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Something no one ever talks about with UBI is how the effects will be eliminated in a few years. The very things poorer people would buy from it would get more

• 3131s 6y ago
  Something no one ever talks about with UBI is how the effects will be eliminated in a few years. The very things poorer people would buy from it would get more expensive by the UBI proportion, it will just be inflated away. Someone brings this up in literally every UBI discussion ever.
  • glogla 6y ago
    Because it makes sense. Why wouldn't rent seekers - both landlords and more abstract rent-seekers - just raise prices? Maybe competition takes care of that? But that doesn't seem to work very well in the current housing market.
    • archi42 6y ago
      Housing is the largest issue here, and probably needs gov correction. OTOH, basic goods becoming more expensive means producing them becomes more attractive which leads to lower prices or better wages (because less people will be willing to work shit jobs with crap pay like in the meat industry today).
      • Chris2048 6y ago
        Housing is rarely the issue on its own, because it is what it is due to related factor. Why live in one particular location? That's the motivator towards housing, and it relates many different things. e.g in my city, I am positive the rent is high because of issues with transport i.e. poor transport means you need to live closer to work for a reasonable commute.
    • 3131s 6y ago
      UBI is no more susceptible to this than a minimum wage raise, for example. Basic rent controls and other affordable housing initiatives are usually advocated by UBI proponents. There's no reason we can't have both.
      • deleted 6y ago
        [deleted]
    • dragonwriter 6y ago
      > Why wouldn't rent seekers - both landlords and more abstract rent-seekers - just raise prices? Why doesn't every change in income level and distribution just change price levels of goods demanded by different groups resulting in no change in relative buying power? Several reasons: (1) No one has access to idealized monopoly rents, and (2) (relative to redistribution) Very few goods are demanded only at one point in the income distribution.
  • Chris2048 6y ago
    Maybe there should be a word for, the most important "crux", flaw, or impediment to an issue that isn't discussed in proportion to it's importance. Discussing the benefit of UBI is wasted time before you fix the market-adjustment problem.
• gotstad 6y ago
  Your comment assumes that UBI is financed through printing more money. If UBI was financed through taxes, UBI would not have the inflationary effects that you describe.
  • boomlinde 6y ago
    If the landlords are not being taxed at least as much as they increase rent, they have an incentive to increase rent in response to UBI. The result could be an inflating effect in essentials like food and housing, even if offset by a deflating effect in non-essentials, disproportionately affecting the poor whose main expenses are essential. IMO the only viable responses are either rent control, or more elegantly, high availability of public housing at fair rents mixed with private units so as to not create class segregation.
    • tonyedgecombe 6y ago
      UBH - Universal Basic Housing.
  • zpeti 6y ago
    You can tax jeff bezos as much as you want, low end property prices will still go up, (and food etc), because poorer people will have more money, and will spend it on the same things. You might decrease the demand for luxury yachts, but demand for necessities will be the same.
• LoSboccacc 6y ago
  it will also impact salary negotiations, as company tend to give you the absolute minimum for any job where's the slightest competition among employees. I still think some form of UBI is worth considering, especially to remove bullshit jobs and help the poorer to come by, but should be complemented from other more positive initiatives (free tuition, free healthcare, free transit) and it will be extremely important to pin down where the money for it exactly comes from, as putting the burden primarily on the middle class would do more damage than not on the economy.
• nightcracker 6y ago
  Your argument is easily shown to be silly if we replace $1000 with $1 mil. Now everybody is a millionaire. Does this mean that prices will increase? Of course. But will people be just as poor as before? No! People that were millionaires before are nothing special after this measure. That's what UBI does, it reduces wealth inequality between lower and upper class. Now this argument does not and will not apply to the billionaire class. For that inequality we need a different solution, starting with unavoidable progressive taxes.
  • zpeti 6y ago
    So... why isn't it $1m? Or $1bn for that matter? As long as its something like $1000, my argument still applies. Are you saying you'd like to see a UBI of $1m?
    • mytherin 6y ago
      You stated that the poor people would be in the exact same situation if they got UBI. Clearly this is not true if the UBI would be $1M. Perhaps $1000 is not enough to accomplish this, but it is obvious that UBI has the potential to lift people out of poverty. It is a wealth equalising measure. Everyone gets X+1000 instead of X. That means if X used to be 1000, you now get double your income. If X used to be 100000, basically nothing changes for you. Perhaps double the income does not mean double the purchasing power because of the effects you stated, but there is no doubt your purchasing power will increase. Rents will go up, that is very likely. However, it is extremely unlikely the rents will go up by $UBI everywhere. Most other products will remain unaffected. That means that if your rent goes up by $UBI/2, your purchasing power has still increased by 1.5X. This is a gigantic increase for poor people that live paycheck to paycheck.
