Okay, that statement is purely there to pique the interest, I'm sorry. I think I can state with confidence, more accurately, that the way most people think about money colours how they perceive other monetary interactions.
We've all had money, haven't we? We have got it, and we have spent it. We have spent years earning it and working out how to earn more, saving it, exchanging it for goods and experiences. We probably have some with us now. Our lives are pretty much devoted to its acquisition, if only because it is our shortest, simplest way to comfort and security - which can often lead to big problems, but I digress.
The way we handle our funds, and their physical existence in our perception of the world, implants a quintessential untruth about how it works and how it circulates. The difference between budgeting and economics is that economics looks at the whole, while budgeting looks at the individual case. People don't study economics - they budget, and thus they have a great understanding of budgeting...
...but not necessarily of economics.
I am not formally educated on the topic. I have done a lot of reading, I have debated it with a great number of people that know a fair amount on the subject. All of this is opinion backed with some research, not given as evidenced fact - so please, utilise a pinch of salt during your reading.
Why do folks hate people on benefits so much?
Because the way they see it, these individuals are being rewarded for something. They are being given something, and they don't apparently deserve it (not as much as the complainant at least). We all know someone who thinks that those who don't work shouldn't get anything, because they've worked hard their whole lives, etc, etc, repeat ad nauseam.
We probably know more people that believe refugees and immigrants shouldn't be given anything at all. They will often use terms like "charity begins at home", despite giving very little to charity themselves, or "why should we", or "where is it going to come from". I don't think that everyone who believes this is racist. I think that there are people who are racist that use those terms to mask their less socially acceptable thoughts, but I think the majority of people who wish to withhold support for expatriates (as I will be referring to them from now on) are doing so because they think we can't afford it.
And who is to blame them. We are seeing public services get cut because we "can't afford them". This is a line that has been touted so often that people repeat it without even questioning it. Even in the face of actual displays of where money is being spent, and how much of it can be reallocated to those in need. As I often say: It is never about not having enough, only about misallocation.
The mistake we make is assuming that, when someone on Jobseekers receives the kings ransom of £72.40 to last them for two weeks, the money simply vanishes.
Which is absurd, when you think about it.
So let us assume that there is an individual who has no other source of income. They receive housing benefit that pays for 100% of their rent and jobseekers allowance that pays them the aforementioned £72.40 a fortnight.
(If you aren't in the UK, these two things are means-tested benefits given to you by the government for various reasons, which are paid for out of public taxes. The circumstances in which you are allowed either housing benefit or jobseekers allowance are regularly reshuffled and usually made tighter. The welfare of poor people is not in the interest of our current government.)
To begin with - housing benefit
So the housing benefit only benefits the person receiving it insofar as it gives them somewhere to live. Meanwhile it guarantees the landlord a return on their initial investment, after removing the costs of maintaining the property. Either the private individual has any net profit to spend on their own day to day lives, their own house, their groveries, their luxuries - or the group or business receives a net profit, which it uses to keep running and pay its employees, who again go out to pay their rent and buy their groceries and purchase their luxuries.
The jobseeker's allowance, £36.20 a week of it, gets spent - because people in poverty don't actually have the option to save. The margins of affording to eat and not are too small. Where does it get spent? Shops usually - local small concerns and chain stores.
The money spent there, after covering costs, pays the employees (and in the case of bigger stores the shareholders). They then spend that money in other shops and on other things. Once more, that money is allocated and spent. And over and over it goes.
What happens every time someone spends money?
While the UK doesn't have sales tax like the US does, the vast majority of products bought and sold have a rate of Value Added Tax (VAT). It is invisible to us because it is included in the price on the box. If you've ever been to the US from the UK and been stung by the sales tax - like you went to buy a dollar soda and it turns out to be a dollar and five cents, but the label says nothing about it - then what occurs with VAT is the reverse.
