6 ms·

Before I pass judgement, I would want to see what happened to the CPI price after basic income. The article says that one recipient was able to buy more milk a

Before I pass judgement, I would want to see what happened to the CPI price after basic income. The article says that one recipient was able to buy more milk and send his kid to school. Fine, how much does milk cost now and which kid is now unable to go to school because his son is sitting in the seat? You can have as much money as the government wants, but goods are a limited resource (in the short term). Just printing money to give people more money is not a solution. Venezuela just hiked minimum wage up to 797,510 BSF a month. That's 79,751 dollars at the official exchange rate (which is 10 to 1). On the black market it's about 6.50. And nothing is available on shelves.

digi_owl 9y ago
That assumes that he BI sum will stay unadjusted across years, a very dumb way to do it if true. As for Venezuela, and similar situations, look towards the exchange rate.
- jimmywanger 9y ago
  Policies like this always lag economic indicators, whereas exchange rates and prices adjust fairly quickly. From [0], "However, Zimbabwe's peak month of inflation is estimated at 79.6 billion percent in mid-November 2008." Even a private charitable organization cannot deal with that level of inflation by tweaking the minimum wage. Plus, you start running out of money (the physical paper kind) really quickly because you can't afford it anymore. Or you can go further down the rabbit hole and enforce price controls. Which leads to shortages of goods and lack of supply because of zero incentive to work and produce. Seeing your children cold and hungry and fair prices is a huge incentive to be productive. [0] https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe
  - digi_owl 9y ago
    Now you are mixing two very different situations. BI as a concept do not, and will never, fix exchange rate problems. BI is for when on paper the nation has a functioning domestic economy, but one that exclude large parts of the population from taking part in said economy via jobs. Weimar Germany was left with a non-functioning industry after WW1, and saddled with reparations denominated in foreign currency. Even Keynes warned that it would be a mess. Zimbabwe similar ended up with a broken domestic industry, but in this instance it was the leadership that tried to keep up appearance via imports that ran things into the ground. For Venezuela i would say that judge is still out, but the slide started with the bet on oil exports to shore up imports, only or for the oil price to take a dip. but in this instance i can't eliminate the potential for foreign meddling as the leadership had incensed certain world powers...
    - jimmywanger 9y ago
      > For Venezuela i would say that judge is still out, but the slide started with the bet on oil exports to shore up imports, only or for the oil price to take a dip. but in this instance i can't eliminate the potential for foreign meddling as the leadership had incensed certain world powers... The only thing world powers would have to do is let Maduro continue his economic policies. There doesn't need to be an external plot, just stupidity in economic powers. With such high inflation, nobody wants to take the BSF, so they insist on hard currency. Thus, prices increases. Even when you make bread, you need hard currency to buy yeast and machine parts (baking and mixing machines) as most of them are imported. With prices spiking, the government gets the bright idea to slap on price controls, at an artificially low bring to "ensure the common man" has access to goods. The price controls don't allow breakeven considering the cost of production and imports, especially when the price rises faster than price controls allow. So they don't make anything that is price controlled. Also, the price control board is controlled by the government. Every year during Christmas and before elections, the government goes in and slashes prices. Sure, you get a big screen TV for cheap, but they never get imported any more. Same thing with airlines. They're not allowed to repatriate profits at anything close to a realistic exchange rate, so they just stop flying there.
lrem 9y ago
By printing money for BI you effectively redistribute from the top half to the bottom half. This would suck for most people here, including myself. However, I don't think that redistribution from the bottom 99% to the top 1%, as I believe quantitative easing turned out, is much better.
- azernik 9y ago
  Or, you just tax the top earners to pay for BI. Much more transparent.
  - jimmywanger 9y ago
    How exactly do you propose to do that? One of Facebook's founders renounced US citizenship because of tax rates. Again, it's only the rich who can afford to find tax havens and expensive accountants. The middle class is stuck paying taxes.
    - dub4u 9y ago
      By renouncing citizenship he probably did the US a favor. http://www.philosophersbeard.org/2012/04/what-to-do-about-rich.html?m=1 http://www.philosophersbeard.org/2012/04/what-to-do-about-ri... Let them decide: give some of your wealth to finance BI or else renounce citizenship.
      - mantas 9y ago
        You'd have to ban them owning property or businesses in the country too. Otherwise they'd just stay but without citizenship or taxes.
        azernik 9y ago
        When you renounce your citizenship, you don't get a green card - you become a foreigner, with no right to live and work in the country. Depending on your new citizenship, you may have the right to visit visa-free, but that's it.
skybrian 9y ago
Inflation happens due to supply limits, for example if more milk can't be produced or more teachers can't be hired. Generally speaking, we assume producers can do these things, if given enough advance notice. More demand is good. To say that these things can't be done at all and that more demand is bad is a defeatist attitude. Venezuela is a special case where the government is attacking production. It's not what happens in a healthy economy.
- gohbgl 9y ago
  Price inflation is caused by - increased money supply - decreased demand for money - increased demand for the good - decreased good supply The 11 million percent price inflation rate in Zimbabwe was not caused by a 11 million percent reduction in goods supply.
  - jimmywanger 9y ago
    If your currency is suffering from hyperinflation, your currency is worthless on international markets. Why would they take money in a rapidly depreciating asset instead of just demanding hard currency that holds value decently well? That starts mattering when you have nothing really to export and still require supplies (parts and food) from foreign countries. It's shocking how connected and interdependent industries are now. I can't think of a single thing produced that doesn't need foreign inputs for production. Even apples need ladders for harvest, when one breaks, pesticides and fertilizer.

