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Site is hugged for me, so I can't check to see if the author addresses this. I've been wondering - wouldn't UBI tend towards an inflationary spiral? I'm sympat

Site is hugged for me, so I can't check to see if the author addresses this. I've been wondering - wouldn't UBI tend towards an inflationary spiral? I'm sympathetic to the goals of UBI. But without price controls, what would prevent rent/mortage/food/entertainment prices from just rising to absorb everybody's newfound income? College tuition has been going up exponentially since the introduction of federal student aid. Is there any reason to assume UBI wouldn't do the same thing (albeit without the debt)?

nyghtly 6y ago
> The Social Security Administration sends out checks each month to 64 million people, mostly the elderly and disabled. Unemployment Insurance programs send out checks each month to 2.1 million people. In other countries, the government, in addition to paying these kinds of old-age, disability, and unemployment benefits, also pays out a monthly benefit to every child. In the US that would mean checks going out to the families of around 74 million children. > None of this leads to any inflation problems because, as mentioned in the very first section above, taxes are used to fund these programs, just as they would be for any other permanent welfare state expansion. https://www.peoplespolicyproject.org/2020/03/18/understanding-claims-about-basic-income-and-inflation/ https://www.peoplespolicyproject.org/2020/03/18/understandin...
- fiftyfifty 6y ago
  There are roughly 209 million adults in the US. Providing a $1,000/month UBI (which seems to be what's commonly proposed) will cost us $2.5 Trillion every year. That is a lot of tax to collect. If we are not careful it will be become a debt burden and it will cause inflation. I'm not saying that it can't be done but I think we would all like to see a very careful plan on where exactly that much money is going to come from.
  - adkadskhj 6y ago
    While i am very pro-tax and pro-support nets, i don't think we can have UBI - an insanely high tax social program - without a tax overhaul. Most specifically, the more social programs you provide the more transparent taxation becomes. Right now our tax programs are not only lacking in transparency but are straight obtuse. This exists, i assume, because they had to work around peoples aversion to taxes and sticker shock when paying taxes. A massively increased tax spend will only serve to illustrate the sticker-shock problem more. I just don't see UBI happening until people can learn to pay for the common good, recognizing what they're getting out of it and how the common good has material impacts on their self - even if entirely selfishly motivated (as most Americans seem). Unfortunately the only way i see UBI (or similar) happening is in the face of mass layoffs and lack of work due to a large technology change - like various forms of automation. Until then, it's a problem people can't see, aren't directly affected by, and won't want to pay for.
  - composer 6y ago
    > $2.5 Trillion every year Actually it will cost $3T ONCE, one-time. Actually the USA has already paid for a UBI from just its pandemic-related stimulus alone, e.g. CARES Act. The way to achieve an perpetual ongoing UBI with just a one time expediture of $3T is... drum roll... Stipulate that all payments must be spent on basics & essentials. AND then issue the payments & handle collection digitally/electronically like with debit cards. I sit astounded that the country's best leaders have not proposed a "basics only" amendment.
  - tharga8616 6y ago
    Why nobody ask where is the money going to come from when is for military spending? They always find the money, or just they print it, lol. Because yes, money can be printed. It's a mere abstraction, a measure tool.
- RandallBrown 6y ago
  > old-age, disability, and unemployment These are all groups of people that aren't working so there isn't any extra money available for people to raise prices on them. If everyone makes $X more dollars than normal I don't understand why prices wouldn't go up to take advantage of that. Would it just be because taxes would go up as well so any extra profits would end up being fed straight back into the system?
dllthomas 6y ago
> wouldn't UBI tend towards an inflationary spiral? A UBI higher than the economy can support would seem to drive inflation, especially if we're (literally or effectively) printing some of the money. Whether that leads to a "spiral" depends on what we do in response. If our UBI is intent on delivering a certain real value, so we give an $X that we adjust regularly to account for observed or expected inflation, then we run risk of inflationary spiral. So let's not do that. If our UBI is a fixed dollar value, increasing based only on targeted inflation, then inflation drives down the real value to something we can empirically support. There are also proposals that tie income to a specific revenue stream (a carbon tax, or Alaska's permanent fund), which has its own dynamics but doesn't seem to risk inflationary spiral. > But without price controls, what would prevent rent/mortage/food/entertainment prices from just rising to absorb everybody's newfound income? Competition, of both direct and indirect substitutes; this is the same thing that prevents rent/mortgage/food/entertainment prices from rising to absorb everybody's oldfound income. Considering rent and mortgage in particular, as they seem to be in more limited supply than the others, I want to note two things: First, competition is not merely competition amongst like units. If there is a fixed number of rooms for rent in a city, more people that want rooms than rooms available, and everyone can pay more, we should expect prices to rise. But as prices rise, choosing to take on an additional roommate, keep living with your parents, or similar become more attractive. And of course, the number of rooms for rent is only approximately fixed, even in the short term. These will typically stop the price from rising the full amount. Second, we aren't actually particularly limited on housing available; we're particularly limited on sufficiently desirable housing available. A huge portion of what makes housing desirable is that it is sufficiently close to sufficient sources of income. By reducing necessary income, we are actually directly increasing the supply of "sufficiently desirable" housing, even before anyone starts building. > College tuition has been going up exponentially since the introduction of federal student aid. There is a very different dynamic when we give people dollars that they can spend as they need, versus when we give people potential dollars they can only spend for a single purpose. If I save a dollar on tuition today, and I'm borrowing from a lender that will only lend to me for tuition, then I can't turn around and use that dollar for anything else that I need (or want). This means it's less important to me to save that dollar, so there's less pressure keeping the price down.
tharga8616 6y ago
Competition. What would then impede people migrating to rural areas, where life is less expensive, to live better? Prices in the city will go down if there is not enough demand.

