxes) to fund jobs at government subsidy, which removes all incentives for personal achievement and thus reduces our gross domestic product from the resulting inefficiency as was demonstrably proven by the failed USSR; or you can put monies earned into the economy and allow it to benefit those in service industries.

While you may be content with the idea of receiving a government check for doing nothing or next to nothing, furry, I am not. Nor should any responsible individual be. A lifetime at the public trough is probably the most desperate, pitiful life I could imagine, because it is a life without fruit, where nothing but a grave marker will commemorate your presence on this earth.

Dr. Guy was right in that capitalism is not perfect. But it is FAR better than the alternatives.

As for the gap between the rich and poor, I find it hard to believe that we have a wider gap than countries such as Haiti, where dictators live in mansions while parents deliberately cripple their children so that they can make more money in begging. And all the stats in the world won't convince me that we ARE that much worse off.

If I'm not mistaken, furry, you don't live in America, do you? If you don't, may I ask if you've ever BEEN to America, if you've ever seen our conditions for yourself? If not, I invite you to come. You could learn an awful lot.

The poorest among Americans are STILL among the richest 5% of persons on this earth. To use the fact that the gap between them and the top 5% of their own countrymen is wider than in many other countries is specious, at best. The fact that we hold such lofty status is perhaps the strongest proof that capitalism DOES work and the strongest argument for its continued existence.
Reply #23 from JoeUser Forums Top
'If I'm not mistaken, furry, you don't live in America, do you? If you don't, may I ask if you've ever BEEN to America, if you've ever seen our conditions for yourself? If not, I invite you to come. You could learn an awful lot.'
Well, no I don't, and no I haven't. Mea f***ing culpa. There is nothing in any of my posts specific to the USA, but obviously one is not entitled to an opinion about poverty unless one is directly acquainted with the American 'model'. Thank you very much Gideon for your overwhelming condescension.
Reply #24 from JoeUser Forums Top
A lifetime at the public trough is probably the most desperate, pitiful life I could imagine, because it is a life without fruit, where nothing but a grave marker will commemorate your presence on this earth.


The only exception of course would be the government grants that keep modern art alive. Actually now I come to think of it...

Speaking from my own experience I think that spending money is probably the only way the system can continue to work. Sure, trickle down isn't very efficient, but the other models we've tried are either unstable (anarchism), unpopular (the welfare state) or just plain bad (communism and dictatorship spring to mind). When I was in Indonesia, despite the fact I was living on an Australian student's government funding, I spent like nothing else. Why? cos everything was cheap. And by not saving any money I didn't merely ensure that now I'm home I can afford to eat nothing better than packet soup, but it also meant that the old woman who cleaned my house, the kids who cooked my food, the thousand and one people who performed trifling tasks for trifling pay got enough to live for another day.

It's not a lot, sure. But it's better than what they would have gotten were I not there with cash in hand.

The tendency of the system to iceberg every few decades (ie the increasingly welfare to increasingly liberal to increasingly welfare seesaw that is economics) means inequality doesn't tend to last too long before redistribution.
Reply #25 from JoeUser Forums Top
The December sales data was released for Wal-Mart. It shows the weakness in the economy. The people who shop Wal-Mart are the low and middle income families. These families have not scene take home wage growth over the past five years and they have driven up their credit card balances to $8,600 per family from $3,300 in the 1990's. Add the higher interest rates and you have consumers with no added take home pay and people that are reaching a limit to their credit card debt. When these families can not afford the higher minimum credit card payments and are faced with the winter home heating bills, the fallacy of the "Great Economy" will become evident. Then the spending will drop off unless the wealthy use all that added net worth to begin shopping at Wal-Mart.