4 ms·

I'm starting to think you're trolling. You're zeroing in on phrases and ignoring the principles they explain. And what is a 'healthy way' for prices to change

by DougN7 10y ago

I'm starting to think you're trolling. You're zeroing in on phrases and ignoring the principles they explain. And what is a 'healthy way' for prices to change for basic needs? They aren't going to drop. Any other change hurts the poor.

jganetsk 10y ago
Ok, let's spell it out with a basic example You said we are going to give $12 billion to the poor There is $747 billion of credit card debt in the United States. Much of that comes from lending in the past to the poor to finance their basic needs. $747 billion > $12 billion It is possible that all of 1 year's basic income entirely goes toward paying off credit card debt. In this scenario: 1) The poor receive a much needed benefit from basic income: they get to pay off their credit card bills. 2) There is no change in demand on basic goods whatsoever. 3) This significant paying down of debt leads to consumer interest rates going down, which further helps the poor. So here is one scenario that is a counterexample to your claim that this can "any other change hurts the poor". This is an example which helps the poor. You are forgetting that people have the freedom to do what they want with their money. When prices go up for one thing, they spend their money in other ways. Healthy ways for prices to change: 1) The price change is stable, rather than runaway. It happens once, and that's it, but we continue to pay basic income year after year. This is expected, if we keep the money supply fixed. 2) The price change eventually leads to an increase in wages for the poor, which have been stagnant for decades.
- sokoloff 10y ago
  What is the likelihood that all $12BB given to people carrying credit card debt gets spent entirely and solely on reducing that credit card debt? I think it's about 1 / googol.
  - jganetsk 10y ago
    Yes but that's irrelevant. What will really happen is, as I said earlier, a combination of saving/investing, spending, and paying off debt. (Obviously, what else can you do with money?) Spending on basic needs is not the only option. They are not forced to do so. And don't underestimate just how much debt the American poor have, and how much they can benefit from relieving their debt.
    - sokoloff 10y ago
      Sorry. I must have mis-understood your argument about why prices would change. I thought you were positing that the recipients might spend all the UBI on retiring credit card debt, causing prices to not change. I thought that to be exceptionally unlikely. Upon re-reading, I still read your words that way.
      - jganetsk 10y ago
        I was just giving one scenario, though unlikely, in which consumer spending does not increase whatsoever. It is likely that a large fraction, maybe even a majority, of basic income would go to paying off debt rather than consumer spending. Given that there is such a huge amount of personal debt out there, the poor have the freedom to allocate their basic income between spending and paying off debt for many years. And when prices go up for certain things, they might reallocate their income to other things.
- DougN7 10y ago
  Paying off debt is good. Once it's paid off, that money will probably go to goods and services (if you say the poor will save it instead, they weren't that poor to begin with). So your scenario of paying off debt for one year just pushes the inevitable out one year. And that one time price change will cancel out the benefit of the UBI. It has to, otherwise companies are not getting the most profit they can (they won't do that), or we magically have unending goods and services. Supply and demand can't be overcome in a market economy of scare resources. Raising the minimum wage eventually has a similar effect. Ask yourself why a loaf of bread isn't $0.05 any more (it surely was sometime in the past 200 years). The obvious answer is inflation. But why? Why did prices increase over time? What economic pressure caused that?
  - jganetsk 10y ago
    Few things wrong in your post: > So your scenario of paying off debt for one year just pushes the inevitable out one year. There is enough debt out there that the poor can spend many years paying it off. > Raising the minimum wage eventually has a similar effect. Ask yourself why a loaf of bread isn't $0.05 any more (it surely was sometime in the past 200 years). The obvious answer is inflation. But why? Why did prices increase over time? What economic pressure caused that? Milton Friedman and Anna Schwartz wrote A Monetary History of the United States, 1867-1960, where they made the claim "inflation is always and everywhere a monetary phenomenon" [1] Thus, the reason why a loaf of bread isn't $0.05 anymore is because of the expansion of money supply, not because of raising minimum wage. The article suggests financing basic income through tax revenues -- and even doing so without raising the deficit. It is not suggesting expanding money supply. Milton Friedman himself even supported the kind of basic income described in the article, which he called a "negative income tax" [2] [1] https://en.wikipedia.org/wiki/Monetarism https://en.wikipedia.org/wiki/Monetarism [2] https://en.wikipedia.org/wiki/Milton_Friedman#Social_security.2C_welfare_programs.2C_and_negative_income_tax https://en.wikipedia.org/wiki/Milton_Friedman#Social_securit...
