4 ms·

motivation to work is non linear. With low UBI amounts people dont starve, but still have incentive to work. One of the biggest problems with welfare in the US

motivation to work is non linear. With low UBI amounts people dont starve, but still have incentive to work. One of the biggest problems with welfare in the US is that you lose benefits that are equal or greater to the amount you make from work, when you start to work, so there is a huge disincentive to work. If UBI was implemented in the US, 100K would make most people lazy and have them drop out from the workforce, but would 5K? A more likely outcome is inflation which results in whatever dollar amount the UBI starts as, effectively moving close to $0 as prices rise.

Retric 8y ago
The inflation impact from UBI should be non existent as the money is taxed from other parts of the economy vs. being created from thin air. Social Security for example is not a huge driver of US inflation it's simply moving money from pocket A to pocket B.
- _rpd 8y ago
  I think this conflates monetary inflation with cost inflation. A universal one time increase in income will likely be absorbed by an increase in the cost of housing unless there is a mass migration from urban to rural areas.
  - Retric 8y ago
    UBI is not a universal increase in income. Moving money from group A to group B means group A has less money. So housing prices might shift with some price decreases largely offsetting price increases in other areas. Inflation is a different effect where there is a net price increase.
- dragonwriter 8y ago
  > The inflation impact from UBI should be non existent as the money is taxed from other parts of the economy vs. being created from thin air. Since demand profile and propensity to consume are not consistent across all sectors, transfers of income from one sector to another can reasonably be expected to have effects on general and particular price levels. Generally, a downward transfer should have some positive first-order effect on inflation. There's good reason to expect this to be modest compared to the size of the transfer so that the recipients have increased buying power just slightly smaller than the pre-transfer prices would suggest. (OTOH, given the existence of actively managed monetary policy that targets inflation, that first-order effect should itself largely just change the landscape for fiscal policy, translating into less net effect on inflation than without monetary policy and higher interest rates.)
  - Retric 8y ago
    UBI does not necessarily increase the total income of the lowest quarter of the economy. What programs are removed, how much more or less they work, etc are all somewhat open questions. Depending on implementation universal healthcare might lower the US governments spending on Healthcare. In that context UBI is about implementation not necessarily total wealth transfer. Presumably eliminating subsidized housing for example would result in more efficient resource allocation. If UBI is set at X, then a social security payment larger than X becomes suspect etc.
fulafel 8y ago
Someone always brings up this inflation argument in these threads, where does it come from? It does not increase the amount of money in circulation. It's just like other forms of income transfers.
- chimeracoder 8y ago
  > It does not increase the amount of money in circulation. It does, in the sense that money circulates faster. This is known as the velocity of money, and increasing the velocity of money does cause inflation.
  - fulafel 8y ago
    Well, it's just taking money out of circulation with taxes and paying it out again. It's not inherently speeding anything up - if anything, slowing it down, since it spends some time in the governments pockets. There can be a second order effect of having well off people kick out some money to taxes that would be otherwise going to investments. It might cause a temporary inflation bump in consumer prices and a corresponding deflation in investments/assets. But that's a much smaller effect than what the amount of income transfers is. And causing this kind of increase in rate of economic activity is normally not considered negative, indeed politicians normally try to make them happen. And anyway central banks regulate this with monetary policy. There is no feedback loop of inflation.
    - chimeracoder 8y ago
      > Well, it's just taking money out of circulation with taxes and paying it out again. It's not inherently speeding anything up - if anything, slowing it down, since it spends some time in the governments pockets. This is completely wrong. The principle I'm referring to is a standard component of basic macroeconomics and is completely uncontroversial among economists. There's lots of literature about this effect if you'd like to learn more.
      - fulafel 8y ago

Retric 8y ago

The inflation impact from UBI should be non existent as the money is taxed from other parts of the economy vs. being created from thin air. Social Security for example is not a huge driver of US inflation it's simply moving money from pocket A to pocket B.

_rpd 8y ago
I think this conflates monetary inflation with cost inflation. A universal one time increase in income will likely be absorbed by an increase in the cost of housing unless there is a mass migration from urban to rural areas.
- Retric 8y ago
  UBI is not a universal increase in income. Moving money from group A to group B means group A has less money. So housing prices might shift with some price decreases largely offsetting price increases in other areas. Inflation is a different effect where there is a net price increase.
dragonwriter 8y ago
> The inflation impact from UBI should be non existent as the money is taxed from other parts of the economy vs. being created from thin air. Since demand profile and propensity to consume are not consistent across all sectors, transfers of income from one sector to another can reasonably be expected to have effects on general and particular price levels. Generally, a downward transfer should have some positive first-order effect on inflation. There's good reason to expect this to be modest compared to the size of the transfer so that the recipients have increased buying power just slightly smaller than the pre-transfer prices would suggest. (OTOH, given the existence of actively managed monetary policy that targets inflation, that first-order effect should itself largely just change the landscape for fiscal policy, translating into less net effect on inflation than without monetary policy and higher interest rates.)
- Retric 8y ago
  UBI does not necessarily increase the total income of the lowest quarter of the economy. What programs are removed, how much more or less they work, etc are all somewhat open questions. Depending on implementation universal healthcare might lower the US governments spending on Healthcare. In that context UBI is about implementation not necessarily total wealth transfer. Presumably eliminating subsidized housing for example would result in more efficient resource allocation. If UBI is set at X, then a social security payment larger than X becomes suspect etc.

fulafel 8y ago

Someone always brings up this inflation argument in these threads, where does it come from? It does not increase the amount of money in circulation. It's just like other forms of income transfers.

chimeracoder 8y ago
> It does not increase the amount of money in circulation. It does, in the sense that money circulates faster. This is known as the velocity of money, and increasing the velocity of money does cause inflation.
- fulafel 8y ago
  Well, it's just taking money out of circulation with taxes and paying it out again. It's not inherently speeding anything up - if anything, slowing it down, since it spends some time in the governments pockets. There can be a second order effect of having well off people kick out some money to taxes that would be otherwise going to investments. It might cause a temporary inflation bump in consumer prices and a corresponding deflation in investments/assets. But that's a much smaller effect than what the amount of income transfers is. And causing this kind of increase in rate of economic activity is normally not considered negative, indeed politicians normally try to make them happen. And anyway central banks regulate this with monetary policy. There is no feedback loop of inflation.
  - chimeracoder 8y ago
    > Well, it's just taking money out of circulation with taxes and paying it out again. It's not inherently speeding anything up - if anything, slowing it down, since it spends some time in the governments pockets. This is completely wrong. The principle I'm referring to is a standard component of basic macroeconomics and is completely uncontroversial among economists. There's lots of literature about this effect if you'd like to learn more.
    - fulafel 8y ago