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>what will happen when basic income inevitably raises the overall price of basic stuff because now "everyone can afford it"? That is the kind of question that

>what will happen when basic income inevitably raises the overall price of basic stuff because now "everyone can afford it"? That is the kind of question that experimentation like this sets out to answer. There are a lot of theories. My personal theory is that, in general, stuff is not going to get more expensive because of basic income. Providers know that people have more money to spend but there is also still competition between providers. There will be places where this generality fails, no doubt. Two areas that I'd be interested in looking at are businesses that require marginal employees to provide a small amount of value and cannot raise prices to cover the increased cost of enticing employees to work for them: fast food, for example. They may have to pay more or change what kind of employees they hire or they may even get to pay less since basic needs are accounted for. Who knows. That is why experimentation is needed. My main concern, and you may be referring to it with your 'basic stuff' category, is what will happen to rents. Landlords know that people /need/ a place to live. I would not be surprised if there is a spike in rents because they hold more power over their consumers than, say, a fruitseller whom, if they raise prices to try and capture some of that extra cash sloshing around, might find their customers just buying a muffin or going to the movies or, really, anything else that is available in the overall market.

orthecreedence 10y ago
I thought this about landlords as well, but landlords are also subject to the same economic rules. Many landlords are just trying to cover the payments on the their property + a little extra. If the landlord has BI as well as the renter, then the baseline doesn't really move at all. The landlord doesn't have to charge more to cover expenses because they get BI too. That's the theory, anyway. I really have been on the edge of my seat to see how this idea works out and what the details will be like. My biggest concern with BI is the abolishment of state healthcare. With healthcare expenses as astronomically high as they are in the US, I think the only real path to a workable system would be universal healthcare + universal basic income, and then getting rid of welfare, food stamps, etc. I can't see this working if people have to spend all their money on health costs.
- greedo 10y ago
  That's not how economics works! If the landlord can charge more for rent, they will. Look at how college tuition skyrocketed as schools became awash in student loan money. Do they need to raise rents? Possible, depending on how inflation hits there costs. But if they can, and the market will bear the cost, they will. That's how pricing of all goods works.
  - clavalle 10y ago
    Only if you ignore competition.
    - greedo 10y ago
      Competition between colleges and universities hasn't done much to keep tuition costs in check.
      - lettergram 10y ago
        That's not what the previous commenter was discussing. College/Universities have no incentive to lower the cost of tuition because everyone can get a loan for what ever they charge. The idea being, the government has removed financial competition and there is no "best for your money" because many students can get a loan for where ever. The way to change this, is to obviously not enforce/have the law enforcing the payback of all student loans. This will dramatically drop attendance at outrageously price universities, forcing them to either drop tuition (or just take more out of country students).
        greedo 10y ago
        Landlords will have no incentive to lower costs either; they have the opposite incentive, charge as much as the market will bear.
      - clavalle 10y ago
        Hasn't it? I see your point. Tuition costs is a good example and I have no doubt that they have risen to capture the money made available through loans and grants. But what makes that different is that student loans can /only/ be spent on tuition and related expenses (college textbooks have done a nice job of capturing that excess as well). Yes, rent is needed and somewhat sticky (people don't like to move a lot), but when you are getting a cash infusion your choices are as large as the market. It is not 'captured money'. I think that if Basic Income is going to have a problem similar to tuition costs to student loans, rent and the housing market in general is where it will show up, perhaps with grocers, too, in constrained areas that have few choices, but I think it will be less of a problem because the 'capture' is very loose compared to tuition and student loans.

orthecreedence 10y ago

I thought this about landlords as well, but landlords are also subject to the same economic rules. Many landlords are just trying to cover the payments on the their property + a little extra. If the landlord has BI as well as the renter, then the baseline doesn't really move at all. The landlord doesn't have to charge more to cover expenses because they get BI too. That's the theory, anyway. I really have been on the edge of my seat to see how this idea works out and what the details will be like. My biggest concern with BI is the abolishment of state healthcare. With healthcare expenses as astronomically high as they are in the US, I think the only real path to a workable system would be universal healthcare + universal basic income, and then getting rid of welfare, food stamps, etc. I can't see this working if people have to spend all their money on health costs.

greedo 10y ago
That's not how economics works! If the landlord can charge more for rent, they will. Look at how college tuition skyrocketed as schools became awash in student loan money. Do they need to raise rents? Possible, depending on how inflation hits there costs. But if they can, and the market will bear the cost, they will. That's how pricing of all goods works.
- clavalle 10y ago
  Only if you ignore competition.
  - greedo 10y ago
    Competition between colleges and universities hasn't done much to keep tuition costs in check.
    - lettergram 10y ago
      That's not what the previous commenter was discussing. College/Universities have no incentive to lower the cost of tuition because everyone can get a loan for what ever they charge. The idea being, the government has removed financial competition and there is no "best for your money" because many students can get a loan for where ever. The way to change this, is to obviously not enforce/have the law enforcing the payback of all student loans. This will dramatically drop attendance at outrageously price universities, forcing them to either drop tuition (or just take more out of country students).
      - greedo 10y ago
        Landlords will have no incentive to lower costs either; they have the opposite incentive, charge as much as the market will bear.
    - clavalle 10y ago
      Hasn't it? I see your point. Tuition costs is a good example and I have no doubt that they have risen to capture the money made available through loans and grants. But what makes that different is that student loans can /only/ be spent on tuition and related expenses (college textbooks have done a nice job of capturing that excess as well). Yes, rent is needed and somewhat sticky (people don't like to move a lot), but when you are getting a cash infusion your choices are as large as the market. It is not 'captured money'. I think that if Basic Income is going to have a problem similar to tuition costs to student loans, rent and the housing market in general is where it will show up, perhaps with grocers, too, in constrained areas that have few choices, but I think it will be less of a problem because the 'capture' is very loose compared to tuition and student loans.