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The interview here is compelling. Yang's book is even more compelling. But what Yang doesn't do here or in his book is make a powerful case to fiscal conservat

• eachro 7y ago
  I wonder if there are any economic studies on whether social security increased inflation when it was first enacted. It's not the ideal comparison because of the sheer scale of UBI vs social security but it would be something to get notion of the impact.
  • jrhurst 7y ago
    Hard to tell. We'd have to ping similar programs in order countries because there was massive depression on the value of the dollar than.
  • mrfusion 7y ago
    Why would it increase inflation? An equal amount of money is taken out of taxes. There’s no new money being created.
    • somebodythere 7y ago
      It's not just the net money supply that results in inflation, it's also the prospensity for it to be spent, and on what it is spent (inelastic/elastic demand curve goods and services) which determines the amount of inflation. If you took 100 dollars out of the pocket of every American and gave it to Warren Buffett, that would most likely be deflationary.
    • eachro 7y ago
      I don't know whether it would or wouldn't. I was just replying to the parent comment which said this: > But what Yang doesn't do here or in his book is make a powerful case to fiscal conservative spelling out just how universal income will avoid demolishing the economy through inflation. Until this happens, UBI is going nowhere.
• bumby 7y ago
  I agree that it needs to be addressed, but my worry is that it’s complete conjecture. So many people were predicting massive inflation from quantitative easing but that never came to pass. To me, the scary thought is implementing UBI without a mechanism to reel it back if our model wasn’t right
  • wahern 7y ago
    QE added ~$3 trillion cumulatively to the money supply at its peak. And most of it sat on banks' balance sheets because in a $200+ trillion global financial asset market ($300+ trillion today), $3 trillion doesn't do much to change banks' incentive structure for making loans, it just propped up the existing incentive structures so the whole system didn't collapse. I can't fathom how adding $2+ trillion every year directly to working Americans' wallets wouldn't lead to greater consumer price inflation than we've seen with QE. That doesn't actually tell us much about whether UBI is worthwhile, but I don't see the point in denying it. In fact, it's important to have that discussion because there are ways we could mitigate it. For example, most of UBI would likely get sucked up by supply-constrained markets like housing, so it's probably a good idea to combine UBI with housing reform, such as development as of right for missing middle multifamily projects. I agree, we should have an exit plan. But we should also have an entry plan.
    • bumby 7y ago
      You made very good points and I think we probably agree on the need for both good entry and exit plans. The larger point I was trying to highlight is how much of each side is based on conjecture, not data driven evidence. Which makes good planning that much more necessary
• alexashka 7y ago
  What's the alternative? This shit economy that nobody understands that favors psychopaths playing number games with people's livelihoods? I'll take just about anything else. A thousand for every adult is just a basic message - people come first, profits come second. Right now, military industrial complex, financial speculation, big pharma, etc, etc come first, humanity is someone else's problem - how many fucking charities do we have instead of a proper functioning system that provides basic dignity to every citizen worldwide? This idiotic way of life is completely unsustainable and frankly, a depressing system to be born into.
• qqqwerty 7y ago
  Inflation is a non-issue. Economic growth has largely been constrained by demand, not supply. And the modern economy is saturated with replacement goods. If the demand for milk goes up, I can switch to soy milk. If soy milk goes up, I can switch to Almond. And if all of them go up, I just drink water. Once most basic needs are met, inflation looses its power with a few exceptions. The financialization of our economy has resulted in crazy high house prices, education, and to some degree health care. And that was driven by excessive monetary stimulus. Giving working class folks an extra $1k a month is not going to cause houses to go up by $1M. But giving speculators access to absurdly low interest rates will.
  • karaterobot 7y ago
    > If the demand for milk goes up, I can switch to soy milk. If soy milk goes up, I can switch to Almond. And if all of them go up, I just drink water. I don't understand how this example describes a situation where inflation is a non-issue. I used to be able to afford to drink milk; now, due to inflation, I can only afford to drink water. That sounds like inflation. What am I missing from this example?