Standard VAT rate is 20%. Some goods - goods for children, electricity and utilities - are charged at 5%. Some goods, like basic food and apparent "necessities", are totally exempt. (Apparently condoms are considered a necessity and tampons aren't, which is absolutely fucking ridiculous, but that is an outrage for another blog.) Some goods and services even have special taxes in and of themselves - fuel pays an extra 10-50 pence per litre on top of the 20% VAT, 6% on insurance, 20% on travel insurance, significant additional taxes on tobacco and alcohol above and beyond the 20% VAT rate.
Almost every time someone spends money, they pay tax back to the government, back to the public purse. £20 of the benefit recipient's money gets spent in a local shop - £2-4 of that goes to the government, the rest goes to the shop. Out of the rest, a portion goes on costs, and the rest goes into the pocket of the people that work in the shop, which gets spent elsewhere. Every time the money moves from point to point, an amount ends up in the same purse that is paying for the benefit recipient in question. Even if they can't afford a car, they take the bus - and the money they spend on the bus not only funds the driver's purchases that week, but also pays a significant amount of fuel tax right back to the government.
Then there's savings and investment. Now, the average recipient of benefits doesn't get enough to save anything - it's just not possible, as previously mentioned. Margins are too small. However - those who benefit from the money of those recipients (see what I did there) invest. They put money away for a rainy day. That money goes into banks, who - since the dissolution of the division between investment banks and savings banks - use it to invest and make money. Those banks don't pay taxes, but they do provide loans to people who do - and those loans are spent on things, which again attracts tax.
Always, always, it finds a way back. It leaves the public purse and flows through wallets and pockets and by inches and yards makes its way back.
"But John," I hear you cry, desperately pushing aside the crowding lobster pots filled with pokemon miniatures. "Doesn't this prove that trickle-down economics works?"
To you I say... nay nay.
See, as I have pointed out - those below a certain level of income can't invest. The money is needed for survival. It can't be squirrelled away in savings accounts, or used in share trading, or utilised in other financial instruments used to make large amounts of money. That requires a significant initial investment.
The money spent by those with a lot of it tends to stay within a certain circle of expenditure. I've blogged before about class and about those with high income. We can probably infer that high-value goods and luxuries are more their purview than anything you would buy in Pound Land. Likewise, the reason why "millenials aren't buying diamonds" is because they can't. They can't afford it. We can maybe squirrel away something in an ISA or a holiday fund. Cost of living has risen so much faster than wages.
But those big companies who sell a lot of products to those with lower income - I am loath to actually name any, as that is stereotyping, but I am sure you can think of your own - have wealthy shareholders who are not people who use those products. The inverse is not possible. DeBeers doesn't pay dividends to a bunch of minimum-wage folks; hell, it barely pays minimum wage to its own employees, but I digress.
Rich money may trickle down a little; but it trickles up far more. It's the money of everyday people that keeps the companies aloft, and lines the pockets of the shareholders and executives that are invested in them, and the politicos that they lobby. If it isn't money that they poured into the system, it is the product of their labour - every factory needs workers. It also bears consideration that those who are wealthy try and find ways to not pay taxes, while those who aren't, can't. Not really.
If the wealthy are made more wealthy by the money in the pockets of those who are not - and if the government is made more wealthy by the same - then...
...why aren't we giving more money to those that don't have much?
If we bring expatriates here, and if we look after them; if we fund the poor, and those on limited income; then not only will the government fund be further refurbished, but so will the companies that pay us our wages. If foreigners show up and they need houses, then build them. Sell them. Make money. Pay tax. Help the government. Help yourselves.
If I am to put my left-wing tendencies aside and speak in right-wing monetary terms: the poor and disenfranchised are an investment opportunity. Stop seeing them as scroungers and start seeing them as debt you can sell that WILL repay to you, sooner or later, in some way. The gold road will run and run, all the way through. Every step it takes, it feeds back into public funds. Sooner or later, it will have paid for itself in entirety - and paid some other people's way besides.
And hey - maybe if you put enough money in an expatriate's pocket, they might have something to save. Wouldn't that be nice for the banks?
I mean the only way you'd think this is a bad idea is if you were some kind of bigot.