vessenes 10y ago
I too think your economic arguments are pretty far off from a likely scenario, so I'll try to say a little bit in counter. In your example, $12bn goes to people who are 'poor'. You imagine all of this will be spent on scarce consumer resources and housing, creating increasing cost for those items. You make a number of assumptions that have to be teased out before we can know how likely that scenario is: 1. Poor people will just spend any additional income. 2. Poor people will not have housing mobility and therefore be subject to rising prices for housing. 3. Consumer goods are scarce and supply will not increase based on increased demand. 1. has shown to be (surprisingly?) untrue in basic income trials so far. Read about India's Basic Income experiments at resources like this: http://www.salon.com/2015/01/25/sponsored_by_my_husband_why_its_a_problem_that_writers_never_talk_about_where_their_money_comes_from/ http://www.salon.com/2015/01/25/sponsored_by_my_husband_why_... It turns out poor people use income security to accrue useful economic assets that have sustained financial benefits. Food security also improves. In addition, research into economic security shows that money worries vastly lower IQ (google for Sendhil Mullainathan and Eldar Shafir to learn more). So the data we have so far is pretty uniformly the opposite of your narrative here. 2. This to me seems pretty obviously false, or at least likely to at most be a small impact net of the money. Poorer families must choose between job proximity, communities, schools, all kinds of things, often with less than one month of safety money. Mobility is extraordinarily low in these circumstances. Guaranteed payments will vastly increase mobility for this community, allowing them to purchase property in economically appealing areas while expanding the number of jobs they take. This will at most redistribute people. Perhaps slumlords will raise rents immediately, but they will find two things: tenants who stay can pay, lowering their own costs, and tenants who don't like prices will move much more quickly. Liquidity in markets is good for efficiency. I don't think you can tell a compelling story about harm to poor renters with UBI here, it's just not sound reasoning. 3. This seems like a very silly assertion to make. Automated factories and low-labor-cost factories around the world would cheerfully sell 5x the consumer goods they manufacture now, and prices will decrease as demand increases. Perhaps the increased demand for factory workers would drive some additional jobs. But, a) I'm not sure what scarce resource you imagine will drive inflationary costs, and b) the India research shows spending goes into a pretty diverse basket of things, education, food security, investment and housing among others.
- 10y ago
jganetsk 10y ago
Here's another simple example. Let's assume that basic income will cause net income to go up for the poor (otherwise, what's the point?) But let's also assume that prices on certain goods will go up (a totally reasonable assumption). Then let's measure wealth in terms of "Big Macs". As in, how many Big Macs can you buy in one year? If basic income causes this number to go up for you... then you've benefitted from basic income, regardless of how much the price of a Big Mac increased. If your income goes from zero to non-zero... you definitely benefit. Because with zero income, you can buy zero Big Macs. But with non-zero income, you can buy non-zero Big Macs... no matter how much the price of a Big Mac goes up. And the number of Big Macs you can buy will be greater than one... Big Macs won't cost $12,000 in this scenario. That would be ridiculous. So we can use this as a framework to analyze how basic income impacts society. Then it is obvious that basic income benefits the poorest in society. But you are right, it may harm some people. However, it requires a much more rigorous analysis than you are providing.
- DougN7 10y ago
  With that thinking, the government should just turn on the printing presses and hand money out. People who had zero now have non-zero. Surely Big Macs can't go to $12,000, right?
  - jganetsk 10y ago
    You haven't read the article. Printing presses are not in consideration here. The whole point was that basic income is redistributive: basic income is financed by income tax.
    - DougN7 10y ago
      I wasn't saying the article said printing presses would be used. But taking money that wasn't being spent (all that money corporations and the rich have stowed away) and giving it to people that will spend it is equivalent - lots of money that's not in circulation entering circulation. You end up with more money in circulation either way, with the ramifications that come with it (inflation).

