Question:
Hi.. I am a writer. I am from India.. I need some help on a story I am writing based on economics.. India is a poor as well as a wealthy country. Therefore, it seems to me that money has a dual purpose - Basic Survival and Human Ambition. The poor I see are busting their asses off just to reach basic survival, while the rich are making millions by the strength of their ambition, intelligence, and passion.. I have always heard the argument that printing money to get rid of poverty will in turn lead to inflation thus in turn leading to even bigger poverty. But one day, I had a different idea... What if, anyone is allowed access to print money.. Every money that is printed can only be accepted by government bodies providing basic necessities like food, basic clothing, water, and modest shelter. These government bodies can later exchange that money for anything they want. But the initial printer cannot exchange the first printed money for anything but only for basic public services. All the money in the market will therefore come from a government source providing one of basic services to people. If people want to then improve, meaning if they want to go to a fancy restaurant rather than a public mess,, they will have to earn that money.. Therefore earning money will be associated with human ambition and passion while money itself will be associated with public basic needs.. With survival out of question,, all people can focus on doing a personal business, taking better jobs, etc. in order to improve their lifestyle; economy will bloom... What I need to know, is, for the sake for my story,, what things can go wrong in this model?? Why is this kind of a system practically impossible because I assume if it was possible it would have been already there.. What are the flaws of this model?? Why does this sound too good to be practical?? I thank you for your time and your patience.. I hope to hear from you soon..Answer:
I think you don't want everyone to have access to the money-printing press or if you do, then let there be a fixed limit (say, they can print no more than a thousand "basics", the name of this currency). If anyone can print as much basics as they want, then the inflation story you've heard will be true, but not so much if the maximum amount they can print is fixed. But why not have the government simply send a thousand basics check to every person every month. It is possible, though, that over time prices of these necessities will rise and people will have to be allowed to print more and more. Bottom line is if production of necessities does not go up, then merely giving people more currency will only inflate prices and that will do them no good in actual purchasing power terms.
In some ways, the system you describe is not too different from what goes in the classic welfare states of Scandinavia (such as, Denmark) except there no one gets any direct cash but they do get goods. There, every person, is assured of a basic standard of living (food, clothing, shelter) by means of government transfers that are funded by taxation. Beyond that, if a person wishes to eat at, say, Copenhagen's world-famous Noma restaurant, they have to acquire education or skills, work hard, show drive etc to earn the income to eat there. But the point is, you could, theoretically speaking, get by in Denmark at that basic standard of living without all the ambition or hard work you speak of. For your story, much will depend on how attractive that basic level is; if it is too attractive, then many will be content to not acquire skills and live off their basics.
