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1. UBI can be thought of as large-scale debt forgiveness. You are simply giving people the means to escape (often, but not always) self-imposed debts. 2. UBI w

1. UBI can be thought of as large-scale debt forgiveness. You are simply giving people the means to escape (often, but not always) self-imposed debts. 2. UBI would lead to a huge jump in inflation (as a %, nearly as much as the initial UBI stimulus % of total money in circulation) as the vast majority of UBI recipients would have a large propensity to immediately spend that money, thereby simply releasing it into circulation and ramping up inflation. If UBI were made into a sustained payment, the market would simply adjust prices up on consumption goods accordingly. UBI doubled the amount of money in circulation? Bread, milk, eggs, and rent cost 2x as much. Of course the effect would not be immediate (rent is sticky) but UBI would not leave much (if anything) left over for the poor today. In the mid-long run the poor are no better off, other than having a few immediate debts paid off through the first few rounds of UBI. 3. UBI leads to the misdirection of resources. People who are not financially secure enough to bring children into this world will suddenly find themselves with the resources to have children. Some, not all, will. We observe fewer and fewer jobs available to the general population, but we have hit a glut in productivity. We do not want to redirect resources to bring more labor into the economy before we hit another period of high productivity brought on by whatever technology drives forward the next paradigm shift in information/goods transportation and synthesis.

manyoso 11y ago
This is simply wrong and has been shown to be wrong empirically. Details here: https://medium.com/basic-income/wouldnt-unconditional-basic-income-just-cause-massive-inflation-fe71d69f15e7#.kz2s8ze9d https://medium.com/basic-income/wouldnt-unconditional-basic-...
- notahacker 11y ago
  It's simply laughable to use a $900 Alaskan dividend or dollar a day stipends for the extreme poor in the developing world as "empirical evidence" of what would happen if a developed country offered >$10k per annum with the stated social purpose of discouraging people from taking jobs they don't want. Sure, demand-pull inflation fears are slightly overblown since any remotely feasible plan relies on taxing the hell out of the middle classes responsible for much of the discretionary spending in the economy, and the poor generally get enough to eat through other subsidies anyway. But basic income will have a whole host of negative effects, many of them region or size specific, and those will undoubtedly include things like huge relative price rises in certain types of labour, sharp rises in property prices in working class districts of expensive cities and "baby farming" if the child grant is the same as or a sufficiently large portion of the adult grant. This is true of most welfare programmes, but BI happens to be the most expensive and least flexible of all possible options.
mikeash 11y ago
I don't understand #2. UBI wouldn't increase the amount of money in circulation, unless you paid for it by printing money or borrowing. But everything I've seen advocates for paying for UBI with taxes. For #3, the overall trend is that people have fewer children, not more, when they have more money. Maybe UBI money would be different somehow, but since you're positing the opposite effect from what we've seen so far, I think it needs way more support.
- roymurdock 11y ago
  #2 is assuming UBI is a one-time cash injection to stimulate aggregate demand, similar to QE. I have a hard time seeing the path forward to the (substantially) higher taxation on the middle and upper classes needed to make UBI a reality with the current political and economic climate in the US. But this is subject to debate. You are correct that a redistribution of the tax burden, if feasible, would not lead to inflation. #3 - yes, in agrarian societies poorer people have more children to help out with labor-intensive work. I think the situation would play out different in a services-based economy like the US. The monetary aspect of UBI would not influence the wealthy, educated cohort's decision to have more children (usually capping out at 3). It would give lower-income individuals an incentive to have more children in order to claim more benefits, as is common for contemporary social services programs. If UBI was substantial enough to allow lower/middle income individuals to quit their jobs, they would also have much more time to have and raise children - not out of necessity, but out of ability. Agreed that the effect on population size is uncertain and needs an actual study.
AnimalMuppet 11y ago
My impression is that many people, given more money, would use most of it to pay down debt, rather than to spend on new stuff. (That may reduce the probability of bad debt, which may increase the safety of the financial system. On the other hand, it may not increase consumption to the degree expected, and therefore may not work as well as expected to "get the economy moving again".)
dllthomas 11y ago
> UBI doubled the amount of money in circulation? Bread, milk, eggs, and rent cost 2x as much. This assumes that production of these things won't rise - almost certainly false. For milk in particular, we've recently had price supports. And for rent, a basic income inherently increases the supply of "real estate near enough to sufficient income".
andrewfong 11y ago
> 1. UBI can be thought of as large-scale debt forgiveness. Not everyone receiving UBI would be in debt. > 2. UBI would lead to a huge jump in inflation Your argument assumes a fixed supply of resources. In a perfect market, rising inflation means higher prices means higher profits for suppliers which then results in increased production and, eventually, lower prices again. The market isn't perfect of course -- supplies for some resources (e.g. real estate) expand very slowly, so we might see increased rent eat up a lot of UBI in the short term. But the increased liquidity mentioned by the parent post counters that problem. For instance, in theory, rising rent prices should encourage renters to move elsewhere. But in reality, the cost of moving itself (plus the difficulty of finding a job in a distant location) is high enough to discourage people from making that move. UBI alleviates both concerns by helping pay for moving costs and by providing some cushion for job-seekers. And most markets actually do a decent job of increasing supply in response to spending. At most, this argument calls for phasing in UBI a pace slow enough for markets to adapt rather than not doing it. > 3. People who are not financially secure enough to bring children into this world will suddenly find themselves with the resources to have children. Empirically, this doesn't seem to happen as much you might think. Poverty reduction usually results in a drop in birth rates. Bill Gates raises this point quite a bit when discussing public health. http://www.gatesfoundation.org/Who-We-Are/Resources-and-Media/Annual-Letters-List/Annual-Letter-2014 http://www.gatesfoundation.org/Who-We-Are/Resources-and-Medi...