by DougN7 10y ago

jganetsk 10y ago

Ok, let's spell it out with a basic example You said we are going to give $12 billion to the poor There is $747 billion of credit card debt in the United States. Much of that comes from lending in the past to the poor to finance their basic needs. $747 billion > $12 billion It is possible that all of 1 year's basic income entirely goes toward paying off credit card debt. In this scenario: 1) The poor receive a much needed benefit from basic income: they get to pay off their credit card bills. 2) There is no change in demand on basic goods whatsoever. 3) This significant paying down of debt leads to consumer interest rates going down, which further helps the poor. So here is one scenario that is a counterexample to your claim that this can "any other change hurts the poor". This is an example which helps the poor. You are forgetting that people have the freedom to do what they want with their money. When prices go up for one thing, they spend their money in other ways. Healthy ways for prices to change: 1) The price change is stable, rather than runaway. It happens once, and that's it, but we continue to pay basic income year after year. This is expected, if we keep the money supply fixed. 2) The price change eventually leads to an increase in wages for the poor, which have been stagnant for decades.

sokoloff 10y ago
What is the likelihood that all $12BB given to people carrying credit card debt gets spent entirely and solely on reducing that credit card debt? I think it's about 1 / googol.
- jganetsk 10y ago
  Yes but that's irrelevant. What will really happen is, as I said earlier, a combination of saving/investing, spending, and paying off debt. (Obviously, what else can you do with money?) Spending on basic needs is not the only option. They are not forced to do so. And don't underestimate just how much debt the American poor have, and how much they can benefit from relieving their debt.
  - sokoloff 10y ago
    Sorry. I must have mis-understood your argument about why prices would change. I thought you were positing that the recipients might spend all the UBI on retiring credit card debt, causing prices to not change. I thought that to be exceptionally unlikely. Upon re-reading, I still read your words that way.
    - jganetsk 10y ago
      I was just giving one scenario, though unlikely, in which consumer spending does not increase whatsoever. It is likely that a large fraction, maybe even a majority, of basic income would go to paying off debt rather than consumer spending. Given that there is such a huge amount of personal debt out there, the poor have the freedom to allocate their basic income between spending and paying off debt for many years. And when prices go up for certain things, they might reallocate their income to other things.
DougN7 10y ago
Paying off debt is good. Once it's paid off, that money will probably go to goods and services (if you say the poor will save it instead, they weren't that poor to begin with). So your scenario of paying off debt for one year just pushes the inevitable out one year. And that one time price change will cancel out the benefit of the UBI. It has to, otherwise companies are not getting the most profit they can (they won't do that), or we magically have unending goods and services. Supply and demand can't be overcome in a market economy of scare resources. Raising the minimum wage eventually has a similar effect. Ask yourself why a loaf of bread isn't $0.05 any more (it surely was sometime in the past 200 years). The obvious answer is inflation. But why? Why did prices increase over time? What economic pressure caused that?
- jganetsk 10y ago
  Few things wrong in your post: > So your scenario of paying off debt for one year just pushes the inevitable out one year. There is enough debt out there that the poor can spend many years paying it off. > Raising the minimum wage eventually has a similar effect. Ask yourself why a loaf of bread isn't $0.05 any more (it surely was sometime in the past 200 years). The obvious answer is inflation. But why? Why did prices increase over time? What economic pressure caused that? Milton Friedman and Anna Schwartz wrote A Monetary History of the United States, 1867-1960, where they made the claim "inflation is always and everywhere a monetary phenomenon" [1] Thus, the reason why a loaf of bread isn't $0.05 anymore is because of the expansion of money supply, not because of raising minimum wage. The article suggests financing basic income through tax revenues -- and even doing so without raising the deficit. It is not suggesting expanding money supply. Milton Friedman himself even supported the kind of basic income described in the article, which he called a "negative income tax" [2] [1] https://en.wikipedia.org/wiki/Monetarism https://en.wikipedia.org/wiki/Monetarism [2] https://en.wikipedia.org/wiki/Milton_Friedman#Social_security.2C_welfare_programs.2C_and_negative_income_tax https://en.wikipedia.org/wiki/Milton_Friedman#Social_securit...

