8 ms·
I still don't see how UBI doesn't cause inflation enough to offset any benefit(in the near term ie before robot job apocalypses).
by sharemywin 9y ago
I still don't see how UBI doesn't cause inflation enough to offset any benefit(in the near term ie before robot job apocalypses).
- bryanlarsen 9y agoInflation is a monetary phenomenon. As long as you are paying for UBI through taxes rather than by printing money, there shouldn't be any overall inflation. Certainly there will be price adjustments: the prices of some things will go up while others will go down. But that definitely wont "offset any benefit".
- dmm 9y ago> Inflation is a monetary phenomenon. Is it? The US monetary base has more than tripled since 2008 but inflation since then is only 14.6%. For comparison between 1999 and 2008, the us monetary base increased by about a third and inflation between those years was around 29%.
- craigkilgo 9y agoInflation being a monetary phenomenon is the technical definition of inflation. When you mention the 14% number, that is based on market price for basket of goods which is not technically inflation (under the definition used by economists, not the definition used by journalists).
- dmm 9y agoSo if bought inflation-protected securities from the us treasury, they would have paid >300% from 2008 to now? Or does the us treasury use the journalist definition of inflation?
- mcguire 9y agoEconomic definitions are abstractions built for mathematical tractibility while creating formal models.
- colorint 9y agoThe technical definition of inflation is raising prices. It's only a strictly monetary phenomenon if output and velocity are fixed with respect to the money supply. In other words, inflation meaning "more money" is only a technical definition in the kooky world of monetarism.
- sharemywin 9y agoThat's assuming the people getting taxed are spending less on the same things (in the CPI) that people that are getting a surplus benefit are spending more on. Otherwise the rich are investing less and the poor are spending more on consumption. asset prices go down cpi goes up.
- mcguire 9y agoMaybe, maybe not. I can see a situation where necessities increase in price, leaving low income household in the same position they have now.
- skybrian 9y agoNecessities would go up in price only if increased demand isn't matched by a corresponding increase in supply. There's little reason to believe that's the case except when the market can't adjust in time, and that's temporary. If Walmart sells more, their suppliers will make more, and the economy does better.
- thriftwy 9y agoBecause many (most?) markets are buyer's markets. You try to increase prices, you are out of business which is eaten by competitors.
- sharemywin 9y agoif everyone's costs go up everyone will be forced to raise prices.
- skybrian 9y agoTo some extent, but labor generally isn't 100% of the cost, so it's still a win. If wages go up due to people having more and better choices in life, isn't that a win?
- thriftwy 9y agoWhy would their costs go up?
- sharemywin 9y agolabor costs go up because labor supply goes down.
- thriftwy 9y agoThis depends. In many locales, labor supply might go up as people come for cheap homes to live on UBI, and then look for auxiliary work.
- wu-ikkyu 9y agoMaybe using a resource based UBI rather than a money based UBI could help avoid this problem?
- jandrese 9y agoUBI is a fancy way of saying "take from the rich to give to the poor". It has to be combined with a progressive tax system to make sense. This isn't even a bad thing from an economic standpoint. Capitalism has the problem where wealth tends to accumulate upward naturally (rich get richer just because they're rich and have a bit of financial sense) and eventually starves itself of demand. Re-injecting cash in the low end keeps the economy moving despite this natural tendency. UBI has the advantage of low administrative overhead too, so more of the money gets used on goods and services. Also, unlike Welfare there is no perceived disincentive to work. That said, UBI has its problems. Prices at the low end are likely to go up simply due to lack of workers. If you have UBI why would you do backbreaking manual labor all day for minimum wage? To really work well it has to be paired with increasing automation of low end jobs to offset the labor imbalance, otherwise you end up with inflation as people are forced to pay higher wages to fruit pickers, fry cooks, etc... in a competitive job market. Or more likely, those jobs will move overseas at an increased rate to countries where the labor market is skewed towards employers and they can pay people well below the value they generate.
- skybrian 9y agoThis supposed problem of higher wages would also be an argument against raising the minimum wage, and yet many people are in favor of that because they think low wages are the problem. If UBI does indeed raise wages at the low end, it's because people have more options in life and made their own choices. Seems like a good thing, no? More generally, inflation is usually a bad thing, except in the labor market where it's a good thing. If wages go up and the overall price level doesn't go up as much, that means people are earning more without their expenses going up as much.
- jandrese 9y agoIMHO our current economy has a lot of slack in it. We could easily increase minimum wage without noticeable inflation because people are being squeezed from so many different directions. We've let the minimum wage lag behind overall economic growth for too long.