digi_owl 9y ago

That assumes that he BI sum will stay unadjusted across years, a very dumb way to do it if true. As for Venezuela, and similar situations, look towards the exchange rate.

jimmywanger 9y ago
Policies like this always lag economic indicators, whereas exchange rates and prices adjust fairly quickly. From [0], "However, Zimbabwe's peak month of inflation is estimated at 79.6 billion percent in mid-November 2008." Even a private charitable organization cannot deal with that level of inflation by tweaking the minimum wage. Plus, you start running out of money (the physical paper kind) really quickly because you can't afford it anymore. Or you can go further down the rabbit hole and enforce price controls. Which leads to shortages of goods and lack of supply because of zero incentive to work and produce. Seeing your children cold and hungry and fair prices is a huge incentive to be productive. [0] https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe https://en.wikipedia.org/wiki/Hyperinflation_in_Zimbabwe
- digi_owl 9y ago
  Now you are mixing two very different situations. BI as a concept do not, and will never, fix exchange rate problems. BI is for when on paper the nation has a functioning domestic economy, but one that exclude large parts of the population from taking part in said economy via jobs. Weimar Germany was left with a non-functioning industry after WW1, and saddled with reparations denominated in foreign currency. Even Keynes warned that it would be a mess. Zimbabwe similar ended up with a broken domestic industry, but in this instance it was the leadership that tried to keep up appearance via imports that ran things into the ground. For Venezuela i would say that judge is still out, but the slide started with the bet on oil exports to shore up imports, only or for the oil price to take a dip. but in this instance i can't eliminate the potential for foreign meddling as the leadership had incensed certain world powers...
  - jimmywanger 9y ago
    > For Venezuela i would say that judge is still out, but the slide started with the bet on oil exports to shore up imports, only or for the oil price to take a dip. but in this instance i can't eliminate the potential for foreign meddling as the leadership had incensed certain world powers... The only thing world powers would have to do is let Maduro continue his economic policies. There doesn't need to be an external plot, just stupidity in economic powers. With such high inflation, nobody wants to take the BSF, so they insist on hard currency. Thus, prices increases. Even when you make bread, you need hard currency to buy yeast and machine parts (baking and mixing machines) as most of them are imported. With prices spiking, the government gets the bright idea to slap on price controls, at an artificially low bring to "ensure the common man" has access to goods. The price controls don't allow breakeven considering the cost of production and imports, especially when the price rises faster than price controls allow. So they don't make anything that is price controlled. Also, the price control board is controlled by the government. Every year during Christmas and before elections, the government goes in and slashes prices. Sure, you get a big screen TV for cheap, but they never get imported any more. Same thing with airlines. They're not allowed to repatriate profits at anything close to a realistic exchange rate, so they just stop flying there.

lrem 9y ago

By printing money for BI you effectively redistribute from the top half to the bottom half. This would suck for most people here, including myself. However, I don't think that redistribution from the bottom 99% to the top 1%, as I believe quantitative easing turned out, is much better.

azernik 9y ago
Or, you just tax the top earners to pay for BI. Much more transparent.
- jimmywanger 9y ago
  How exactly do you propose to do that? One of Facebook's founders renounced US citizenship because of tax rates. Again, it's only the rich who can afford to find tax havens and expensive accountants. The middle class is stuck paying taxes.
  - dub4u 9y ago
    By renouncing citizenship he probably did the US a favor. http://www.philosophersbeard.org/2012/04/what-to-do-about-rich.html?m=1 http://www.philosophersbeard.org/2012/04/what-to-do-about-ri... Let them decide: give some of your wealth to finance BI or else renounce citizenship.
    - mantas 9y ago
      You'd have to ban them owning property or businesses in the country too. Otherwise they'd just stay but without citizenship or taxes.
      - azernik 9y ago
        When you renounce your citizenship, you don't get a green card - you become a foreigner, with no right to live and work in the country. Depending on your new citizenship, you may have the right to visit visa-free, but that's it.

skybrian 9y ago

Inflation happens due to supply limits, for example if more milk can't be produced or more teachers can't be hired. Generally speaking, we assume producers can do these things, if given enough advance notice. More demand is good. To say that these things can't be done at all and that more demand is bad is a defeatist attitude. Venezuela is a special case where the government is attacking production. It's not what happens in a healthy economy.

gohbgl 9y ago
Price inflation is caused by - increased money supply - decreased demand for money - increased demand for the good - decreased good supply The 11 million percent price inflation rate in Zimbabwe was not caused by a 11 million percent reduction in goods supply.
- jimmywanger 9y ago
  If your currency is suffering from hyperinflation, your currency is worthless on international markets. Why would they take money in a rapidly depreciating asset instead of just demanding hard currency that holds value decently well? That starts mattering when you have nothing really to export and still require supplies (parts and food) from foreign countries. It's shocking how connected and interdependent industries are now. I can't think of a single thing produced that doesn't need foreign inputs for production. Even apples need ladders for harvest, when one breaks, pesticides and fertilizer.