Theoretically ? May be /
Practically ? Impossible !
=====================================
Sunday Times ( 01 Oct ) carried following
QUORA question :
“ If I start destroying currency , how
will that affect economy ? “
Alex Tabarrok ( Professor , George Mason University )
replied as follows :
=======================================================
“ Amazingly, burning your cash would make everyone else
a little bit richer. “
Suppose that you get a job and earn $100
that you use to buy a pair of jeans. You created $100 worth of value and you
consumed $100 worth of value. Now suppose you give the $100 to charity. You
created $100 worth of value and someone else consumed $100 worth of value.
Now suppose you work and burn the $100.
This is the same as the charity case! You created $100 worth of value but
didn't consume anything. But the value you created doesn't disappear. You did
the work and society is richer because you did the work. So who does the extra
consuming? Everyone else.
How does this work?
When you burn your cash you reduce
prices just a tiny, tiny, bit. The fall in prices means that other people can
buy more. How much more ?
Exactly $100 in value more ( $100,
divided by the population who participates in that economy, so not very much per
person ! ).
So the upshot is that those fat cats lighting their cigars with $100 bills are really benefitting all the rest of us !
* I am assuming a normal, well-functioning market economy. In a recession with sticky prices there could be short-term Keynesian considerations which I have ignored as these don't seem to be at the heart of the question as asked. “
=====================================================
Theoretically , Professor is right
But practically , you cannot expect
anyone to work for the society , without expecting anything in return !
No doubt , some rich / well-to-do ,
individuals do join NGOs / Charitable Organizations and work for “ Free “ . But they are exceptions and in minority
But , can we get millions to , “ Give more to the Society in relation to
what they receive from the Society “ ?
Can we get them to sacrifice a “ little
bit “ , in order to enrich the lives of other poor people ?
Can such “ small sacrifice “ on part of
millions , make India , a “ Low Cost
Economy “ and set in motion a “ VIRTUOUS CIRCLE “, making
us globally competitive ?
Yes , it is possible as described in my
following blogs :
Automation
is Inescapable [ 30 Nov 2016 ]
GIST :
Reduce
" Cost of Inflation " by limiting " Annual Wages-Salaries Increases " to 75 % of
the
preceding year's GDP number ( ie: if GDP for
2015, is 8 % , maximum salary /
wage increase that can be granted on 01 April
2016 , will be 6 % ) .
=====================================================
How
to break the Vicious Circle [ 03
July 2016 ]
04 Oct 2017
www.hemenparekh.in
/ blogs
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