So I recently came across an interesting point on why NASA isn't a waste of money, and it basically stated how NASA supports thousands of jobs, creates community events, and uses a part of its budget as the salary of some of the smartest people on the planet. But is this a huge impact?

Whenever a large company is created, it creates hundreds maybe even thousands of decent paying jobs. But does this only benefit the people who are working in that company? Or does it benefit the community as a whole (in terms of economic success)?

  • $\begingroup$ Sorry if my question is a little messy, this is my first time posting. Also I couldn't really find any relevant tags... real sorry. $\endgroup$ – user24424 Oct 2 '19 at 3:56

Generally, whenever people have more income, it doesn't only benefit those people with more income. Imagine you somehow received \$100 that fell from the sky (or through NASA job). Would you save the entire \$100 and never spend it? More likely, you would spend some fraction of it... let's say you spend \$60. This money you spend will go to a shopkeeper, who then keeps a fraction and spend some of that \$60 on something else, and so on. So this extra money benefits other people too, not just the person receiving the money.

If you're interested, you can read more about this here.

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    $\begingroup$ The fiscal multiplier resulting from spending of the salaries of the jobs created is only part of the picture. To assess the impact on the whole economy it also needs to be considered a) where the money comes from to fund the jobs and what are the indirect effects of that funding, eg via less spending elsewhere or increased borrowing, and b) what the jobs do and what value their output contributes to the economy. The net effect on the economy from job creation may be positive, but showing that in any particular case is likely to be complex. $\endgroup$ – Adam Bailey Oct 2 '19 at 9:46
  • $\begingroup$ Completely agree. I, however, take Alex's question to be something more like: is the government throwing millions of dollars to NASA and get just some cool pictures of Mars ("a waste of money" and "does this only benefit the people who are working in that company?"), to which the answer is no. $\endgroup$ – Art Oct 2 '19 at 10:34
  • $\begingroup$ Ah, okay I see. So to recap, the Fiscal Multiplier is an economic theory which states that increasing a country's national income will actually benefit the entire country, since the money people have will just go into the economy's circulation. This is also seen as a key factor in UBI. Correct? $\endgroup$ – user24424 Oct 2 '19 at 22:06
  • $\begingroup$ I think the key message for fiscal multiplier is that, \$100 put down by the government would result in more than \$100 growth of the economy. Now... different people have different marginal propensity to consume. Rich people have enough already, so an extra \$100 probably wouldn't matter much and it's not like he/she will go out and spend that right away. \$100 for poor people is another story. UBI gives out money to everyone, so one could argue that it might be better given to poor people. Need more than a comment to discuss this though. $\endgroup$ – Art Oct 3 '19 at 1:59
  • $\begingroup$ Gotcha. Thanks! $\endgroup$ – user24424 Oct 3 '19 at 3:32

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