Thread by @ektrit

Okay, thread about Production vs Distribution vs Redistribution

1/

https://twitter.com/ektrit/status/1580893083130277892

An Economy has 3 Stages:

Production

Distribution

Redistribution

1/

An Economy produces and consumes OUTPUT PER HOUR.

To reiterate:

An economy produces and consumes OUTPUT PER HOUR.

Not just Output, it's output/hr.

To reiterate again

An economy produces and consumes OUTPUT PER HOUR.

Not just Output, it's output/hr.

2/

Let's take tomatoes as a example.

We eat X kg tomatoes per week every week.

We don't eat 100kg of tomatoes on December 31st for the entire year.

So, what matters is OUTPUT PER HOUR, not overall output as we consume output/hr, not just output.

3/

Conclusion 1:

An Economy PRODUCES OUTPUT PER OUR.

So far so good.

Next stage.

4/

Stage 2: DISTRIBUTION

After the Output/hr is produced, how is it distributed?

There is a LEGAL SYSTEM, called Financial System.

Folks, again, The Financial System is a Legal System, NOT A MARKET.

Folks, again, The Financial System is a Legal System, NOT A MARKET.

5/

In this Legal System called Financial System, DISTRIBUTION of output/hr is done via SALARIES.

Each person receives X salary per his/her productive capacity, thus CLAIMING the output/hr.

So, let's assume today were produce 10 kg of tomatoes costing $1 per kg, total $10.

6/

Assume the village has 3 people, receiving $3 per hour salary the first, $2 per hour salary the 2nd, $5 per hour salary the third.

The first can claim only 3 kg of tomatoes today, the second can claim only 2 kg of tomatoes today and the third will claim 5 kg of tomatoes.

7/

Conclusion 2:

Distribution of output/hr is done by a Legal System called Financial System (NOT A MARKET), whereby each person claims output/hr based on income he/she makes per their productivity.

Next Stage.

7/

STAGE 3: REDISTRIBUTION

The problem arises that the person who is making $2 per hour, who claims just 2 kg or tomatoes for this week, is hungry and very upset, ready for revolution.

The person who makes $3 per hour, claiming 3 kg or tomatoes for this week, is okay.

8/

Whereas the person who makes $5 per hour, claiming 5 kg of tomatoes for this week, is living quite well, he is actually throwing out rotten tomatoes which remained unconsumed.

Social problems are boiling up.

The Government has to do something.

9/

The government is OBLIGATED to resort to REDISTRIBUTION, stage 3.

In order to pacify social problems, the Government takes away some tomatoes from the $5 per hour person and gives them to the $2 per hour person, so he/she has enough food.

10/

The Government has 3 ways to do that, within the legal system called financial system.

1) Tax on the $5 per hour person.
2) Sending money to the $2 per hour person.
3) Increase of Minimum Wage from $2 per hour to $3 per hour.

11/

All these 3 ways achieve the exact same thing. The increase the claims towards output/hr from the lower class by reducing the claims towards output/hr from the middle class.

12/

So, now my friends, you know the difference between Production, Distribution and Re-Distribution.

And all for free, you paid nothing to learn this from #krisonomics, which is for free.

13/end