4 ms·

I don't understand the principle behind UBI. If everyone makes +$X amount more doesn't everything just raise by +$Y?

by jcon321 10y ago

ashark 10y ago
Are you contending that changes in average income (in either direction, presumably) of the lower, say, four quintiles of society, have no real effect on quality of life? Or only when it's achieved via UBI? If the latter, why is that case special?
- jcon321 10y ago
  Having a hard time understanding your comment. Are you saying UBI should only be for lower class? Isn't that just a welfare program?
  - ralmeida 10y ago
    Don't think so, they may be referring to the fact that since the UBI is a fixed value, then the increase for the lower income percentiles is percent-wise higher w.r.t the current income.
Chris2048 10y ago
Maybe certain products are sold on the basis on minimal viable profit. This will not change, even if everyone now has more money. Things sold on the basis of what people are able to pay are usually based on something in short supply (not liquid?) such that if people (now with more money) started to compete (by offering more money) they could not just produce more of that good; hence the price rises instead, like in an auction. So UBI should probably be accompanied with some kind of plan for affordable housing (increase housing supply).
ralmeida 10y ago
Not if you assume a fairly free market (not many cartels, etc). If you could buy bread for $10, and now earn 50% more, a merchant could raise the price to $15 to try to grab the 'newly found money'. But they would be just raising their margin, since the cost of producing the bread is the same. A free market then will self-regulate via competition. A new merchant could enter the market charging $14 for the bread, undercutting the $15 guy. And so on, until the price reaches equilibrium based on what the people are willing to pay. Of course, there's value in the discussion on whether UBI changes the costs of production and/or demand, but it's not as simple as 'income raises, price raises'.
- jcon321 10y ago
  "Of course, there's value in the discussion on whether UBI changes the costs of production and/or demand but it's not as simple as 'income raises, price raises'" Makes sense.
logfromblammo 10y ago
What I don't understand is how people can support Fannie Mae/Freddie Mac/Sallie Mae loan guarantee programs and not UBI-style welfare programs. They're almost the same thing. The government is essentially providing a subsidy, and middlemen suck up most of the value, leaving the presumptively intended beneficiaries with almost nothing. Government encourages mortgages with loan guarantees. Home prices rise. Existing builders, owners, and lending institutions benefit, and the new buyers are less able to afford the higher prices and debt loads. Government encourages student loans with loan guarantees. Tuition prices rise. Universities and lending institutions benefit, and the students are less able to afford the higher prices and debt loads. UBI encourages purchase of lifestyle necessities with monthly checks. Rent, gas, and grocery costs rise. Landlords and business owners benefit, and people still have to work in addition to the monthly check they are now utterly dependent on. You can't move the supply curve by fiddling around with prices or demand. You can't provide everyone with their lifestyle necessities independent of work or trade just by sending out checks. If you want to make home ownership increase, you have to build more affordable (and more-affordable) homes. If you want higher education to expand, you have to build more universities and hire more professors. If you want more unemployed people to not starve and not be homeless, you have to acquire and distribute more food and beds. Why do people persist in thinking you can solve problems by just printing/taxing more money and transferring it to certain groups?
- JoeAltmaier 10y ago
  The old "prices will rise to absorb UBI" argument. That takes a profound distrust of the free market to even imagine. As for supply curve, wake up and notice how industry is changing. In the last 10 years, automation has been explosive. Factories coming back to America from overseas don't do it because somehow labor has become affordable. They do it because robots are cheaper than even Chinese and Indian labor. The robots are ready to lift the yoke of labor from humanity. As expected, folks are reacting with panic and alarm. Yes, it'll be different. But perhaps not the apocalypse that keeps getting threatened. And yes, we can provide everyone with necessities by handing out checks. We've been able to over-produce food, clothing and many other things essentially without limit for decades. The rest is not going to be far behind.

I don't understand the principle behind UBI. If everyone makes +$X amount more doesn't everything just raise by +$Y?

by jcon321 10y ago

I don't understand the principle behind UBI. If everyone makes +$X amount more doesn't everything just raise by +$Y?

Are you contending that changes in average income (in either direction, presumably) of the lower, say, four quintiles of society, have no real effect on quality of life? Or only when it's achieved via UBI? If the latter, why is that case special?

jcon321 10y ago
Having a hard time understanding your comment. Are you saying UBI should only be for lower class? Isn't that just a welfare program?
- ralmeida 10y ago
  Don't think so, they may be referring to the fact that since the UBI is a fixed value, then the increase for the lower income percentiles is percent-wise higher w.r.t the current income.

Chris2048 10y ago

Maybe certain products are sold on the basis on minimal viable profit. This will not change, even if everyone now has more money. Things sold on the basis of what people are able to pay are usually based on something in short supply (not liquid?) such that if people (now with more money) started to compete (by offering more money) they could not just produce more of that good; hence the price rises instead, like in an auction. So UBI should probably be accompanied with some kind of plan for affordable housing (increase housing supply).

ralmeida 10y ago

Not if you assume a fairly free market (not many cartels, etc). If you could buy bread for $10, and now earn 50% more, a merchant could raise the price to $15 to try to grab the 'newly found money'. But they would be just raising their margin, since the cost of producing the bread is the same. A free market then will self-regulate via competition. A new merchant could enter the market charging $14 for the bread, undercutting the $15 guy. And so on, until the price reaches equilibrium based on what the people are willing to pay. Of course, there's value in the discussion on whether UBI changes the costs of production and/or demand, but it's not as simple as 'income raises, price raises'.

jcon321 10y ago
"Of course, there's value in the discussion on whether UBI changes the costs of production and/or demand but it's not as simple as 'income raises, price raises'" Makes sense.

logfromblammo 10y ago

What I don't understand is how people can support Fannie Mae/Freddie Mac/Sallie Mae loan guarantee programs and not UBI-style welfare programs. They're almost the same thing. The government is essentially providing a subsidy, and middlemen suck up most of the value, leaving the presumptively intended beneficiaries with almost nothing. Government encourages mortgages with loan guarantees. Home prices rise. Existing builders, owners, and lending institutions benefit, and the new buyers are less able to afford the higher prices and debt loads. Government encourages student loans with loan guarantees. Tuition prices rise. Universities and lending institutions benefit, and the students are less able to afford the higher prices and debt loads. UBI encourages purchase of lifestyle necessities with monthly checks. Rent, gas, and grocery costs rise. Landlords and business owners benefit, and people still have to work in addition to the monthly check they are now utterly dependent on. You can't move the supply curve by fiddling around with prices or demand. You can't provide everyone with their lifestyle necessities independent of work or trade just by sending out checks. If you want to make home ownership increase, you have to build more affordable (and more-affordable) homes. If you want higher education to expand, you have to build more universities and hire more professors. If you want more unemployed people to not starve and not be homeless, you have to acquire and distribute more food and beds. Why do people persist in thinking you can solve problems by just printing/taxing more money and transferring it to certain groups?

JoeAltmaier 10y ago
The old "prices will rise to absorb UBI" argument. That takes a profound distrust of the free market to even imagine. As for supply curve, wake up and notice how industry is changing. In the last 10 years, automation has been explosive. Factories coming back to America from overseas don't do it because somehow labor has become affordable. They do it because robots are cheaper than even Chinese and Indian labor. The robots are ready to lift the yoke of labor from humanity. As expected, folks are reacting with panic and alarm. Yes, it'll be different. But perhaps not the apocalypse that keeps getting threatened. And yes, we can provide everyone with necessities by handing out checks. We've been able to over-produce food, clothing and many other things essentially without limit for decades. The rest is not going to be far behind.