Yes... and no. How many people would buy the high end stereo is an important factor, there. If we're talking about the majority of the population living under the poverty line under crushing debt then most of that $30k is going to go to securing one's stability. Housing, food, utilities... And that's pretty much it. Minimum Wage living puts you right above the poverty line but it's not like you have cash to throw around after that point. Sure someone could live, with modest comfort, at the poverty line indefinitely, but if they ever hope to improve their lot in life or supply a better life to their family or friends then they're SoL.
But that doesn't correspond with the evidence we have; from roughly 2000 to 2008 as average household income increased so did average household debt. As people earn or are given more money they spend more money and generally not on paying debts down but instead on consumer goods. For the most blatant example of that look at Nauru
; during the 1960's and 1970's it had the highest per-capita income in the world due to payments by companies which wanted to use it's natural gas (there's quite an interesting short segment on it here
). The problem was that the people simply spent the money, their attempts to save or create a viable income stream were laughable (notably funding the musical flop Leonardo the Musical
). As much as we may hope that people may pay down debt the truth is they're unlikely to.
And even if they do pay down debt, what happens when it's all paid off? Average US debt today (including mortgages) is just over $200,000 (note, that only applies to households that have some
debt; if you remove the households that don't have any credit card debt for example then the average credit card debt drops from around $15,000 to around $7,200). That means that within a decade of getting $30,000 a year all that debt will likely be paid off and thus the issues about demand rise again.
A lot of people in this nation skip meals or don't eat for multiple days in a row because they can't afford to put food on the table. Basic Income would give them that ability. High end or luxury items would still be exactly that. They'd just be slightly more attainable by people working to improve their lot in life.
The poverty threshold (the point at which all basic needs can be fulfilled) is set at around $23,000 at the moment for a family of four. Even if we say that's too restrictive and it's closer to say $30,000 a family of four with two parents would get at least double that through the $30k a year gift. That's not just putting food on the table; it's giving $30k above that.
A Person who makes $25,000 a year will not be able to afford a Mercedes Benz with Basic Income added to it. At least, not if they want to pay off all their bills, cover debts, put food on the table, and enjoy some nights or weekends out partying or enjoying themselves. And those who forgo simple pleasures in favor of getting a Benz are still working 40 hours a week, 50 weeks out of the year to afford a new car (assuming they get any vacation pay).
A person making $55,000 per year
can certainly afford a Benz while still buying food, partying and paying off some debt. Under your plan it wasn't a $30,000 one-off, it was per year
Really simplistic examples fall apart super fast. that's not a surprise. But let's get into it, anyway. You can work at a Widget Factory and pull down $55,000 a year or you can not work at a widget factory and make $30,000 per year. You'll have to make the choice to stop hanging out with work friends and disconnect yourselves from their lives, ignore the time and energy and emotional investment you've put into the company, and all other considerations to do it, but you could give up that $30,000 a year "Raise" and instead get a $5,00 a year "Raise". Sure.
Why can't you hang our with work friends? I still hang out with a lot of people who work at companies that I used to work at (and who often earn considerably more than me).
While you can find people with what could be described as stereotypical "working class pride" you can also find a lot of people... especially in lower level jobs... who don't care about their employer or work beyond picking up their pay.
Remember, each individual person would earn more than the US national average wage for a household
today under the system. With prices being forced to remain the same that means that they get a pretty damn good lifestyle without having to work... and certainly without having to work fulltime.
And, again, I point to the ability to get the money you need to improve your life, pay off your debts, and work towards a brighter future for yourself, your family, and your friends.
But with $30k a year in my pocket I can also get the money I need to improve my life, pay off debts and work toward a brighter future while also getting to spend far more time with my family, indulging my passions, doing creative work like writing, crafting, painting etc, volunteering, doing charity work etc etc.
The key component to your example is, as it has ever been, that the factors presented are the only factors that are important to the worker's decision. Well... that and the terribly wrong conceit that $25k a year isn't worthwhile to someone making just above poverty level wages. "We're asking you to work the same amount as before for the same amount as before and you'll have even more money, too" does not equate.
As above, the poverty level for a four person household is $23,000. Under this system a four person household with two parents and two children would be earning going on three times as much without working. IIRC the individual poverty threshold is around $11,000... again, around a third of what they'd be earning under your system. With prices remaining the same the poverty threshold wouldn't change.
Let's also remember what might not equate; "we're asking you to work a full 40 hour week in a widget factory for less money than you earn simply by sitting there doing nothing."
