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No, it's an inflation argument against UBI. If everyone has more money, everyone becomes less sensitive to increases in prices, and therefore prices rise into t

by Tyrek 9y ago

No, it's an inflation argument against UBI. If everyone has more money, everyone becomes less sensitive to increases in prices, and therefore prices rise into the new equilibrium. (Increase in demand without a corresponding increase in supply leads to an increase in the price level, in intro microeconomics-ese). Now, the price level may not rise to the exact level where it cancels out the entire UBI, but that's based on various factors that are effectively unobservable. It's not quite thermodynamics, because it's not as strict of a 'law', but it's close.

erentz 9y ago
But that suggest prices are set by the available cash flow. Which means without other factors if we just lower everyone’s wages to zero everything will be free. Obviously this isn’t the case. Also it completely ignores supply and demand. Under UBI someone will raise their price to take more profit... but then no one will step in and compete because they see an ability to offer the product/service more efficiently. Seems this inflation argument against UBI has obvious limits. Maybe it could cause some but it can’t be a linear relationship as people like the parent argue.
- FooHentai 9y ago
  >But that suggest prices are set by the available cash flow. Which means without other factors if we just lower everyone’s wages to zero everything will be free. Obviously this isn’t the case. Prices can rise above cost, as long as someone will keep paying for it, But prices can only drop until the seller loses their incentive to sell, at which point the product/service will be withdrawn from sale.
- deleted 9y ago
  [deleted]
- donw 9y ago
  Prices aren't set by one thing and one thing only, though. Available cash flow definitely plays into the equation, and we can see this at work in a multitude of areas, from the skyrocketing cost of a university education, to the fact that ski resorts charge two or three times the going rate for a cup of hot chocolate (because if you have the money to go skiing, you have the money to pay extra for a hot beverage). Costs also play a factor, of course. Dropping everybody's wages to zero doesn't mitigate the fact that raw materials, fuel, and even time are all finite resources. Personally, while once a fan, I'm highly skeptical of UBI. I would rather see something more like a universal assistance program: safe, government-run housing, dormitory style, with a cafeteria, available to all. And I do mean "all". If Warren Buffet wants to bunk with Hobo Joe, that's his business. Buffet pays taxes that support the system, and shouldn't be barred from making use of it. The people that live there are responsible for working to maintain the space: cleaning, cooking, etc. Put them near libraries and community centers, with ready access to whatever public transportation is available. Unfortunately, given the current political climate, I doubt that this would go over well with either party.
  - mattrices 9y ago
    The ski lodge and state college operate with a monopoly, once youre there you have no other choice of coco vendors. Cash flow has nothing to do with monopoly pricing.
badestrand 9y ago
I think you should think of UBI not as "everyone gets $X more" but rather a redistribution of income. The lower half of income earners will in sum receive more than currently while the upper half will have less due to higher taxes.
- Tyrek 9y ago
  Sure, but generally the top income earners aren't really in the same market as people with lower incomes. Sure there's indirect impacts, but the housing stock that they pursue is different, they eat at different places, probably shop at different grocery stores... the impact that this will have on their spending will be substantially more muted and difficult to measure in a model as compared to the impact of everyone at (lower income bracket) receiving an increase to their income.

by Tyrek 9y ago

erentz 9y ago

But that suggest prices are set by the available cash flow. Which means without other factors if we just lower everyone’s wages to zero everything will be free. Obviously this isn’t the case. Also it completely ignores supply and demand. Under UBI someone will raise their price to take more profit... but then no one will step in and compete because they see an ability to offer the product/service more efficiently. Seems this inflation argument against UBI has obvious limits. Maybe it could cause some but it can’t be a linear relationship as people like the parent argue.

FooHentai 9y ago
>But that suggest prices are set by the available cash flow. Which means without other factors if we just lower everyone’s wages to zero everything will be free. Obviously this isn’t the case. Prices can rise above cost, as long as someone will keep paying for it, But prices can only drop until the seller loses their incentive to sell, at which point the product/service will be withdrawn from sale.
deleted 9y ago
[deleted]
donw 9y ago
Prices aren't set by one thing and one thing only, though. Available cash flow definitely plays into the equation, and we can see this at work in a multitude of areas, from the skyrocketing cost of a university education, to the fact that ski resorts charge two or three times the going rate for a cup of hot chocolate (because if you have the money to go skiing, you have the money to pay extra for a hot beverage). Costs also play a factor, of course. Dropping everybody's wages to zero doesn't mitigate the fact that raw materials, fuel, and even time are all finite resources. Personally, while once a fan, I'm highly skeptical of UBI. I would rather see something more like a universal assistance program: safe, government-run housing, dormitory style, with a cafeteria, available to all. And I do mean "all". If Warren Buffet wants to bunk with Hobo Joe, that's his business. Buffet pays taxes that support the system, and shouldn't be barred from making use of it. The people that live there are responsible for working to maintain the space: cleaning, cooking, etc. Put them near libraries and community centers, with ready access to whatever public transportation is available. Unfortunately, given the current political climate, I doubt that this would go over well with either party.
- mattrices 9y ago
  The ski lodge and state college operate with a monopoly, once youre there you have no other choice of coco vendors. Cash flow has nothing to do with monopoly pricing.

badestrand 9y ago

I think you should think of UBI not as "everyone gets $X more" but rather a redistribution of income. The lower half of income earners will in sum receive more than currently while the upper half will have less due to higher taxes.

Tyrek 9y ago
Sure, but generally the top income earners aren't really in the same market as people with lower incomes. Sure there's indirect impacts, but the housing stock that they pursue is different, they eat at different places, probably shop at different grocery stores... the impact that this will have on their spending will be substantially more muted and difficult to measure in a model as compared to the impact of everyone at (lower income bracket) receiving an increase to their income.