Double all the benefits/welfare, fix the economy

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The economic crisis is caused by lack of demand. Doubling the welfare benefits solves the problem not only by increasing demand from a high MPC population, but will pressure employers to pay their workers more if the Reserve Army of Labour is so well-paid. That will increase demand all through the economy. If this demand is not restored, the system will readjust itself to a lower production and standard of living. The country will produce less permanently. Only will it produce more if there's the demand for the production. With the automation and efficiency increases, this becomes even more important as the bosses do have the option if they have full power to pocket the entire surplus from the improved efficiency and leave a minimal amount to the workers and the Reserve Army of Labour caused by the massive redundancies caused by these efficiencies. Thus, the bosses choose to produce less, at far less than capacity, to punish not just the Reserve Army of Labour, but the workers too, when they choose to be less than generous with these groups.

... and the last I recall, China will gladly loan the funds needed to do that.

No need to do that. The central bank can easily purchase the treasuries. That's what Japan has done, half of its debt, which is 200% of GDP, is held by the Japanese central bank. Japan's debt to GDP is far higher than Britain's, the U.S.'s or Greece or and of the major countries.

Please tell me you were high when you decided that doubling benefits would fix the economy. From my point of view that would only end up costing more people more money while making nobody hardly anything. What needs to happen is that the wealth needs to be redistributed to the lower class who are more likely to spend it adding to the demand for goods and services.

I mean exactly what I said. It would boost the economy enormously. It would put upward pressure on wages and increase demand even more. This would cause a boost in supply, in production. Why, the economy might even overheat and this would bring some inflation.

The word "double" was a response to the other thing about cutting them entirely. Perhaps doubling them would be a bit too much in one shot, but a significant increase surely would improve the economy without a doubt.

And how are we supposed to pay for it. Doubling welfare benefits isn't going to help the economy improve it's just going to reduce the incentive for people to get a job.

Ugh. The model of lack of demand being the problem, and using govt. spending to fuel a recovery isn't a new idea. Until supply-side/Voodoo/welfare-only-for-corporations-and-the-rich economics happened 30 or so years ago, it was the standard model.

Since supply-side has failed I don't know why it's being clung to, except that the rich have the biggest media megaphone. Frankly, I think the USA is going to be owned by the rich in the next 20 or so years.

It's already over OP, just have a beer, and watch the world burn.

Evidently you haven't been following the news. The rich own it now.

I already explained that part. It will help the economy to improve by increasing demand and that will help people get work. As for incentives to get a job, if the bosses are being too stingy with their pay that they have trouble competing with welfare, well, they know what to do. And guess what - that increases demand too. More demand, more supply, the nation produces more, and isn't that supposed to be the goal here.

I already am used to the idea that whatever is the right thing to do, the people in charge will do the opposite, and this will be the case about 90% of the time.

then why haven't the most redistributionist societies been the wealthiest societies?

ruveyhn

They have. The West circa 1945-80 had achieved a great deal. So did South America post World War II until the Milton Friedman people took over the various states. They were so-called redistributionist and they had amazing growth and improvement. If you suggest that the command economies are redistributionist, they really aren't. It's a different model altogether and one where there is a bias in favour of austerity as the economy is driven on the supply side, not on the demand side.

It would provide stimulus but changing welfare practices is not the best way of doing this. At the start of the financial crisis, here in Australia two one time payments were given to students and pensioners. This provided a much better sort of stimulus than the sort you are proposing; which would act as a long term commitment.

Also you cannot spend you way out of a recession. You can stimulate the economy to stop it bottoming out too low, but stimulating a way out is addictive. Your much better off cutting taxes on the middle-class in order to facilitate the growth of the housing market and sales of consumer goods.

These middle-class tax cuts have done nothing to help us so far.

And the beer's long gone

Ah, that is some good economics here. In the United States from 1946 to 1980 the average growth rate of the of the real gross domestic product was 3.53% per year. ( I used this site: http://www.measuringworth.com/growth/ to calculate the annualized growth rate of the real GDP. The rates were consistent with other sources). And from 1946 to 1980 was a period when there was an increase in the equality in the United States and the formation of a "middle class" society. On the other hand in the period from 1980 to 2009 when there was an increase in the GINI index (increase in inequality) the economy grew less. The average growth of the real GDP in this period was 2.79% per year which is lower than the growth of the previous period. More equal societies can growth more than unequal societies and sometimes the trade-off between equality and efficiency is false.