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> Change the policy. Labor is a commodity because we as a society have decided to make it so. If we want to change it, there are lots of options available: More

> Change the policy. Labor is a commodity because we as a society have decided to make it so. If we want to change it, there are lots of options available: More stringent labor laws. Higher minimum wage. Stronger unions. UBI. What about the other side of some of these things, UBI in particular? How do you account for inflation and higher costs for goods? Example (and I know it's overly simplified): minimum wage goes up to $20/hour. People have more buying power, so they buy more (demand increases). Costs of goods go up. Buying power is reduced. Another call to increase minimum wage is issued. Cycle repeats. How do you reconcile these very real consequences? Can we really say that the benefits outweigh them? Answer is: they may very well have more benefits, but we can't know without doing them - and the consequences of getting it wrong could be permanently damaging.

EdwinLarkin 6y ago
That's ridiculous.Inflation caused by raising minimum wage did not really happen. You dont really increase the cost of vegetables or bread because more people can buy it. If we are worried about inflation we can use the same economies of scale to give people that depend on minimum wage things they would not be able to afford. Housing,healthcare,education,food.
lisper 6y ago
Inflation is a totally separate issue. The value of money is the value of the goods and services produced by the economy divided by the total money supply. That is completely independent of how that value is distributed. If you pay for UBI by borrowing, you will produce (some) inflation. If you pay for it with taxes, you won't. Again, this is purely political. When the government borrows, it indirectly taxes savings (by producing inflation), which people generally don't notice as much as an actual tax bill. > Can we really say that the benefits outweigh them? That's a judgement call. And there is more at play here than just inflation. The economy is a very complex dynamic system. My point is that these things are not consequences of the laws of physics which we are powerless to change. These things are consequences of decisions we make as a society. These decisions are not easy, but they are ours to make.
- dragonwriter 6y ago
  > If you pay for UBI by borrowing, you will produce (some) inflation. If you pay for it with taxes, you won't. Yes, you will (unless you do a flat capitation so thst everyone’s taxes are equal to their benefits, but what’s the point of that?) Downward redistribution is inflationary (in CPI terms) because of differences in the marginal propensity to spend, in the same way that upward concentration creates asset price inflation because of marginal propensity to invest.
  - lisper 6y ago
    > in CPI terms Any economic policy that changes prices can be seen as inflationary if you pick the right index. The CPI is not what matters. What matters (to workers) is the ratio of the CPI to wages. It doesn't matter if the CPI rises (temporarily) as long as wages rise faster. As long as you are not actually just printing new money, the system will eventually reach a new equilibrium where workers have more bargaining power than they do today and capital holders have less. That is an attainable policy goal. The problem is that that the moment capital has all the bargaining power, and capital wants low wages, so that's what we have. As I pointed out earlier, this is great if you're buying, not if you're selling.
    - dragonwriter 6y ago
      > Any economic policy that changes prices can be seen as inflationary if you pick the right index. The CPI is not what matters. What matters (to workers) is the ratio of the CPI to wages. Since UBI isn’t likely to drive wages up (and, if as often proposed it replaces or offsets minimum wage, it may drive them down at the low end), I don’t see any real difference there, even if it was correct (I agree that what matters to workers qua workers is real [that is, CPI-adjusted] wages, and to consumers qua consumers real income; but that doesn’t alter the definition of inflation, just notes the inflation per se is not the concern for those groups in those roles.) UBI is likely to lead to inflation, is unlikely to lead to general real wage increases (though that’s complicated), but will lead to real income increases in the low end of the distribution unless cranked too high high too fast (and there are negative feedback controls that should avoid that problem unless deliberately subverted, say by indexing UBI to inflation.)
jfengel 6y ago
Net demand doesn't increase, because that $20/hour came from somewhere. Increase in wages means less elsewhere (ideally, corporate profit). Total demand remains constant. That's a macro view. Drilling down there will be some products that get more attention, some less. Say, Bezos buys one fewer yacht, and his employees switch from dollar store cat food to Chicken McNuggets. Prices will jiggle around, but there's no increase in the money supply and so no net inflation. Data repeatedly shows that there isn't a consistent effect from increases to the minimum wage -- as expected. There are too many other factors in the price of goods, and minimum wage changes get lost in the noise.
- froggertoaster 6y ago
  > Data repeatedly shows that there isn't a consistent effect from increases to the minimum wage Care to share that data?
  - jfengel 6y ago
    The "Empirical Studies" section of the Wikipedia page has a decent overview. There's a lot to drill down into: https://en.wikipedia.org/wiki/Minimum_wage#Empirical_studies https://en.wikipedia.org/wiki/Minimum_wage#Empirical_studies

