One among my favorite books of the yr was Randall Munroe’s What If? 2, which like its predecessor presents severe scientific solutions to absurd hypothetical questions. For instance, “What would occur if the photo voltaic system was full of soup out to Jupiter?” The brief reply is nothing good. Munroe’s extensively researched reply begins merely with “Please ensure that everyone seems to be safely out of the Photo voltaic System earlier than you fill it with soup.” Or, what would occur for those who put in a big iron dice cooled to absolute zero in your lounge? (In the event you can keep away from the danger that liquid oxygen collects like dew on the dice’s floor, then units your home on hearth, you’ll be nice. Simply don’t lick the dice.)
Impressed, I took to Twitter to ask individuals for his or her absurd hypothetical questions in regards to the financial system, to which I’d try severe solutions. This column is simply too brief — and this columnist insufficiently gifted — to do justice to Munroe’s books. But I have to attempt; these absurd hypothetical questions aren’t going to reply themselves.
What does the world appear to be if all financial transactions are actually performed with solely penny cash?
— Stuart Langridge
The apparent downside is that your purse would grow to be moderately heavy. The British penny weighs 3.56 grammes; put one other manner, £2.81 weighs a kilogramme. Most merchandise would weigh considerably lower than the cash required to purchase them. A grocery store store costing £100 would require 35.6kg of pennies, so ensure you park subsequent to the procuring trolleys.
All this could be inconvenient. Folks may begin to determine workarounds. What may they do?
Historical past presents a clue. A couple of thousand years in the past, the residents of Sichuan, China, have been ordered to make use of cash made from iron. (Sichuan was a frontier province, and China’s rulers didn’t need gold and silver circulating round Sichuan, probably leaking into international lands.) Sichuan’s residents instantly confronted the penny downside, specifically that hardly something weighed greater than the iron cash you would wish to lug round to purchase it.
Reasonably than pushing round wagonloads of iron cash, retailers would write IOUs, promising to settle their payments later when it was extra handy for everybody. Then — this step is clear in hindsight — individuals began paying for issues by passing across the IOUs. If the extensively revered Mr Zhou purchased one thing from my store and wrote me an IOU, then after I went to your store later, I might write you an IOU in flip. However you may want it if I gave you Mr Zhou’s IOU as an alternative. In spite of everything, we each know that Mr Zhou at all times pays his money owed.
Now you and I, and Mr Zhou, have collectively created a sort of paper cash. It’s a promise to repay that has a marketable worth of its personal that may be handed round from individual to individual with out being redeemed with these tiresome iron cash. I think that if we have been pressured to undertake Stuart’s “pay in penny cash” system, we might invent paper or digital options simply because the Sichuanese did, and be again the place we began.
What if we had not a minimal wage however a most wage?
— Rachel Wrangham
The perennial concern with a minimal wage is that it’d destroy jobs. Oddly, the utmost wage might have the identical impact. In each circumstances, staff and employers must discover a candy spot in wage negotiations: a wage that’s excessive sufficient to draw the employee, however low sufficient to be worthwhile for the employer. An issue with each minimal and most wages is that the candy spot could also be unlawful — through which case the job received’t exist. Both it’s unprofitable for employers, or unattractive for the employees. Oops.
Wage guidelines additionally change the facility dynamic within the office. Minimal wages put extra bargaining energy into the fingers of staff. A authorized wage most would put extra bargaining energy into the fingers of employers. It’d properly enhance company earnings whereas decreasing famous person salaries.
I think that extremely paid staff would attempt to discover loopholes, for instance, within the type of self-employment. However then self-employment has been a loophole for avoiding the minimal wage, too.
What would occur if tax wasn’t a factor?
— John Cronin
The speedy consequence could be that we’d have to search out one other strategy to pay for, or go with out, issues corresponding to the military, the police, roads, the NHS, faculties, state pensions and repaying public debt. For a touch at what this may appear to be, choose up a British newspaper this month.
In fact it could be extra intense than that. UK authorities debt could be repudiated, pensioners would return to work or beg for alms, and healthcare and education could be paid for in the identical manner as meals and housing — out of individuals’s personal pockets.
Many individuals is likely to be stunned at how little distinction such a radical change made to their lives. What they saved in taxes, they’d pay as an alternative on visits to the physician or college charges. However an enormous quantity of redistribution is quietly performed by means of public spending, so the nation could be full of people that couldn’t afford healthcare, education, highway pricing, pensions or a lot of anything.
And a few issues simply don’t lend themselves to person charges. The Meteorological Workplace might in all probability pay for public climate forecasts by means of voluntary contributions, but it surely’s unclear that you could possibly pay for the military, navy and air power just by having a whip-round.
A radical different is to pay for public spending by printing cash. This could trigger inflation, and eat away at everybody’s spending energy. At a primary approximation, it ought to value residents about as a lot as their taxes would have performed. The burden would fall in another way, although. Folks with massive money holdings or nominally fastened incomes would lose most. Those that held tangible property or have been simply in a position to maintain their wealth in foreign currency echange would lose the least.
Attempting to pay for all current public spending by printing cash could be disastrous pretty rapidly. Within the UK, the federal government is answerable for about half of all spending within the financial system, so firing up the printing presses would quickly trigger chaotic hyperinflation. But when public spending have been dramatically diminished, and well being, schooling and different providers have been supplied on a fee-for-service foundation, then maybe the printing presses might clear up that nagging query of how you can pay for the military.
In abstract: ensure that everyone seems to be safely in another country earlier than you abolish all taxation.
What would occur if everybody in Coventry was given £1mn on situation they didn’t go away Coventry?
— Neil Pattinson
Coventry would grow to be the Qatar of the West Midlands. With everybody in Coventry instantly turning into a millionaire, it could be exhausting to steer anybody to do disagreeable work. Nevertheless disagreeable work would must be performed. That may imply persuading a brand new class of non-resident staff to commute into town to do it — an association that’s prone to show inefficient and costly. Inside the metropolis’s boundaries, it could be absurd to attempt to produce something aside from Michelin-starred restaurant meals or luxurious spa therapies for Coventry’s unique residents. And the entire thing would finish in tears if the cash ran out. On the upside, Coventry would host a incredible World Cup.
You probably have different absurd hypothetical questions in regards to the financial system to ask me, please ship them to tim.harford@ft.com. In the meantime I can solely apologise to Randall Munroe.
Tim Harford’s new guide is ‘How to Make the World Add Up’
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