this is just incrementing some numbers in a computer, not directly changing the amount of actual goods and services in the world. Price levels would adjust as soon as sellers got around to it, or shortages would occur as soon as things sold out
Related questions
Silver lining to the hyperinflation is increased sales of nonrival goods like software, ebooks, music, movies, stockphotos, porn, and datasets briefly until the intellectual rentiers adjust their prices. This is kinda like increasing total factor productivity but not enough to compensate for the other economic chaos.
The chaos of hyperinflation will disrupt a lot of the businesses that produce goods and services, and probably shrink real output. I don’t think there’s any historical episode of hyperinflation that wasn’t considered terrible. $800 real per person is a lot in some places but the poorest of the poor don’t have checking accounts anyway.
Since this only adjusts numbers on a ledger sheet and does not impact income, goods, services (i.e. assets/resources), it would appear to only devalue money via inflation. There would be a window of opprotunity to convert the cash to resources while prices take a moment to adjust, but in the long run I believe this hurts the "have-not-s" much more than the "have-s" due to the fact that the "have-not-s" wealth would be concentrated in cash which would rapidly devalue, and the "have-s" may be expected to have more of their wealth parked in assets and resources which will not be as radically devalued as "cash in the bank" would.
@Lorxus seriously though a low Gini coefficient means fewer desperate people even in the medium term as prices equilibrate and that means more and faster commerce and trade and that means more wealth sloshing around, regardless of the weird proto-racist garbage the poll author occasionally says
I note that roughly a quarter of adults around the world ( https://www.worldbank.org/en/publication/globalfindex/Report ) do not have any bank accounts, so they don't benefit at all from the button-pushing, even before you get into interpretation issues around the definition of "checking account".
I was originally contemplating this as an internal-US thought experiment since we’re using the USD. That would cause a 64x hyperinflation. The one where you give a mil to all seven billion people would be more like 1280x hyperinflation. So your 1 million dollars would then be worth $800ish in real terms. So much financial chaos would probably reduce real output so it might be worth even less than that. I’m more optimistic about it reducing between-country inequality than within-country inequality but it probably doesn’t do that much long term either way.
@Frogswap I’m not confident it would cause long term (75+ years) inequality reduction. Short term (0-5 years) inequality of consumption would be reduced for sure. But it would 64x base money supply in the US, leading to equilibrium 64x higher price levels. Basically 98.5% of every dollar denominated debt would be wiped out. This would be a boon to taxpayers, telecom companies, utilities, industrial companies, and any homeowner with a mortgage. It would be bad for insurance companies, banks, pension funds, foreign governments, and any other entity that owns bonds. Natural experiments like the georgia land lottery show that there’s usually no intergenerational wealth effect from random windfalls. People rise or fall to the level they would have been anyway, within a generation or two. I acknowledge this is contrary to the popular trend of casually blaming history for things, but it seems true.
@JonathanRay Unadjusted statistics suggest that half of the potential Bezoses, Einsteins, and Kennedys live on less than $6.85/day, and a tenth of them on less than $1.90. I fully agree that there is a genetic component, but you'd need an absolutely ludicrous effect size to overcome those numbers.
This isn't trends-based reasoning; I expect most of the trend followers (in the US) don't realize that this would substantially diminish their wealth. I love capitalism, I just happen to think inheritance works against it. I'd rather fix this with taxes and welfare, but I have only been blessed with the one magic button.
I admit "long term" was the wrong choice, "medium term" would be more accurate. I guess I forgot which community I was talking to 😂
@frog: differential ownership of wealth isn't just about different personal consumption, it's also about investment/allocation competence. it's good that the officers and investors in Tesla have direct control over its operations and that a majority vote of tesla employees or us citizens do not. the latter would not reliably make good investment or manufacturing decisions. This change would disrupt the market signals give the more competent people more economic power, which would be bad.
also (lesss confident) (assuming this was politically backed and thus not immediately reversed) it'd immediately cause the worst recession in US history as as all information stored in price and contracts would be totally wiped out. This is more like 'hyperinflation' than it is 'moderate wealth redistribution'. Hyperinflation is usually bad.
@frog The main thing preventing Africa from reaching parity with the US isn't money. (If it were, foreign investment would be all over it. and they have tried.). Culture, institutions, maybe other stuff, little consensus there. But I don't expect giving them all $1M bank accounts to stop the political instability. It'd probably make it worse if anything. It is true that there are a bunch of smart people trapped in terrible economies and political systems, although I'm not sure about the particular ratio, but unless this wealth transfer enables them to immigrate to somewhere better I don't think it helps them long-term.
@jacksonpolack Like I said, I only have the one button. There will be severe, catastrophic consequences in the short term, and huge (relative) negative consequences on me personally for the rest of my life, but I believe they are worth it for the greater good. I don't deserve credit for being born to a middle class family in the richest country in the world, while billions of people live in poverty. I deserve equal opportunity and nothing more.
I'm not immediately on board with the premise that it will be harder to create institutions in Africa after such an event. Bribery would be nearly impossible, for example. All of the competent people would be very much on the side as the commons; pushing for rapid, local economic growth would be in their self interest- buying American real estate, etc. would not be viable. But perhaps you're right, I didn't really consider other sources of power when I made my decision. I would expect them to be eroded at least somewhat, but maybe the African warlord whose power comes from a chain of violence escapes unscathed.
@DavidBolin I actually spent a few minutes steel-manning this comment and preparing an argument against before I realized how incredibly silly/insane that would be. There is a better way.
Weigh in here: