5 ms·

In the end it all seems like a no-win situation. basic income, much like housing debt, will just set a new price floor. This any merchant worth their salt will

In the end it all seems like a no-win situation. basic income, much like housing debt, will just set a new price floor. This any merchant worth their salt will price things at that point plus a markup. Thing is that going the other way and freezing the amount of currency in the economy, like say with a gold standard, will do crap all as well. As that just means things will be prices fractions of fractions, and the pay will be likewise. In the end the only thing that can really solve things is massively, and i mean Star Trek scale massively, crank up supply of goods and services. And unless we have something like Deuterium (aka the handwaved wonderfuel of every space age sci-fi) and replicators to go with, thats not going to happen as we run into an energy crunch sooner than we like to think. Effectively humanity can't win.

jacquesm 10y ago
Well, unlike housing debt this one is more or less un-avoidable. If you add another 20 to 30 years of progress to software and automation in general there will be a lot more people out of job and if they don't have money to spend the whole machine will grind to a halt. Either that or you can welcome a new generation of Luddites.
recursive 10y ago
If my income is $10, and your income is $100, you can buy 10x the stuff I can buy. If you add a basic income of $20, (ignoring taxes lol) now you can buy 4x the stuff I can. It might not affect high end luxury items, but I can probably afford some staple items like socks now.
- mixmastamyk 10y ago
  He's saying the price of socks will rise to eat your new income, no?
  - usefulcat 10y ago
    Which would require a lack of competition in the sock market.
    - lolsal 10y ago
      I'm guessing that's implied since people would not longer 'have' to work. Why compete in the sock market when I can survive and not compete?
- digi_owl 10y ago
  But what if i am the merchant selling you socks, what then? That is part of the problem, this at the top are invariably those that sell stuff to those at the bottom (either directly or via ownership in companies that do so).
senko 10y ago
> basic income, much like housing debt, will just set a new price floor. This any merchant worth their salt will price things at that point plus a markup. And immediately afterwards any merchant worth their salt will price things slightly lower and grab the market. (Or rather not, as someone else will again price it slightly lower, and it'll reach the equilibrium at the old cost + markup).
- digi_owl 10y ago
  But how far down can that go before nobody is interested because there is no profit to be made? We already see how in the PC market the margins are razor thin. The markup do not have to be 10s of percentages, but it has to be there or there is no point in being a merchant in the first place.
  - senko 10y ago
    Right, there is such a point, and it's exactly how things are priced now. Bakeries already have to turn out some profit. I should clarify that this works for commodities but not for monopolies, eg Disney can jack up prices for new Star Wars movies all it wants, as SW fans don't really have a choice :) But for groceries, clothes, texh, etc, it does work
shuntress 10y ago
I don't think I follow. I believe the purpose of basic income is to provide the guarantee that everyone will be able to afford the bare minimum of shelter and sustenance (sustenance including necessary utilities which in addition to power+water includes internet access). Are you saying that the effect of introducing a basic universal income would be that the current price of shelter+sustenance will increase beyond affordability from just basic income alone?
- digi_owl 10y ago
  That is the possibility i worry about yes. Where i live, Norway, there used to be a price control on housing. But then it was abolished by a right wing government, allowing banks to lend to individuals wanting to buy. What in effect has happened is that household debt and house prices have risen in lock step ever since. Similarly, after the unions negotiate a wage rise the prices on good and services will invariably rise to match with a bit of time lag. Damn it, we can perhaps look at how things work for students that get a fixed government stipend. It has to be constantly adjusted upwards to stay relevant with the price inflation.
  - senko 10y ago
    > there used to be a price control on housing. But then it was abolished by a right wing government Was there a relaxation of the rules for building new housing? If not, prices for a limited supply naturally went up.
Chris2048 10y ago
> This any merchant worth their salt will price things at that point plus a markup Couldn't any other merchant then undercut that merchant?
nicholas73 10y ago
Basic income is more about social security, even if it changes price points. Plus, the most basic needs have a somewhat fixed consumption rate. You don't buy more bread if your income goes up. If anything, you buy less and use your money elsewhere.
mindslight 10y ago
> As that [gold standard] just means things will be prices fractions of fractions, and the pay will be likewise. The issue isn't how much one unit of currency is worth, but how its value degrades over time and where newly-created money introduced into the economy. The first concern - it's lower-middle class people that want to save in simple currency, because the transaction and management fees are relatively larger. And so inflation represents a direct drag not on their month-to-month budget, but on their ability to save up economic bargaining power for the future. The second concern - when creating new money, we would expect areas where that new money is spent to inflate quicker than areas where it is not (conversely, if we printed a new $10T and dropped it in a deep sea trench, we would see zero price inflation). Newly created money is seen by consumers for things that can be financialized - housing, cars, education, healthcare. This has the effect of replacing capital assets with monthly rents - the banks don't actually give out newly printed money, but merely lend it. This discourages these expenses from ever being paid off, leading to decreased economic power due to higher burn rates.

