4 ms·

> All sane UBI proposals don't create money, they just move money from rich people to poor people I'm not very educated in this, so correct me if I'm wrong, bu

> All sane UBI proposals don't create money, they just move money from rich people to poor people I'm not very educated in this, so correct me if I'm wrong, but my understanding was that while UBI doesn't create money, but it can move money from people with a lower ratio of money-spent to money-made, to people with a higher ratio. If that's the case, the money that's actively being used should increase.

grasshopperpurp 9y ago
Yes, that's one of the problems we're already facing, as I understand it. Too much of the money is in too few hands, and it's not being circulated back into the economy the way that it would be if that money was spread out among more individuals.
DougBTX 9y ago
What do you mean by, "actively being used" though? The rich tend to want a return on their money, "invested" seems like a type of use, even if it is passive. Crazy hypothetically, if it reduced the money available for investment, it might raise the interest rate on loans, reducing the rate of lending, so reducing the total money supply.
- AnimalMuppet 9y ago
  I'm not sure that the rich usually invest in terms of making loans available, so I don't think your concern will happen. What might happen is a decrease in investment, which might lead to a decrease in economic growth. (Or, alternately, to a decrease in the rate of installation of automation, which might preserves jobs...)
  - prostoalex 9y ago
    > I'm not sure that the rich usually invest in terms of making loans available, Outside of the $100+ trillion bond market the examples are indeed hard to come by.
Retric 9y ago
Saving ever more money is deflationary by removing it from the economy, but spending money is not inflationary because spending money does not create more money. In the simplest possible term demand for money is created through taxes and loans because people need it at a future date to meet these obligations. Spending money does not remove these obligations so it does not devalue money.
wbillingsley 9y ago
The main barrier to UBI is that the same groups in the population that are so in favour of it are also fiercely determined immigration must be open. And guess what happens to the first country to say at the same time "anyone can come here" and "we'll give anyone living here (not just a limited closed trial scheme) $40,000 per yer no-questions-asked". It may just be a transient effect (things might even out steady-state) but that would be a very big transient effect with some pernicious consequences (eg it'd be in other countries' accounts-balance interests to keep their welfare low, and to be harsher to the poor, to encourage more net recipients to move to the UBI country, while offering low-tax environments to encourage the UBI's wealthy to squirrel away their money there) Globalisation is ending at the right time for a UBI to emerge, but so long as the first priority is ensuring globalisation is never dented, UBI can't get to the starting line. There are two hundred mice; they can all see the bit of cheese that looks like the solution to many of their problems in the trap; but nobody's going first.
- panic 9y ago
  You'd want to increase the level of income slowly over time so you can deal with problems like this as they arise. I don't think anyone's proposing an immediate $40k-per-year no-questions-asked grant to all residents.
  - wbillingsley 9y ago
    It's a state change. As with the introduction of the NHS in the UK, you'd need to bring it in pretty much all at once, with a significant value so people see the benefits. Otherwise, the costs add up fast, but the impact does not. eg, even picking a smaller country than the US -- the UK has 70 million people; giving them £14 per year would be a £1bn item in the budget but £14 would not have visible impact to society-as-a-whole, and would be cancelled quickly as an unaffordable indulgence. It's happened before recently -- eg, the UK's Child Trust Fund policy gave every child born a one-off £250 investment gift (a relatively small sum but with a multiplier effect as it would grow over time and prompt relatives to add to the account). The £250 from the government was cancelled within six years as unaffordable. As the benefits only get seen later (when the children grow up), there's a valley of death for the policy where the cost of it kills it. https://en.wikipedia.org/wiki/Child_Trust_Fund https://en.wikipedia.org/wiki/Child_Trust_Fund Curiously, Iain Duncan Smith's "universal credit" seems about the closest governments have come to a national scheme headed towards being a basic income (or at least a negative income tax), with the idea of at least first eliminating the benefits eligibility cliffs that existed in the system. But it's not been plain sailing, and again started being taken apart before it could be rolled out or "got right". (Any government can be expected to get it wrong first, you just hope they'll get it right later.) So has comparatively little likelihood of growing to be a universal basic income or negative income tax.

grasshopperpurp 9y ago

Yes, that's one of the problems we're already facing, as I understand it. Too much of the money is in too few hands, and it's not being circulated back into the economy the way that it would be if that money was spread out among more individuals.

