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I've thought about this some. I think the problem with this reasoning is that prices can't go up by the UBI level, since it would be a fixed dollar amount per p
by andrewla 8y ago
I've thought about this some. I think the problem with this reasoning is that prices can't go up by the UBI level, since it would be a fixed dollar amount per person. That is, the price of bread can't increase by $1200 per loaf.
The best the market could compensate, I think, would be a percentage increase in prices corresponding to the average percentage increase in income. Since UBI is a flat amount, not tied to income, that average percentage is going to be so close to 0 as to be completely irrelevant. Even if it's not close to 0, for low-income (or UBI-only income) households especially, the marginal increase in income should be significantly higher than the marginal increase in prices.
- sharemywin 8y agoIf the economy doesn't produce more(or even less) then all that money would go to pay for the same(or less) amount of items.
- andrewla 8y agoYes, I think that's true, although the magnitude of the effect is hard to determine, and I think is likely to be very small. If the average purchaser of a particular class of good (say, eggs) is making 10xUBI post-tax, then getting one unit of UBI in addition to their base salary shifts the demand curve enough that you'd expect to see a price increase proportional to that increase -- so a dozen eggs goes from costing .05xUBI to .055xUBI, purely as an economic rent. But for a person making less than the average salary, like 2xUBI or 0xUBI, their egg-purchasing power increases dramatically. A 2xUBI person previously could afford to buy 40 units of egg, and can now afford 54 eggs, a 36% increase in their buying power.