      • Chris2048 6y ago
        Giving the poor $1M is the same as taxing the rich more heavily. The richest would just leave, and those with more modest wealth would be less happy, possibly leaving in the future. There have been countries that seized the assets of corporations and the wealthy, and redistributed them; this rarely worked out well. > there is no doubt your purchasing power will increase Why is there no doubt? Just because you having more money, you must have more PP? But if everyone* gets more money, it might not. What you are doing is devaluing currency. Everyone invested in currency loses as their investment loses value. The rich have more "money" so it might seem this proportionally penalises the rich, but it doesn't - a person whose large wealth is invested in things that aren't dollars doesn't really lose a lot, the dollar-amount value of their investments just increases, which cancels out the effect of a lower-value dollar.
• LordDragonfang 6y ago
  People make this argument whenever there's a discussion of raising the minimum wage, and guess what? It's thoroughly disproven every time.
• LorenzA 6y ago
  ubi doesn't automatically mean that you get a flat increase. there are models where it is modelled with taxes in mind. so simplified. if you had nothing before you know have $1000. if you had $2000 before it stays. if you had $3000 before it goes down to $2500. so sure if you just stupidly add $1000 that wouldn't work
• mytailorisrich 6y ago
  > When everyone has an extra $1000 do you really think landlords won’t increase rent? Before even going there the key is to ask where this money comes from. Handing any significant amount of money on a recurring basis to everyone is tremendously expensive. Without considering inflation the first issue that comes to mind is that people will use the extra money to pay the extra tax needed to give them extra money....
• tonyedgecombe 6y ago
  I think you would only see inflation where supply is constrained and even then only in limited areas. Food is likely to be safe as supply exceeds demand. Slum properties in richer areas might see it however perhaps those people living on the breadline in a rich city would take their BI and migrate away. UBI does not create more wealth. Nor do pensions for the elderly yet we still pay them.
• kashug 6y ago
  Many places where I have seen people wanting to introduce UBI, increased (flat percentage) tax is often also suggested. The percentage is then suggested to be set at a level so that: - People at low average income will have more money (the UBI-increase will be higher than the tax-increase) - Average income: You get as much as before. - Higher income: you pay more in taxes than you get from UBI. Basically it ends up being a way to move money from the ones with higher incomes to the ones with less. It will ofc still give some inflation as poor people have more funds for basic needs. But other people will have less - and the average person just as much as before. Limiting the effect of the inflation.
  • zpeti 6y ago
    Even if average inflation doesn't go up, when you look at specifics it doesn't look very good for the poor, the very people it's supposed to help. Take your example. - Low income housing costs will probably inflate because all poor people will have an extra $1000 to spend. - Avocado costs probably won't rise, as middle classes will have the same spending power - Bentley and yacht prices might decrease as the rich have less spending power. So you haven't helped the poor. You've created the usual issue with socialism/communism that in the end all it does is pull everyone down, rather than lift anyone up. If that's your goal, fine, admit that you hate the rich. But the marketing promises of UBI are not that, they are about helping the poor.
    • kashug 6y ago
      I will admit that I don't have enough understanding about macro-economics to know how everything will be affected. But inflation on low-price housing does make sense, but I will admit I don't know enough about the field to understand to what degree. So at this point I just wanted to state the points I've heard other people make related to UBI. (basically that is also comes with increased taxes). My own opinion is that I don't know the correct way to do economics in the future. But I do think that we at some point should think very different. I don't think the current system works out for most people in the future. And UBI looks more like a band-aid than an actual fix.
• millstone 6y ago
  "Will landlords increase rent" is a real economics problem. Maybe UBI is financed through massive deficit spending, leading to inflation, and rents increase. Maybe UBI is financed through broad-based tax increases that offset the increased income, leading to nothing in particular. Maybe UBI is financed through increased taxes on rich hedge fund managers, who all quit their high-paying finance jobs to pursue their low-paying art passions, and rents decrease. Any of these are plausible. UBI is a political topic, and how it is financed is crucial to understanding its impact.
• scotty79 6y ago
  I wouldn't be worried about prices of food. Money from UBI should end up in the hands of people that provide poor people with what they need. It's societally useful thing. Rent however...
• mcv 6y ago
  Not everybody will get an extra $1000. For people on welfare, social security, etc. UBI will mostly just replace that. The big advantage is that people who start to work from a position of unemployment don't lose that money and won't get punished for working. The other big advantage is that you save a lot on bureaucracy figuring out who is entitled to what according to which rule, because everybody gets the same. It will help the working poor a lot, but any market where there's real competition, that competition will continue to keep prices low. If prices go up anywhere, that's a sign that in that market, there's no real competition. Or it could be that wages go up due to basic income, in which case costs and prices will indeed go up, but then there will be a good reason for it.
