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Every basic income story has an inflation comment. Think in terms of proportion of wealth helps. If a company issues new shares and gives it X(analogy to govt

by enugu 10y ago

Every basic income story has an inflation comment. Think in terms of proportion of wealth helps. If a company issues new shares and gives it X(analogy to govt printing money), the overall dilution in value of share doesn't prevent that the wealth of X from going up. For instance, giving 100% new shares of a 10 million dollars company to X means each share has half of the old value, but X has nevertheless gained 5 million dollars. Redistribution, as opposed to new money, would put even less stress. Another argument for inflation, is the possibility that the poor are consuming non-elastic goods(ie supply doesnt increase with price), so lot of extra money effectively ends up with the sellers of these goods. But this is probably false and at least not obvious. It has to be shown why supply of goods that people consume is inelastic. Most likely redistribution would lead to poor gaining a larger share of the output produced in a year relative to the rich. Note that there can be other potential arguments against basic income(wasting money in alcohol, alternatives like supplementing wage-income), but inflation doesnt directly make the case against it.

neilwilson 10y ago
The argument for inflation is simple. You are giving goods and services to people, who then also self consume their own labour. So they get paid twice in real terms. If they worked for a living they would get paid once, and their output would return to the social pool. Since the social pool ends up less than the counterfactual, and there is more money chasing it you have inflation. Those working get fed up with that and agitate to have the scheme ended, And that is why income guarantee schemes fail. They never appreciate that money and stuff are two totally separate circuits that only have an inductive connection.
- enugu 10y ago
  Ok, this is another argument for inflation depending on the reduction of work incentives after basic income. So lower amount of output is distributed among same number of people causing inflation. But for making this argument, you will have to explain why increasing wages doesnt have the same effect as supplementing labour income with an extra stipend. After all, we are talking about basic income, ie a low amount. In this case it is even more modest (my guess is around 50$ or so a month). To make this argument in general, you would need some idea of how large this work disincentive effect is. Remember there are many positive effects as well - the security of income means that someone doesnt need to do drastic stuff like selling off capital(for instance, cutting short training and taking up a job immediately) in bad times or becoming indebted due to basic necessities.
- sp332 10y ago
  Isn't this an argument against all forms of welfare?
- logfromblammo 10y ago
  Price inflation and deflation occur when there is a temporary mismatch between the apparent relative economic influence of the consumer and the availability of goods and services, or actual economic influence. If you give every member of the lower class a cash income that is effectively a transfer payment from the upper class, you are redistributing apparent relative economic influence. We can look at this as though the entire economy were just two people. Let's call them Peter and Paul. Peter is a rich landowner, who owns the everything factory. Paul is Peter's employee and tenant. Let us also say that the status quo is for Paul to do all the work in the economy. He keeps all the machines in the everything factory cleaned, oiled, and programmed. But Peter owns the factory and the machines. He sets Paul's wages, and the prices of the goods and services produced by the machines. So being a good businessman, Peter sets the prices of food, housing, medical care, and everything else, such that if Paul were to purchase everything he needs and everything he wants, it would require 120% of his wages. Peter, you see, wants to keep Paul motivated to do additional good work for Peter's sole benefit. Paul has to prioritize the things that he wants, and never has quite enough to be content. And Peter gets to keep everything that Paul makes with the machines in excess of what Peter decides he can have. Now Paul programs the machines to make a pistol, and he eats beans and rice for two months to be able to buy it. He then points the gun at Peter and says, "Brother, we need to talk." Paul is not quite as smart as Peter. Instead of demanding ownership of the factory, like a dirty communist, or a change in the goods-production algorithm, like some kind of genius technocrat, he asks for more of the fake units of accounting that Peter manipulates to keep Paul from getting everything he wants, like a complete idiot. Peter huffs and puffs and pretends this is a grievous loss for him, and finally agrees. Paul holsters his gun and goes back to work. Peter goes to his management terminal and sets up a monthly payment in addition to normal wages. Then his automatic price-management daemon slowly ups the prices of everything Paul routinely buys from the factory until it is once again costing Paul 120% of his cashflow to get everything he desires. In this instance, there was no change in the availability of goods and services. Peter still ultimately makes all the economic decisions. So any change in relative economic influence causes price inflation or deflation, until the influence matches the market again. The money is the lubricant for the economic engine, not the fuel. You don't ask for gear grease when you want #2 diesel. Paul should have demanded that he be given a certain percentage of everything the factory produces, independently of Peter's fake accounting units. For instance, he might have demanded that he get a guaranteed 5000 kcal/day of the robot-produced food, without having to pay for it, and 2 L/day of the potable drinking water, and 4 hours/month with the AI physician, and 9 hours/day in the factory's capsule hotel. That would necessarily shift the production of the factory towards the things that Paul wants, without affecting the prices of the things Paul does not specify in the deal. Peter will still try to adjust the prices of those other things so that Paul must work full-time in the factory to get some of the things he wants. Peter doesn't want to get his hands dirty, after all.