    • manicdee 7y ago
      It’s a commentary about available options meaning that beverage makers can not exploit a market without shrinking their own market. If they want to maintain revenue the suppliers will need to ensure they retain their market. In addition if it got to the point where someone priced milk so high that customers were abandoning that segment of the beverage market, an aspiring milk empire builder could enter the market with lower prices. The assumption being made in the allegory is that water and milk fill the same role as “something to drink,” with no qualitative difference in consideration.
    • qqqwerty 7y ago
      There are 2 issues that I was attempting to demonstrate, but perhaps I conflated them a bit. Here is second attempt: Inflation requires a persistent and durable increase in the price of a good. The first issue is that a large proportion of individuals in modern economies are barely making enough money to make ends meet. They are very sensitive to price. An increase in the price of milk would likely cause them to switch to alternatives, thus lowering demand for milk which would then bring the price back down. In effect, the constraint on the wages of the lower classes acts as a constraint on prices of goods. And the second factor, is that in these modern global economies, we have plenty of replacements for almost all types of goods. So if a drought in the mid-west causes soy prices to spike, people will just east less soy based products and switch to something cheaper for a while. COVID-19 could disrupt that of course. But my hunch is that within a few months after the lockdowns are over, most supply chains will be back up and running. At that point we will be back to being demand constrained (perhaps significantly so if the economic impact is severe enough).
• mrfusion 7y ago
  I’m so confused why this inflation argument keeps popping up. If you’re paying for the Ubi with taxes then there’s no inflation. Net money supply hasn’t changed (0). If you pay for ubi by printing money then yes, inflation would be a problem. But no one has suggested that. (0) I’m willing to entertain an argument about the velocity of money increasing from ubi but I really doubt it would be too significant.
  • justchilly 7y ago
    Rich people aren't spending all their money on stuff, they're investing it. If wealthy people were to take all that wealth and start buying stuff (themselves or via redistribution through taxes to UBI), there isn't magically more stuff, so the price of stuff goes way up => inflation.
    • mrfusion 7y ago
      What do you think investment is? That money doesn’t disappear. It still enters the economy.
    • mr_toad 7y ago
      Investing is just lending money to people who need to buy something, such as capital. That money is still spent. In fact it needs to be spent on production, in order to produce returns. You can’t just store wealth in a vault and have it grow.
    • TimJRobinson 7y ago
      > there isn't magically more stuff Most companies can easily ramp up production to meet increased demand. It's not magic, it's the modern world. Most general goods companies are demand constrained, that's why they need to do marketing campaigns to make more sales. It's only if they had too many orders and couldn't grow production that we'd have inflation. So there may be some inflation immediately but not long term.
    • digitaltrees 7y ago
      But there would be more stuff, the increase in demand would be met with an increase in supply. Thats the magic of the market.
• bogidon 7y ago
  This Medium article that addresses this point has been pretty wildly shared throughout his campaign: https://medium.com/basic-income/wouldnt-unconditional-basic-income-just-cause-massive-inflation-fe71d69f15e7 https://medium.com/basic-income/wouldnt-unconditional-basic-...
• manicdee 7y ago
  Fiscal conservatives think austerity is a good idea. How do you explain common sense to someone ideologically married to kicking poor people when they are down?
• starpilot 7y ago
  Yeah, no. When Greg Mankiw, probably the foremost conservative economist in the world, endorses Yang's UBI, then it's probably worth considering seriously: https://www.nytimes.com/2019/09/27/business/yang-warren-taxes-mankiw.html https://www.nytimes.com/2019/09/27/business/yang-warren-taxe... https://youtu.be/HDKfdmbCuvw?t=31615 https://youtu.be/HDKfdmbCuvw?t=31615
  • gnicholas 7y ago
    My quick read of the NYT piece is a comparison of Yang's plan and Warren's plan, and it concludes that Warren's is unworkable (e.g., how do you value the present value of Rihanna's future royalties? This has to be determined for Warren's wealth tax, but not Yang's VAT tax). It does not read like an endorsement — just an assessment that Yang's plan is better than a plan he describes as unworkable (Warren's). In the Youtube, he says: "My own view is that a universal income financed by an efficient tax, something like a value added tax, might well be worth considering" — hardly a full-throated endorsement. Has he said anything else that is more positive? Or more specific with regard to the amount of UBI that he thinks would be appropriate/efficient? I wouldn't call either of these things an endorsement.