DougBTX 9y ago

What do you mean by, "actively being used" though? The rich tend to want a return on their money, "invested" seems like a type of use, even if it is passive. Crazy hypothetically, if it reduced the money available for investment, it might raise the interest rate on loans, reducing the rate of lending, so reducing the total money supply.

AnimalMuppet 9y ago
I'm not sure that the rich usually invest in terms of making loans available, so I don't think your concern will happen. What might happen is a decrease in investment, which might lead to a decrease in economic growth. (Or, alternately, to a decrease in the rate of installation of automation, which might preserves jobs...)
- prostoalex 9y ago
  > I'm not sure that the rich usually invest in terms of making loans available, Outside of the $100+ trillion bond market the examples are indeed hard to come by.

Retric 9y ago

Saving ever more money is deflationary by removing it from the economy, but spending money is not inflationary because spending money does not create more money. In the simplest possible term demand for money is created through taxes and loans because people need it at a future date to meet these obligations. Spending money does not remove these obligations so it does not devalue money.

wbillingsley 9y ago

The main barrier to UBI is that the same groups in the population that are so in favour of it are also fiercely determined immigration must be open. And guess what happens to the first country to say at the same time "anyone can come here" and "we'll give anyone living here (not just a limited closed trial scheme) $40,000 per yer no-questions-asked". It may just be a transient effect (things might even out steady-state) but that would be a very big transient effect with some pernicious consequences (eg it'd be in other countries' accounts-balance interests to keep their welfare low, and to be harsher to the poor, to encourage more net recipients to move to the UBI country, while offering low-tax environments to encourage the UBI's wealthy to squirrel away their money there) Globalisation is ending at the right time for a UBI to emerge, but so long as the first priority is ensuring globalisation is never dented, UBI can't get to the starting line. There are two hundred mice; they can all see the bit of cheese that looks like the solution to many of their problems in the trap; but nobody's going first.

panic 9y ago
You'd want to increase the level of income slowly over time so you can deal with problems like this as they arise. I don't think anyone's proposing an immediate $40k-per-year no-questions-asked grant to all residents.
- wbillingsley 9y ago
  It's a state change. As with the introduction of the NHS in the UK, you'd need to bring it in pretty much all at once, with a significant value so people see the benefits. Otherwise, the costs add up fast, but the impact does not. eg, even picking a smaller country than the US -- the UK has 70 million people; giving them £14 per year would be a £1bn item in the budget but £14 would not have visible impact to society-as-a-whole, and would be cancelled quickly as an unaffordable indulgence. It's happened before recently -- eg, the UK's Child Trust Fund policy gave every child born a one-off £250 investment gift (a relatively small sum but with a multiplier effect as it would grow over time and prompt relatives to add to the account). The £250 from the government was cancelled within six years as unaffordable. As the benefits only get seen later (when the children grow up), there's a valley of death for the policy where the cost of it kills it. https://en.wikipedia.org/wiki/Child_Trust_Fund https://en.wikipedia.org/wiki/Child_Trust_Fund Curiously, Iain Duncan Smith's "universal credit" seems about the closest governments have come to a national scheme headed towards being a basic income (or at least a negative income tax), with the idea of at least first eliminating the benefits eligibility cliffs that existed in the system. But it's not been plain sailing, and again started being taken apart before it could be rolled out or "got right". (Any government can be expected to get it wrong first, you just hope they'll get it right later.) So has comparatively little likelihood of growing to be a universal basic income or negative income tax.