Why we have social security.
Why is Economania so upset by the cuts in social security? Quite apart from the inhumanity of it, it's damaging to the economy. If you're in the UK, that's your economy, so you should be upset too. When, back in the 1880s, then German Chancellor Otto von Bismarck proposed what his critics called state socialism and we've come to know as social security, we understand he did so because, by giving small but regular amounts of money to the unemployed, the sick and disabled, and those too old and infirm to work, those people were turned into economic assets. Necessity dictated they spend the money they were given, increasing the velocity of money in the economy and creating an environment which encouraged corporate investment. Normal taxation, then as now, took care of any potential problems with inflation. This created what's now known as a virtuous circle, one we should, if we had any education and sense, be emulating. Instead, we're cutting benefits. This has the effect of reducing the velocity and amount of money in circulation, damaging the economy. Remember, the claimant spends it with the butcher who spends it with the baker who spends it with the candlestick maker. Social security is security for the whole neighbourhood as, when govt's doing its job, despite the onset of hard times they know there'll still be money circulating in the economy overall. Further, money that isn't spent or 'loaned' into the economy isn't ever actually created, so it's wildly misleading to misrepresent austerity as savings, just as it is to represent savings as something the national economy needs when what we use for money, government IOUs we remind you, can be & are created to order.
Bill Kruse - http://www.economania.co.uk/various-authors/various-authors.htm
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