EdwinLarkin 6y ago

That's ridiculous.Inflation caused by raising minimum wage did not really happen. You dont really increase the cost of vegetables or bread because more people can buy it. If we are worried about inflation we can use the same economies of scale to give people that depend on minimum wage things they would not be able to afford. Housing,healthcare,education,food.

lisper 6y ago

Inflation is a totally separate issue. The value of money is the value of the goods and services produced by the economy divided by the total money supply. That is completely independent of how that value is distributed. If you pay for UBI by borrowing, you will produce (some) inflation. If you pay for it with taxes, you won't. Again, this is purely political. When the government borrows, it indirectly taxes savings (by producing inflation), which people generally don't notice as much as an actual tax bill. > Can we really say that the benefits outweigh them? That's a judgement call. And there is more at play here than just inflation. The economy is a very complex dynamic system. My point is that these things are not consequences of the laws of physics which we are powerless to change. These things are consequences of decisions we make as a society. These decisions are not easy, but they are ours to make.

dragonwriter 6y ago
> If you pay for UBI by borrowing, you will produce (some) inflation. If you pay for it with taxes, you won't. Yes, you will (unless you do a flat capitation so thst everyone’s taxes are equal to their benefits, but what’s the point of that?) Downward redistribution is inflationary (in CPI terms) because of differences in the marginal propensity to spend, in the same way that upward concentration creates asset price inflation because of marginal propensity to invest.
- lisper 6y ago
  > in CPI terms Any economic policy that changes prices can be seen as inflationary if you pick the right index. The CPI is not what matters. What matters (to workers) is the ratio of the CPI to wages. It doesn't matter if the CPI rises (temporarily) as long as wages rise faster. As long as you are not actually just printing new money, the system will eventually reach a new equilibrium where workers have more bargaining power than they do today and capital holders have less. That is an attainable policy goal. The problem is that that the moment capital has all the bargaining power, and capital wants low wages, so that's what we have. As I pointed out earlier, this is great if you're buying, not if you're selling.
  - dragonwriter 6y ago
    > Any economic policy that changes prices can be seen as inflationary if you pick the right index. The CPI is not what matters. What matters (to workers) is the ratio of the CPI to wages. Since UBI isn’t likely to drive wages up (and, if as often proposed it replaces or offsets minimum wage, it may drive them down at the low end), I don’t see any real difference there, even if it was correct (I agree that what matters to workers qua workers is real [that is, CPI-adjusted] wages, and to consumers qua consumers real income; but that doesn’t alter the definition of inflation, just notes the inflation per se is not the concern for those groups in those roles.) UBI is likely to lead to inflation, is unlikely to lead to general real wage increases (though that’s complicated), but will lead to real income increases in the low end of the distribution unless cranked too high high too fast (and there are negative feedback controls that should avoid that problem unless deliberately subverted, say by indexing UBI to inflation.)

jfengel 6y ago

Net demand doesn't increase, because that $20/hour came from somewhere. Increase in wages means less elsewhere (ideally, corporate profit). Total demand remains constant. That's a macro view. Drilling down there will be some products that get more attention, some less. Say, Bezos buys one fewer yacht, and his employees switch from dollar store cat food to Chicken McNuggets. Prices will jiggle around, but there's no increase in the money supply and so no net inflation. Data repeatedly shows that there isn't a consistent effect from increases to the minimum wage -- as expected. There are too many other factors in the price of goods, and minimum wage changes get lost in the noise.

froggertoaster 6y ago
> Data repeatedly shows that there isn't a consistent effect from increases to the minimum wage Care to share that data?
- jfengel 6y ago
  The "Empirical Studies" section of the Wikipedia page has a decent overview. There's a lot to drill down into: https://en.wikipedia.org/wiki/Minimum_wage#Empirical_studies https://en.wikipedia.org/wiki/Minimum_wage#Empirical_studies