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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 t

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.
- logfromblammo 10y ago
  Scaling this back up to the real economy, this means that UBI as transfer payments of cash from rich to poor will never have the intended effect. If the intent is to provide everyone with a guaranteed floor of necessary goods and services, the only way to do it is to take production capacity from the rich and produce the necessary quantities directly. If the U.S. collectively consumes 300 million metric tons of food per year, the federals tax Monsanto, ADM, et al. the 100 million metric tons of that Americans actually need to eat to survive, and tax Kroger, Walmart, et al. some of their distribution network to get it into stores, then issues everyone their ration coupons and tracks the redemption locations Kanban-style, so they can fine-tune the distribution. You get your one bag of cornmeal for free, but if you want a second bag, you have to get a job and pay for it. That is considerably more administrative overhead than just cutting everyone a check. But it is the only feasible way to accomplish the intended purpose on a permanent basis without forcibly changing property ownership. If you're going to be socialist, even in part, you have to control the means of production outside of the normal market price system. Otherwise, the free market eventually routes around your mandates as damage to the business network. If you're not going to nationalize it like a communist, you have to give the existing owners binding production orders, like a fascist. It just so happens that America hates communism, is at least passably friendly with fascism, and saddled with loads of debt, so mandatory production orders would be how to implement UBI there. Countries with big sovereign wealth funds from state-owned natural resources can go the semi-communist route, buy shares in the necessary companies, vote as necessary to guarantee their supply, and take their dividends as a share of the production. I can't say which would be better for India, but I think fascist-style UBI would be more likely to work there.

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.

logfromblammo 10y ago
Scaling this back up to the real economy, this means that UBI as transfer payments of cash from rich to poor will never have the intended effect. If the intent is to provide everyone with a guaranteed floor of necessary goods and services, the only way to do it is to take production capacity from the rich and produce the necessary quantities directly. If the U.S. collectively consumes 300 million metric tons of food per year, the federals tax Monsanto, ADM, et al. the 100 million metric tons of that Americans actually need to eat to survive, and tax Kroger, Walmart, et al. some of their distribution network to get it into stores, then issues everyone their ration coupons and tracks the redemption locations Kanban-style, so they can fine-tune the distribution. You get your one bag of cornmeal for free, but if you want a second bag, you have to get a job and pay for it. That is considerably more administrative overhead than just cutting everyone a check. But it is the only feasible way to accomplish the intended purpose on a permanent basis without forcibly changing property ownership. If you're going to be socialist, even in part, you have to control the means of production outside of the normal market price system. Otherwise, the free market eventually routes around your mandates as damage to the business network. If you're not going to nationalize it like a communist, you have to give the existing owners binding production orders, like a fascist. It just so happens that America hates communism, is at least passably friendly with fascism, and saddled with loads of debt, so mandatory production orders would be how to implement UBI there. Countries with big sovereign wealth funds from state-owned natural resources can go the semi-communist route, buy shares in the necessary companies, vote as necessary to guarantee their supply, and take their dividends as a share of the production. I can't say which would be better for India, but I think fascist-style UBI would be more likely to work there.