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Would basic income still register in the collective mindset as “help”? Because if it registers as “free money” I fear prices will go up. I understand that since
by andraganescu 11y ago
Would basic income still register in the collective mindset as “help”? Because if it registers as “free money” I fear prices will go up. I understand that since BI correlates with income tax no inflation should be created. Yet people have particular ways to understand how welfare happens. In a poor community, when you know for sure that everyone there can afford some stuff, wouldn’t that be an incentive to collectively raise prices, just because you know there is definitely new money to be spent.
- jjxw 11y agoMy understanding of most implementations of Basic Income is that the funds would come from taxes or budget cuts in other parts of the government rather than printing money which would reduce inflationary pressure. The problem with raising prices is that collective coordination would be difficult for goods which operate in a competitive market.
- andraganescu 11y agoYes, indeed it's not inflation I fear, but the collective mentality people have. Markets in poor communities are not as competitive as we'd think. Not to mention big retailers who are not that many to make coordination impossible.
- TrevorJ 11y agoThere's some evidence to suggest that this is what has happened with tuition rates due to the availability of student loans.
- ctdonath 11y agoAmazing how many people don't understand the concept of "supply and demand". Increase the availability of money, increasing demand, and the prices increase so long as supply can't keep up. This has been manifestly demonstrated by tuition, health care, mortgages, insurance, etc.
- icebraining 11y agoThat's true for student tuitions, but availability of money doesn't increase demand for a specific product/market, so if the prices in supply-constrained markets increase, some people will use that money for something else instead, reducing the demand pressure. Similarly, local minimum wage laws might be eaten by rent increases, since they're tied to those area and jobs. But a BI would make it much easier for people to move out, distributing the demand over cheaper areas.
- bryanlarsen 11y agoUnless you're printing money, there's no increase in supply. You're changing the distribution so there are small localized effects but overall prices should remain constant. Some will go up, some go down, but the top rate stays the same.