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Its not awful over a short term. Over a longer term, it will price commodities out of reach. I've watched milk prices rise dramatically over the last 5 years
by hpcjoe 9y ago
Its not awful over a short term. Over a longer term, it will price commodities out of reach. I've watched milk prices rise dramatically over the last 5 years or so. This is in part due to the costs of production rising, not necessarily the farm margins. These costs of production rise for any number of reasons, but mostly its because rising costs tend to spread out through the economy. [1]
My point is that prices will rise and find their time dependent values, in a way that will diminish the purchasing power of those you'd be attempting to help. You give enough so they have some left over, and enterprising groups will realize that they can raise prices to reflect the larger purchasing power.
Economics 101 in this case.
[1] http://www.investopedia.com/financial-edge/0212/inflation-and-economic-recovery.aspx http://www.investopedia.com/financial-edge/0212/inflation-an...
- SirRhosis 9y agoMilk inflation is not that significant. Five dollars of milk in 2000 will cost you 6.51 USD today[0]. It's actually lower this year than it was in 2014[1]. [0] - http://www.in2013dollars.com/Milk/price-inflation http://www.in2013dollars.com/Milk/price-inflation [1] - https://ycharts.com/indicators/milk_price https://ycharts.com/indicators/milk_price
- ianai 9y agoMilk is also not a necessity for survival. Also over the longer term the UBI would increase at the base inflation rate. It would have to move in relation to all things.
- hpcjoe 9y agoHmm ... not 3 years ago, the milk I currently pay $4/gallon for was selling for ~$3/gallon. Maybe outside of Michigan it is different.
- thebooktocome 9y agoHeh, in Ohio milk is currently 1$/gal.
- dragonwriter 9y ago> I've watched milk prices rise dramatically over the last 5 years or so. Milk is subject to government price supports, including a mandate to purchase if market prices fall below a certain floor. > My point is that prices will rise and find their time dependent values, in a way that will diminish the purchasing power of those you'd be attempting to help. It's true to the extent that the long term effect of a fixed UBI will be less than you would expect based on prices at the time adopted and the inflation that net beneficiaries would experience without the UBI. This is mitigated if the UBI formula tends to grow in nominal terms (e.g., because it's tied to a revenue source which grows with the economy, or indexed to inflation) and, in any case, it requires unlikely assumptions about elasticity to have it not be a real net benefit to the nominal net beneficiaries.
- ianai 9y agoEcon 101 should not use milk as a case study.