    • burroisolator 7y ago
      I feel like the quote you pulled out of Youtube is slightly unfair in the extent to which he endorses the idea. In my opinion, it sounds like he full-throat endorses the general method and aim of the idea just not the exact transfer amounts and the method to raise revenue (sales/VAT tax vs carbon tax). Here is the quote in more context: "The plan is just a version of the negative income tax. Milton Freedom first proposed it...and as a student 40 years ago I thought it was a pretty good idea. And it turns out I wasn't alone in that judgement...In 1968 a 1000 economists endorsed a negative income tax along these lines. What Andrew Yang is proposing is a version of what these 1000 economists endorsed back in 1968. Could 1000 economists all be wrong? Laughs Well yes they could. But I don't think in this case they are. My own view is that a universal income financed by an efficient tax, something like a value added tax, might well be worth considering. And I'm one of the signatories...of a plan to do something similar with a carbon tax."
• cycomanic 7y ago
  Why would giving everyone an grant a month result in inflation? That is entirely not clear, alluding to Venezuela does not make it an argument. Essentially you seem to be saying that creating a more equal society results in higher inflation. I don't see your argument being supported by reality, I am not aware of studies showing that the North European countries have statistically higher inflation.
  • atq2119 7y ago
    Unfortunately, many people equate "printing money" with inflation, which is too simplistic. That said, all those monetary grants could lead to excessive demand which leads to inflation, especially in sectors of the economy that are not competitive. Whether it actually would lead to inflation and, more importantly, to how much is a question that needs to be answered empirically.
• JDiculous 7y ago
  There is nothing inflationary about UBI. It's interesting how people think the onus is on UBI proponents to justify why their policy wouldn't cause inflation. Even if it did cause inflation, ultimately it's just a redistribution of wealth, and it still helps those most at the bottom. You mention Venezuela which is a totally different scenario. They had an economy overly dependent on imports paid for by the revenue from oil exports, so when the price of oil crashed, so did their economy along with it. With resulting large amounts of foreign denominated debt, their only options were to 1. default 2. print money to pay off those foreign-denominated debts. They went with option #2, and their currency collapsed. Furthermore their country has extremely weak property rights (eg. businesses being seized by the government), enormously high levels of corruption, and ridiculous price controls. Now what does any of that have to do with UBI?
  • mech1234 7y ago
    There is a large risk of inflation under UBI. You cannot make an honest argument about UBI without accepting this risk. 1. On the margin, UBI reduces employment and production. This contributes to inflation. 2. On the margin, UBI increases consumption of consumer staples. This contributes to inflation. 3. On the margin, UBI increases the velocity of money. This contributes to inflation. 4. Under most assumptions, UBI increases government spending. Either taxes will rise, increasing the real cost of goods and services, or the money supply will increase, contributing to inflation. UBI advocates should not dismiss these effects outright but should argue that they are small in comparison to the benefits of UBI. The lack of proper consideration of these arguments (and other arguments) by UBI advocates is pretty dang spooky.
    • digitaltrees 7y ago
      1. Early evidence of UBI reducing employment actually shows the opposite. 2. Increased demand for consumer staples, if met with increased supply won't lead to inflation, if suppliers and entrepreneurs see the increase in demand as stable, they will make investments to increase supply. As long as we allow the price seeking mechanism of the market reach equilibrium, inflation will be at most momentary. 3. Velocity of money doesn't, by itself create inflation. Said another way, it's not a sufficient condition to bring about inflation. Sometimes a massive increase in money is just hoarded and doesn't enter the economy in any real sense. 4. Taxes don't necessarily have to rise in a regressive way such as sales tax and instead could be redistribution. I suspect what we would see is less inflation in the luxury art and real estate market if taxes were increased and the proceeds redistributed.