4. Different ways of conducting transfers

So far we have been discussing sources for state transfers. Now let´s have a look how these transfers can get money between real people and complement their buying power (that is the point). There are many options:

  • Structural projects as building of roads, railroads, hospitals … green energy projects, hydropower plants, ebb power plants, hydrogen economy infrastructure and many more. That way the governments can build useful infrastructure and also stimulate demand. It is good if the need for such projects is evident. The problem is that these specific projects are aimed at specific areas (industries) and therefore their redistributing ability (their ability to complement missing buying power between wide layers of society) is rather limited. Income from them has only specific professions participating at these projects and complementing buying power is spreading further indirectly through further purchases that can or don´t have to be realized. Also this consumption is geographically limited to area of project and so its multiplication effects are not working at broader geographical scale. Large part of invested capital ends up at the hands of companies as profit (which is hindering factor of strengthening buying power) and there is the risk of corruption and overpayment of government projects, which is not doing good name for this kind of stimulus. Of course, in areas where infrastructural developments are obviously needed, there is nothing to wait for.
  • Family support. It is universal tool how to support buying power. It is working across the board through hands of many individuals, who know best how to spend their money and therefore there is no risk of deforming the market through moving of resources from needed industries to governmentally chosen ones, as is the case of infrastructural projects. (Having said that it is not a conclusion that government is not to realize infrastructural projects at all! The point is to realize that it is better to give the money Directly to the people to spend at what they need than having to invent artificial infrastructural government spending if none is evidently needed. ) Additional buying power which families will gain through child supplements and similar benefits will be used  accordingly to natural needs of consumers and will contribute to sales and profits in standard industries. At present developed industrial countries are facing falling fertility rates and aging of their populations. There are less and less children born which is causing deepening problems in pension systems around the globe. Some nations are desperately trying to replace their missing labor force with immigration. Transfers in the form of family benefits structured as progressive support based on number of children can be of great help in fighting this problem. It is easy and effective way how to encourage families to have more children and also provide for their increased living costs associated with upbringing of higher number of kids which is definitely not insignificant. The same way it is boosting the buying power of whole society. It is just as well as upbringing the kids’ takes real effort and society should reward those who are doing it properly.  Last, but also most important aspect of this policy is to ensure that this family supplements are not paid as means of easy money for families that do not care about their children and their education properly.