Gift Cards as an Economic Stimulus

A discussion of classical and Keynesian economics was taking place on the subject of government spending and the stimulus package(s) arose.  Many people received a stimulus check in the mail this year for $600 dollars or some other amount greater or less than that depending on how many dependents they had or income, etc.  The basic idea of the check is to get people to spend money, boosting they economy.  This idea is derived from Keynesian economics.  The problem is, people use the check to pay off debt or they put the check into savings since it is not a permanent increase in their wages/salary, they don’t necessarily want to spend it frivolously.  This results in a failure of the principles of Keynesian economics.

A tax cut would work just as well as the proposal that follows, allowing people to have more after tax income resulting in more spending, but I like my way better.

Gift cards.

Instead of writing everyone a stimulus check, the government would offer gift cards to it’s citizens.  

1. People would have a choice of what gift card the would like.

The government could give everyone a choice of whether they would like a gift card to Walmart, Target, Lowes, Home Depot, The Gap, Sears, Dick’s Sporting Goods, JC Penneys, Khols, or ten of other places.

2. The cash is already stimulating the economy.

This is the largest fallacy of stimulus checks that I mentioned above.  People were not necessarily spending them.  If the government would offer citizens gift cards, they would have to purchase the gift cards from the retailers first, putting money directly into the economy and bypassing non-stimulating actions citizens can do with cash.  However, the citizen is still rewarded.  

3. What if people just save the cash that they would have spent, by using the gift card?

Yes, on some occasions this will happen, however, it is more likely to increase spending on a whole.  I think it is some what of a psychological trick when you receive a gift card.  From personal experience, I have gotten 20 dollars to Target and I go in and look at what they have for sale.  Suddenly items that I wouldn’t dream of spending 30 or 40 dollars for are “subsidized.”  I only have to put 10 or 20 bucks towards them out of my own pocket to get that item.  It seems a much better.

Now think of that on a larger scale.  The government gives it’s citizens gift cards worth 500 dollars.  One of the choices is say, for Circuit City or Best Buy.  You walk in with a 500 dollar gift card and look at televisions.  Suddenly that 750 dollar TV that you wouldn’t every pay for using your own cash, is now more attractive because all you have to do is put 250 dollars of your own money towards it and the government has given you the rest.

4. What stops people from stealing the gift cards out of your mail box when the government sends them?

This is simple–security checks.  The government can use the same philosophy as the major credit card companies.  When a gift card is received by a citizen, they have to call a telephone number and type in their social security number and/or perform some other task to activate the card.  The government could either set up a system to do this–creating jobs–or outsource it to one of the major credit card companies or a series of them, since they already have large amounts of information on citizens already.  

How many people receiving a stimulus gift card, already have a credit card?  I would wager that many do.

5. What if I don’t like any of the places the government offers gift cards to?

This can also be addressed relatively simply.  The government can provide you with vouchers that have no cash value to citizens, but act as cash for businesses.  Think in terms of the government subsidizing the digital converter box.  They send you a card that you take into Walmart or wherever, and it reduces the price of the converter box.  Vouchers would use the same concept.  The government would issue citizens who do not want a gift card to a certain store/business a series of vouchers.  Vouchers would come in some smaller increment as to allow for flexibility and to encompass smaller purchases.  If everyone is getting a 500 dollar gift card to Walmart, but you want vouchers, you can receive ten 50 dollar vouchers.  

The vouchers would:

• allow for smaller purchases
• allow for use at small businesses 
• have to be completely consumed at the time of purchase (which is why they are in smaller increments)
• have an expiration date (With gift cards, the money is already in the economy.  We don’t want hundreds of thousands of people taking out vouchers and just holding onto them–that would defeat the point of the stimulus)

The vouchers would not:

• allow for change in cash
• be usable outside of the United States (the whole point is to stimulate our economy)

Trends Appearing in My Life

Right now I am really happy.  I would like to attribute it to these trends that keep appearing in my life.

1.  Just do something.  

Definitely because I follow Alex Hillman on twitter.  I hear this a lot from him and it makes so much sense.  Doing something is better than nothing, and even if you’re not 100% on something you’re doing, just do something that makes 90% of sense.  Right now this is school for me.  I’m not 100% on where to go or what I want to do, but I love learning, and doing it promotes and facilitates it with in itself.

2.  Child-like wonder.

I have been hearing a lot lately that one should keep their child-like wonder.  This is really easy for me because I seem to think differently than a lot of people.  Today at work for example a man is there with his wife and daughter.  His wife is pregnant with their second child.  I work in a library and they had just opened a library card for their daughter.  The guy seemed super psyched about it.  He was asking do we have this, do we have that, do we have Thomas [the tank enginee] movies.  Yes, we do have them.  His face just lights up.  He was genuinly excited and enthusiastic, even more so than his daughter.  This triggered a burst of happiness in me–know that his daughter, wife, and future child got to be surrounded by such joy and excitement over something as small as knowing we had Thomas movies that he could check out for his daughter was great.  So nuturing and caring.  It’s like you instanly wanted to be his friend; your troubles would just ease away.  That’s something I would like to be known for. 

3. You can’t force creativity / anything good in life.

I don’t know if I recently saw this in a snowboard magazine, film, or somewhere else.  I may be totally off base of where I heard it, but it definitely applies.  Don’t try and force life, just guide it.

4. Self correction.

I wrote these trends down the other day and this was on the list.  I don’t remember why I wrote it.  I guess the idea has stopped trending in my head, but let’s take a look at it quickly.  It goes back to the article on Why Talent is Overated.  Self correction is key for advancing in anything.  Be it religion or learning times tables or writing.  Realizing where you strayed and correcting it, rather than letting it go, will result in progress.

5. Perspective thinking. 

I don’t have this one written down, but I think about this often, especially when I think about my education.  I feel that the education system today is so limited, so forced (see number 3), that we aren’t developing to our full potential.  The college system is especially bad.  Kids are channeled into their major and there isn’t a lot of flexibility.  For instance, in high school they used to tell us that we would be able to study whatever we wanted in college.  Yes this is true!  But at the cost of time and money, and having to fight a system that does not want to let a chem engineering student take an intro to film class.  This!!! is a huge problem!

I want to be able to take all sorts of classes.  Because of the title of this trend.  Perspective thinking!  Viewing things from all different angles and then taking one thought and applying it to each angle.  I want to see the picture from the photographers point of view, the scientists point of view, and the businessmans point of view.  I struggle at this when I am limited to what I can learn.