vessenes 10y ago

I too think your economic arguments are pretty far off from a likely scenario, so I'll try to say a little bit in counter. In your example, $12bn goes to people who are 'poor'. You imagine all of this will be spent on scarce consumer resources and housing, creating increasing cost for those items. You make a number of assumptions that have to be teased out before we can know how likely that scenario is: 1. Poor people will just spend any additional income. 2. Poor people will not have housing mobility and therefore be subject to rising prices for housing. 3. Consumer goods are scarce and supply will not increase based on increased demand. 1. has shown to be (surprisingly?) untrue in basic income trials so far. Read about India's Basic Income experiments at resources like this: http://www.salon.com/2015/01/25/sponsored_by_my_husband_why_its_a_problem_that_writers_never_talk_about_where_their_money_comes_from/ http://www.salon.com/2015/01/25/sponsored_by_my_husband_why_... It turns out poor people use income security to accrue useful economic assets that have sustained financial benefits. Food security also improves. In addition, research into economic security shows that money worries vastly lower IQ (google for Sendhil Mullainathan and Eldar Shafir to learn more). So the data we have so far is pretty uniformly the opposite of your narrative here. 2. This to me seems pretty obviously false, or at least likely to at most be a small impact net of the money. Poorer families must choose between job proximity, communities, schools, all kinds of things, often with less than one month of safety money. Mobility is extraordinarily low in these circumstances. Guaranteed payments will vastly increase mobility for this community, allowing them to purchase property in economically appealing areas while expanding the number of jobs they take. This will at most redistribute people. Perhaps slumlords will raise rents immediately, but they will find two things: tenants who stay can pay, lowering their own costs, and tenants who don't like prices will move much more quickly. Liquidity in markets is good for efficiency. I don't think you can tell a compelling story about harm to poor renters with UBI here, it's just not sound reasoning. 3. This seems like a very silly assertion to make. Automated factories and low-labor-cost factories around the world would cheerfully sell 5x the consumer goods they manufacture now, and prices will decrease as demand increases. Perhaps the increased demand for factory workers would drive some additional jobs. But, a) I'm not sure what scarce resource you imagine will drive inflationary costs, and b) the India research shows spending goes into a pretty diverse basket of things, education, food security, investment and housing among others.

10y ago

jganetsk 10y ago

Here's another simple example. Let's assume that basic income will cause net income to go up for the poor (otherwise, what's the point?) But let's also assume that prices on certain goods will go up (a totally reasonable assumption). Then let's measure wealth in terms of "Big Macs". As in, how many Big Macs can you buy in one year? If basic income causes this number to go up for you... then you've benefitted from basic income, regardless of how much the price of a Big Mac increased. If your income goes from zero to non-zero... you definitely benefit. Because with zero income, you can buy zero Big Macs. But with non-zero income, you can buy non-zero Big Macs... no matter how much the price of a Big Mac goes up. And the number of Big Macs you can buy will be greater than one... Big Macs won't cost $12,000 in this scenario. That would be ridiculous. So we can use this as a framework to analyze how basic income impacts society. Then it is obvious that basic income benefits the poorest in society. But you are right, it may harm some people. However, it requires a much more rigorous analysis than you are providing.

DougN7 10y ago
With that thinking, the government should just turn on the printing presses and hand money out. People who had zero now have non-zero. Surely Big Macs can't go to $12,000, right?
- jganetsk 10y ago
  You haven't read the article. Printing presses are not in consideration here. The whole point was that basic income is redistributive: basic income is financed by income tax.
  - DougN7 10y ago
    I wasn't saying the article said printing presses would be used. But taking money that wasn't being spent (all that money corporations and the rich have stowed away) and giving it to people that will spend it is equivalent - lots of money that's not in circulation entering circulation. You end up with more money in circulation either way, with the ramifications that come with it (inflation).