The Thousand-a-Month Idea

MSN brought up this report, which I read through three or four times. It's a curious piece.

There is this research foundation....the Roosevelt Institute....which did this study, in connection with the Italian University of Cassino and Southern Lazio and the Bard College's Levy Institute.

The result of the study is a suggestion that you ought to give every adult (assuming over the age of 18 years old)....$1,000 in a cash handout each month.  If you did this....the US economy would surge by $2.5 trillion in just seven years.

The tail-end of this study suggests that by paying out the handouts....would result in increased taxes, which is a slight negative and you'd have to find some method to avoid this angle of the consequences.

For several years, this hand-out deal has floated around Europe and been a popular idea for fringe political parties.

The general issues I see with this?

First, you assume that each person getting the $1,000 a month....will spend it.  There's never been a real study done to say what a thousand people getting the $1,000 a month would do with the money.  I have doubts that all of the thousand would readily spend it each month.  If you had ten to twenty percent who stock-piled the money....it wouldn't be such a positive idea.  The idea of some borrowing even more money, and that $20,000 loans being easily created and banks trying to gimmick-up 20-percent loans out of this thousand-a-month?

Second, none of the research ever done....has suggest how the $1,000 a month would be spent. This bothers me in some ways.  Some people would go and find a upscale car, and put a thousand dollars down, and pay a monthly payment of $999 on the car.  Some adults would spend the whole thousand on a weekend at some Indian casino.  Some would buy a thousand dollars of meth.  Some might go and buy shares of stock.

Third, you would eventually come around and ask....all these material-type products that the thousand per month went to.....are they actually made in the US?  The laughable answer is no.....the vast majority would probably have been made either in Mexico, some Asian region, or China.  It would be different if the money all went to US-made products....that would invent jobs....create a wave of enthusiasm within the US market, and be a great positive trend. But you can't even come close to even twenty-percent of this mass purchase each month being US-manufactured.

I don't intend to knock all of these efforts by the private foundations....we need research like this.  But you see various limits to the concept and wonder why they won't investigate where the money would be spent or what materials/products would be bought?