Then it’s almost guaranteed that any action you devise to solve a problem will make it worse:
Many economists will tell you that the ideal intervention to help the poor is to simply give them money (a negative income tax) – that shores up their income – rather than directly controlling prices. In general, this is correct advice; but not in this case. Suppose we collect $1000 from the rich and hand this out to the poor. Since the rich spend a tiny fraction of their money on food and the poor a large fraction, this transfer will cause food prices to rise.
In general, this would not matter since the price was being driven up by the greater purchasing power of the poor. But in the present precarious situation, the risk is that if the negative income tax does not reach all the poor, then the ones who are left out will see their position deteriorating as prices rise further.
While the professor is correct in this particular instance, it’s worth noting that the only economists who think simply handing over money to the poor is an “ideal intervention” are the ridiculous neo-Keynesians who have landed the global economy in a serious quagmire with their incessant inflationary monetary and fiscal policies. This is no surprise, of course, considering that their philosophy is based on “in the long run we are all dead” thinking. So now the long run has arrived, Keynes is dead, and the inheritors of his economic policies are left to try to get out of the quicksand somehow.
Giving money for nothing, or even lending it for interest, leads to only one thing: price inflation. This is not hard to understand, for example, do college educations cost less now that they are heavily subsidized? The disastrous results of so many of these interventions is completely predictable, and yet most people continue to demand them because they simply can’t think past tomorrow. If you want to be wealthy, you must learn to think at least three years down the road.