jacquesm 10y ago

Well, unlike housing debt this one is more or less un-avoidable. If you add another 20 to 30 years of progress to software and automation in general there will be a lot more people out of job and if they don't have money to spend the whole machine will grind to a halt. Either that or you can welcome a new generation of Luddites.

recursive 10y ago

If my income is $10, and your income is $100, you can buy 10x the stuff I can buy. If you add a basic income of $20, (ignoring taxes lol) now you can buy 4x the stuff I can. It might not affect high end luxury items, but I can probably afford some staple items like socks now.

mixmastamyk 10y ago
He's saying the price of socks will rise to eat your new income, no?
- usefulcat 10y ago
  Which would require a lack of competition in the sock market.
  - lolsal 10y ago
    I'm guessing that's implied since people would not longer 'have' to work. Why compete in the sock market when I can survive and not compete?
digi_owl 10y ago
But what if i am the merchant selling you socks, what then? That is part of the problem, this at the top are invariably those that sell stuff to those at the bottom (either directly or via ownership in companies that do so).

senko 10y ago

> basic income, much like housing debt, will just set a new price floor. This any merchant worth their salt will price things at that point plus a markup. And immediately afterwards any merchant worth their salt will price things slightly lower and grab the market. (Or rather not, as someone else will again price it slightly lower, and it'll reach the equilibrium at the old cost + markup).

digi_owl 10y ago
But how far down can that go before nobody is interested because there is no profit to be made? We already see how in the PC market the margins are razor thin. The markup do not have to be 10s of percentages, but it has to be there or there is no point in being a merchant in the first place.
- senko 10y ago
  Right, there is such a point, and it's exactly how things are priced now. Bakeries already have to turn out some profit. I should clarify that this works for commodities but not for monopolies, eg Disney can jack up prices for new Star Wars movies all it wants, as SW fans don't really have a choice :) But for groceries, clothes, texh, etc, it does work

shuntress 10y ago

I don't think I follow. I believe the purpose of basic income is to provide the guarantee that everyone will be able to afford the bare minimum of shelter and sustenance (sustenance including necessary utilities which in addition to power+water includes internet access). Are you saying that the effect of introducing a basic universal income would be that the current price of shelter+sustenance will increase beyond affordability from just basic income alone?

digi_owl 10y ago
That is the possibility i worry about yes. Where i live, Norway, there used to be a price control on housing. But then it was abolished by a right wing government, allowing banks to lend to individuals wanting to buy. What in effect has happened is that household debt and house prices have risen in lock step ever since. Similarly, after the unions negotiate a wage rise the prices on good and services will invariably rise to match with a bit of time lag. Damn it, we can perhaps look at how things work for students that get a fixed government stipend. It has to be constantly adjusted upwards to stay relevant with the price inflation.
- senko 10y ago
  > there used to be a price control on housing. But then it was abolished by a right wing government Was there a relaxation of the rules for building new housing? If not, prices for a limited supply naturally went up.

Chris2048 10y ago

> This any merchant worth their salt will price things at that point plus a markup Couldn't any other merchant then undercut that merchant?

nicholas73 10y ago

Basic income is more about social security, even if it changes price points. Plus, the most basic needs have a somewhat fixed consumption rate. You don't buy more bread if your income goes up. If anything, you buy less and use your money elsewhere.

mindslight 10y ago

> As that [gold standard] just means things will be prices fractions of fractions, and the pay will be likewise. The issue isn't how much one unit of currency is worth, but how its value degrades over time and where newly-created money introduced into the economy. The first concern - it's lower-middle class people that want to save in simple currency, because the transaction and management fees are relatively larger. And so inflation represents a direct drag not on their month-to-month budget, but on their ability to save up economic bargaining power for the future. The second concern - when creating new money, we would expect areas where that new money is spent to inflate quicker than areas where it is not (conversely, if we printed a new $10T and dropped it in a deep sea trench, we would see zero price inflation). Newly created money is seen by consumers for things that can be financialized - housing, cars, education, healthcare. This has the effect of replacing capital assets with monthly rents - the banks don't actually give out newly printed money, but merely lend it. This discourages these expenses from ever being paid off, leading to decreased economic power due to higher burn rates.