by enugu 10y ago

neilwilson 10y ago

The argument for inflation is simple. You are giving goods and services to people, who then also self consume their own labour. So they get paid twice in real terms. If they worked for a living they would get paid once, and their output would return to the social pool. Since the social pool ends up less than the counterfactual, and there is more money chasing it you have inflation. Those working get fed up with that and agitate to have the scheme ended, And that is why income guarantee schemes fail. They never appreciate that money and stuff are two totally separate circuits that only have an inductive connection.

enugu 10y ago
Ok, this is another argument for inflation depending on the reduction of work incentives after basic income. So lower amount of output is distributed among same number of people causing inflation. But for making this argument, you will have to explain why increasing wages doesnt have the same effect as supplementing labour income with an extra stipend. After all, we are talking about basic income, ie a low amount. In this case it is even more modest (my guess is around 50$ or so a month). To make this argument in general, you would need some idea of how large this work disincentive effect is. Remember there are many positive effects as well - the security of income means that someone doesnt need to do drastic stuff like selling off capital(for instance, cutting short training and taking up a job immediately) in bad times or becoming indebted due to basic necessities.
sp332 10y ago
Isn't this an argument against all forms of welfare?
logfromblammo 10y ago
Price inflation and deflation occur when there is a temporary mismatch between the apparent relative economic influence of the consumer and the availability of goods and services, or actual economic influence. If you give every member of the lower class a cash income that is effectively a transfer payment from the upper class, you are redistributing apparent relative economic influence. We can look at this as though the entire economy were just two people. Let's call them Peter and Paul. Peter is a rich landowner, who owns the everything factory. Paul is Peter's employee and tenant. Let us also say that the status quo is for Paul to do all the work in the economy. He keeps all the machines in the everything factory cleaned, oiled, and programmed. But Peter owns the factory and the machines. He sets Paul's wages, and the prices of the goods and services produced by the machines. So being a good businessman, Peter sets the prices of food, housing, medical care, and everything else, such that if Paul were to purchase everything he needs and everything he wants, it would require 120% of his wages. Peter, you see, wants to keep Paul motivated to do additional good work for Peter's sole benefit. Paul has to prioritize the things that he wants, and never has quite enough to be content. And Peter gets to keep everything that Paul makes with the machines in excess of what Peter decides he can have. Now Paul programs the machines to make a pistol, and he eats beans and rice for two months to be able to buy it. He then points the gun at Peter and says, "Brother, we need to talk." Paul is not quite as smart as Peter. Instead of demanding ownership of the factory, like a dirty communist, or a change in the goods-production algorithm, like some kind of genius technocrat, he asks for more of the fake units of accounting that Peter manipulates to keep Paul from getting everything he wants, like a complete idiot. Peter huffs and puffs and pretends this is a grievous loss for him, and finally agrees. Paul holsters his gun and goes back to work. Peter goes to his management terminal and sets up a monthly payment in addition to normal wages. Then his automatic price-management daemon slowly ups the prices of everything Paul routinely buys from the factory until it is once again costing Paul 120% of his cashflow to get everything he desires. In this instance, there was no change in the availability of goods and services. Peter still ultimately makes all the economic decisions. So any change in relative economic influence causes price inflation or deflation, until the influence matches the market again. The money is the lubricant for the economic engine, not the fuel. You don't ask for gear grease when you want #2 diesel. Paul should have demanded that he be given a certain percentage of everything the factory produces, independently of Peter's fake accounting units. For instance, he might have demanded that he get a guaranteed 5000 kcal/day of the robot-produced food, without having to pay for it, and 2 L/day of the potable drinking water, and 4 hours/month with the AI physician, and 9 hours/day in the factory's capsule hotel. That would necessarily shift the production of the factory towards the things that Paul wants, without affecting the prices of the things Paul does not specify in the deal. Peter will still try to adjust the prices of those other things so that Paul must work full-time in the factory to get some of the things he wants. Peter doesn't want to get his hands dirty, after all.