  • thu2111 6y ago
    Saving on bureaucracy is a frequently made argument that I have never seen supported by a quantitative analysis. Do they exist? Such a claim seems untrue on its face. You can't eliminate the welfare bureaucracy with UBI because: - You won't want to be giving free money to literally everyone, only people within your jurisdiction. So you still need to figure out who those people are and whether they're authorised to receive UBI. - It will act as even more of a magnet for illegal immigration, so you'd still need to spend on border reinforcements. Same problem as they have now in Germany and Sweden: lots of people turned up who can't work and sit on welfare forever. If you don't stop this it's in reality a policy of giving out enough free money to live by western standards to the entire world, which isn't how it's being advertised. - You still need to deduplicate everyone and ensure people can't register for UBI over and over. - You need to stop people creating fake identities to receive UBI for people who don't exist. - You still need to ensure UBI stops being paid when someone dies, even though families and friends have strong incentives to stop the state finding out about a death. - You still need to decide how much the UBI is, how much it should change, and whether the amount should vary by location. What's plenty for someone in the countryside may be considered insufficient in the city. - You still need to track where people live, the moment you give way on the amount being adjusted regionally, which you will because the sort of people who most enthusiastically support UBI are all-in on the type of "fairness" that invariably means not treating people the same. Or are they going to advocate for a single income tax rate across all earning bands as well? - You will need a huge rise in taxes to pay for this, meaning tax evasion and avoidance will also go up quite dramatically. You'll need to bulk up the tax bureaucracies to handle this. UBI is just a modern rebranding of what in the 20th century was called the socialist utopia. People tried it, it doesn't work. That was Russia at the start of the 1900s. UBI advocates today seem to have forgotten about all that, but they're re-treading intellectually dead ground.
• konschubert 6y ago
  If everyone has 1000 Euro more, for some people that’s 200% more than before, for others it’s 1% more. This means that the amount of money overall does not increase as much as the amount of money poor people have. Therefore, even if there will be a bit of inflation, it won’t cancel the effect of UBI. Those who earn a lot will have less than before (Because of inflation), but those who earn little or nothing will have more.
  • zpeti 6y ago
    Spoken like a true economist talking from the ivory tower. Just because average inflation is the same, doesn't mean every product's inflation is the same. You will see much larger inflation in goods everyone needs, especially low income housing, and maybe some deflation in luxury goods. On average theres maybe no inflation, but you haven't actually helped the poor. Well done.
    • konschubert 6y ago
      While my argument surely had some simplification, it holds approximately. Whereas for your argument, I’m not sure how you come to the conclusion that inflation will cancel out all benefits. There is no reason to assume that.
    • krysp 6y ago
      Your argument rests on the assumption that poor people consume a set of goods completely distinct from middle income and wealthy people. If the price of a loaf of bread increases by 200% in an attempt to take advantage of increased purchasing power, why would the wealthier consumers accept this, if their income had not increased? Competition would put an end to rent seeking behaviour. And on the subject of low income housing, it's often highly regulated, and can't be hiked arbitrarily. If I've understood correctly, your argument is that the inflation in the basket of goods consumed by low income people exactly cancels out the increased purchasing power, I'm not sure you can argue that's definitely the case.
    • nailuj 6y ago
      Basic goods demand is fairly stable. Poor people will always need to pay for food, shelter, etc. Just with basic income, they won’t have to worry about how they’re going to scrape together the money next month for the rest of their lives. These inflation concerns also assume zero elasticity on the supply side, which seems odd since there is no monopoly situation on any basic good, with the exception of housing in specific areas. Fortunately, the ability to move places strongly increases with a guaranteed income too.
• dragonwriter 6y ago
  > Something no one ever talks about with UBI is how the effects will be eliminated in a few years. No, this is something someone raises in literally every conversation, without any support. > The very things poorer people would buy from it would get more expensive by the UBI proportion, The argument you are making is that redistribution regardless of magnitude cannot affect buying power, even if the after-redistribution distribution is perfectly flat, people (at least those coming up from below) will retain exactly their pre-redistribution buying power. > UBI does not create more wealth Not as a first-order effect, no; it's first-order effect is redistribution. > It just means everyone gets X+$1000 more tokens for the same wealth/goods. Only if it is fully monetized, which doesn't seem to be anybody’s plan. If any of it is financed by traditional fiscal means (taxes and/or debt) it's redistribution, not flat addition.
• vladTheInhaler 6y ago
  The solution to that is to produce more goods. There is no physical law that says that there is a fixed supply of housing. Currently, it is difficult to get approval to build in many urban areas, but if we eliminate that barrier, there is no reason somebody else can't jump in and undercut an extortionate landlord by offering housing at X + $999, etc. until the price is pushed back down. UBI doesn't directly create more wealth, but it would spur demand for creation of more actual goods. After all, poorer people tend to spend much more of their income than wealthier people. And once that is done, society will in fact be wealthier in a concrete sense.