manyoso 11y ago

This is simply wrong and has been shown to be wrong empirically. Details here: https://medium.com/basic-income/wouldnt-unconditional-basic-income-just-cause-massive-inflation-fe71d69f15e7#.kz2s8ze9d https://medium.com/basic-income/wouldnt-unconditional-basic-...

notahacker 11y ago
It's simply laughable to use a $900 Alaskan dividend or dollar a day stipends for the extreme poor in the developing world as "empirical evidence" of what would happen if a developed country offered >$10k per annum with the stated social purpose of discouraging people from taking jobs they don't want. Sure, demand-pull inflation fears are slightly overblown since any remotely feasible plan relies on taxing the hell out of the middle classes responsible for much of the discretionary spending in the economy, and the poor generally get enough to eat through other subsidies anyway. But basic income will have a whole host of negative effects, many of them region or size specific, and those will undoubtedly include things like huge relative price rises in certain types of labour, sharp rises in property prices in working class districts of expensive cities and "baby farming" if the child grant is the same as or a sufficiently large portion of the adult grant. This is true of most welfare programmes, but BI happens to be the most expensive and least flexible of all possible options.

mikeash 11y ago

I don't understand #2. UBI wouldn't increase the amount of money in circulation, unless you paid for it by printing money or borrowing. But everything I've seen advocates for paying for UBI with taxes. For #3, the overall trend is that people have fewer children, not more, when they have more money. Maybe UBI money would be different somehow, but since you're positing the opposite effect from what we've seen so far, I think it needs way more support.

roymurdock 11y ago
#2 is assuming UBI is a one-time cash injection to stimulate aggregate demand, similar to QE. I have a hard time seeing the path forward to the (substantially) higher taxation on the middle and upper classes needed to make UBI a reality with the current political and economic climate in the US. But this is subject to debate. You are correct that a redistribution of the tax burden, if feasible, would not lead to inflation. #3 - yes, in agrarian societies poorer people have more children to help out with labor-intensive work. I think the situation would play out different in a services-based economy like the US. The monetary aspect of UBI would not influence the wealthy, educated cohort's decision to have more children (usually capping out at 3). It would give lower-income individuals an incentive to have more children in order to claim more benefits, as is common for contemporary social services programs. If UBI was substantial enough to allow lower/middle income individuals to quit their jobs, they would also have much more time to have and raise children - not out of necessity, but out of ability. Agreed that the effect on population size is uncertain and needs an actual study.

AnimalMuppet 11y ago

My impression is that many people, given more money, would use most of it to pay down debt, rather than to spend on new stuff. (That may reduce the probability of bad debt, which may increase the safety of the financial system. On the other hand, it may not increase consumption to the degree expected, and therefore may not work as well as expected to "get the economy moving again".)

dllthomas 11y ago

> UBI doubled the amount of money in circulation? Bread, milk, eggs, and rent cost 2x as much. This assumes that production of these things won't rise - almost certainly false. For milk in particular, we've recently had price supports. And for rent, a basic income inherently increases the supply of "real estate near enough to sufficient income".

andrewfong 11y ago

> 1. UBI can be thought of as large-scale debt forgiveness. Not everyone receiving UBI would be in debt. > 2. UBI would lead to a huge jump in inflation Your argument assumes a fixed supply of resources. In a perfect market, rising inflation means higher prices means higher profits for suppliers which then results in increased production and, eventually, lower prices again. The market isn't perfect of course -- supplies for some resources (e.g. real estate) expand very slowly, so we might see increased rent eat up a lot of UBI in the short term. But the increased liquidity mentioned by the parent post counters that problem. For instance, in theory, rising rent prices should encourage renters to move elsewhere. But in reality, the cost of moving itself (plus the difficulty of finding a job in a distant location) is high enough to discourage people from making that move. UBI alleviates both concerns by helping pay for moving costs and by providing some cushion for job-seekers. And most markets actually do a decent job of increasing supply in response to spending. At most, this argument calls for phasing in UBI a pace slow enough for markets to adapt rather than not doing it. > 3. People who are not financially secure enough to bring children into this world will suddenly find themselves with the resources to have children. Empirically, this doesn't seem to happen as much you might think. Poverty reduction usually results in a drop in birth rates. Bill Gates raises this point quite a bit when discussing public health. http://www.gatesfoundation.org/Who-We-Are/Resources-and-Media/Annual-Letters-List/Annual-Letter-2014 http://www.gatesfoundation.org/Who-We-Are/Resources-and-Medi...