And even when you do find these "Lazy" people that your premise pushes for, our unemployment rate is high enough that people from all over the nation would scramble to make widgets because they WANT $55,000 a year instead of $30,000 a year. And that's not even touching on the Migrant Workers who would be ecstatic beyond reason to get into a factory rather than traveling from location to location picking plants in the hot summer months.
1) I'm specifically avoiding the talk of "lazy" people because that wasn't my point. Very few people live to work... there's a reason we don't tend to do our jobs for free when off the clock. We have interests and wants outside our working lives; if given the chance to indulge them full time while still earning around three times the poverty threshold wouldn't you be tempted?
2) US unemployment level if 5.9%... that's not a historic low but neither is it particularly high.
3) So if the migrant workers are working at the factory and not in the fields (assuming they do decide to work in the factory to begin with), who's picking pants in the hot summer months? Why would they choose to pick plants in the hot summer months in pretty backbreaking, unreliable labour rather than simply collect their $30,000?
The premise itself is flawed because it doesn't consider all of the variables involved. It assumes that no one wants more than to live on the absolute minimum level of money.
The absolute minimum level of money would be around $11-12,000 per adult; that's enough to put them over the poverty threshold. This is roughly three times that.
You're still hanging on to that flawed line of reasoning. Yeah, situations with price controls have historically been met with inflation and shortages. But you're looking at nations with 1/10th the economic power of the US. Often with about 1/3rd it's population or less.
California's frequent power shortages in the late 90's and early 2000's were at least partially the fault of price controls that meant that it cost more for utility companies to buy electricity than they were allowed to sell it for. Market manipulation (notably by Enron) deservedly gets much of the blame but price controls shouldn't be ignored either; it forced Pacific Gas and Electric Company into bankrucpcy within three years. Likewise one can look at the situation relating to oil in 1973 where the US introduced price controls and was caught out when the wholesale price shot up, leading to huge queues, rationing and rioting.
Would there be shortages in the short run? Probably. Really it's almost definite. Wal-Mart doesn't stock each of it's stores with shitloads more product than it currently sells, though it has the ability to increase the throughput at a moment's notice through a massive fleet of trucks. Wal-Mart could afford, however, to constantly restock it's stores with absolutely ridiculous quantities of product, day after day after day. And would be able to access even more product to put on it's shelves with the increased spending.
What happens when the wholesale price increases? What happens when there's an sharp increase in oil prices and it costs more to get goods to the stores then they make by selling them? What happens if electricity prices go up? What happens when Walmart staff on zero-hour part time contracts earning minimum wage decide that it's not worth working there and don't? What happens when international traders, not bound by these price restrictions, massively hike the costs of imports?
And I thought we wouldn't see a huge increase in spending, with most of the money going on paying off debt?
America has massive surpluses of basically everything. Especially food and other basic necessities. We ship overseas and throw away massive amounts of food because we can't sell it all.
A significant amount of food waste is bought by consumers and then not consumed; it's not all overproduction, it's also overourchasing; people purchasing more food would likely only contribute to that. For example, 33% of the seafood that reaches the consumer is wasted, far more than at the production stage (11%), handling and storage (5%), processing and packaging (5%) or distribution and retail (9.5%). For an even more stark example, 17.5% of all milk that reaches consumers is wasted... vastly more than the 3% lost at production, 0.25% lost at handling and storage, 0.5% lost in processing and packaging and 0.25% lost at retail (i.e spoiled or unsold).
And it should be noted that this paycheck wouldn't be a $30,000 check with your tax returns, but a $570 check mailed out weekly (or $1,140 mailed out once every two weeks). How much of that would be immediately turned over for rent, McDonald's, electric bills, medical bills, student loan debt, and more?
Aren't most of those bills paid either at least monthly (if not tri-monthly) or on a meter system rather than on a weekly or bi-weekly basis? On that account relatively few.
Anyway, back of a matchbox maths.
Average rent in the USA for a three bed apartment is just over $300 a week (although presumably the people we're aiming this at would be living in properties that cost less than the average apartment). Basic utilities are just under $40 a week. Weekly student loan repayments are around $50. Out of pocket healthcare expenses average out at around $60. That combines to $450 leaving $130 for McDonalds and other expenses each week... and remember, that's the average
where a huge difference can be made depending on where someone lives for example (a relatively slick three bedroom, two bathroom apartment in Kansas City can be had for $795 a month
which averages out to under $200 a week giving an extra $100 to spend).