nyghtly 6y ago

> The Social Security Administration sends out checks each month to 64 million people, mostly the elderly and disabled. Unemployment Insurance programs send out checks each month to 2.1 million people. In other countries, the government, in addition to paying these kinds of old-age, disability, and unemployment benefits, also pays out a monthly benefit to every child. In the US that would mean checks going out to the families of around 74 million children. > None of this leads to any inflation problems because, as mentioned in the very first section above, taxes are used to fund these programs, just as they would be for any other permanent welfare state expansion. https://www.peoplespolicyproject.org/2020/03/18/understanding-claims-about-basic-income-and-inflation/ https://www.peoplespolicyproject.org/2020/03/18/understandin...

fiftyfifty 6y ago
There are roughly 209 million adults in the US. Providing a $1,000/month UBI (which seems to be what's commonly proposed) will cost us $2.5 Trillion every year. That is a lot of tax to collect. If we are not careful it will be become a debt burden and it will cause inflation. I'm not saying that it can't be done but I think we would all like to see a very careful plan on where exactly that much money is going to come from.
- adkadskhj 6y ago
  While i am very pro-tax and pro-support nets, i don't think we can have UBI - an insanely high tax social program - without a tax overhaul. Most specifically, the more social programs you provide the more transparent taxation becomes. Right now our tax programs are not only lacking in transparency but are straight obtuse. This exists, i assume, because they had to work around peoples aversion to taxes and sticker shock when paying taxes. A massively increased tax spend will only serve to illustrate the sticker-shock problem more. I just don't see UBI happening until people can learn to pay for the common good, recognizing what they're getting out of it and how the common good has material impacts on their self - even if entirely selfishly motivated (as most Americans seem). Unfortunately the only way i see UBI (or similar) happening is in the face of mass layoffs and lack of work due to a large technology change - like various forms of automation. Until then, it's a problem people can't see, aren't directly affected by, and won't want to pay for.
- composer 6y ago
  > $2.5 Trillion every year Actually it will cost $3T ONCE, one-time. Actually the USA has already paid for a UBI from just its pandemic-related stimulus alone, e.g. CARES Act. The way to achieve an perpetual ongoing UBI with just a one time expediture of $3T is... drum roll... Stipulate that all payments must be spent on basics & essentials. AND then issue the payments & handle collection digitally/electronically like with debit cards. I sit astounded that the country's best leaders have not proposed a "basics only" amendment.
- tharga8616 6y ago
  Why nobody ask where is the money going to come from when is for military spending? They always find the money, or just they print it, lol. Because yes, money can be printed. It's a mere abstraction, a measure tool.
RandallBrown 6y ago
> old-age, disability, and unemployment These are all groups of people that aren't working so there isn't any extra money available for people to raise prices on them. If everyone makes $X more dollars than normal I don't understand why prices wouldn't go up to take advantage of that. Would it just be because taxes would go up as well so any extra profits would end up being fed straight back into the system?

dllthomas 6y ago

> wouldn't UBI tend towards an inflationary spiral? A UBI higher than the economy can support would seem to drive inflation, especially if we're (literally or effectively) printing some of the money. Whether that leads to a "spiral" depends on what we do in response. If our UBI is intent on delivering a certain real value, so we give an $X that we adjust regularly to account for observed or expected inflation, then we run risk of inflationary spiral. So let's not do that. If our UBI is a fixed dollar value, increasing based only on targeted inflation, then inflation drives down the real value to something we can empirically support. There are also proposals that tie income to a specific revenue stream (a carbon tax, or Alaska's permanent fund), which has its own dynamics but doesn't seem to risk inflationary spiral. > But without price controls, what would prevent rent/mortage/food/entertainment prices from just rising to absorb everybody's newfound income? Competition, of both direct and indirect substitutes; this is the same thing that prevents rent/mortgage/food/entertainment prices from rising to absorb everybody's oldfound income. Considering rent and mortgage in particular, as they seem to be in more limited supply than the others, I want to note two things: First, competition is not merely competition amongst like units. If there is a fixed number of rooms for rent in a city, more people that want rooms than rooms available, and everyone can pay more, we should expect prices to rise. But as prices rise, choosing to take on an additional roommate, keep living with your parents, or similar become more attractive. And of course, the number of rooms for rent is only approximately fixed, even in the short term. These will typically stop the price from rising the full amount. Second, we aren't actually particularly limited on housing available; we're particularly limited on sufficiently desirable housing available. A huge portion of what makes housing desirable is that it is sufficiently close to sufficient sources of income. By reducing necessary income, we are actually directly increasing the supply of "sufficiently desirable" housing, even before anyone starts building. > College tuition has been going up exponentially since the introduction of federal student aid. There is a very different dynamic when we give people dollars that they can spend as they need, versus when we give people potential dollars they can only spend for a single purpose. If I save a dollar on tuition today, and I'm borrowing from a lender that will only lend to me for tuition, then I can't turn around and use that dollar for anything else that I need (or want). This means it's less important to me to save that dollar, so there's less pressure keeping the price down.

tharga8616 6y ago

Competition. What would then impede people migrating to rural areas, where life is less expensive, to live better? Prices in the city will go down if there is not enough demand.