38 ms·

If you raise taxes and prices a lot, UBI will become basically useless, because it's effects will be eaten up by inflation. Hell, why wouldn't I increase rent

If you raise taxes and prices a lot, UBI will become basically useless, because it's effects will be eaten up by inflation. Hell, why wouldn't I increase rent to the UBI amount?

bryanlarsen 5y ago
If UBI doesn't increase the money supply (aka it is paid for with taxing), it shouldn't increase inflation.
- pc86 5y ago
  Strictly speaking this isn't the case. If you define inflation with a set CPI basket, and your redistribution moves money to people whose purchasing is more correlated with that basket than the people you're taking the money from, inflation will increase.
- collegeburner 5y ago
  Wrong, money velocity and demand (both probably go up under this scheme) can increase inflation. So can shortages caused by a big demand spike.
  - bryanlarsen 5y ago
    Demand for food and housing doesn't go up with UBI, there are still the same number of people.
    - collegeburner 5y ago
      More desirable food (organic, grass fed, whatever) and more desirable housing will both have increased demand, especially short term. Also even if we hold food and housing constant, more money frees up what people formerly spent on food and housing to spend on other stuff so demand increases there. America has very high marginal propensity to consume so most of this will be spent. An additional tax that redistributes primarily will also be spent much more because poor and middle class have higher MPC than rich.
      - bryanlarsen 5y ago
        And the opposite effect happens too: UBI makes it easier to move to cheaper areas and to take the time to make food from scratch rather than relying on quick take out. Any changes will be very marginal. Fundamental demand isn't changing, it's just a redistribution of demand. Some prices will go up, some will go down, but neither will move much. Unless of course UBI isn't fully costed. Then the money supply increases and we will likely see inflation.
BuyMyBitcoins 5y ago
I predict that a UBI system will evolve from direct cash payments to a voucher system in order to try and escape the inflation -> higher UBI -> higher taxes -> higher inflation spiral. At some point, a politician will realize that there just isn’t enough money going around and the “solution” will be to dole out resources directly. Why constantly adjust the amount of money needed to buy essential items like say, toilet paper or menstrual products, when you can just print a voucher for said items?
- DocTomoe 5y ago
  Because unless the state starts producing menstrual products and toilet paper himself, including the supply chain to create and distributing that, there will be a price hike. Me as a toilet paper manufacturer would happily raise my prices and lower the quality when I know the state HAS to buy a certain number of sales units from me.
telxosser 5y ago
Of course that is what would happen. Of course prices are relative. The idea of UBI without a massive increase in apartment/housing supply is frankly moronic. Even then though, it will all be captured. Being poor is still relative exactly like prices. Ultimately, it will all pool upwards to the equity markets. All UBI will really end up being is a giant stimulus to the ultra rich.
imtringued 5y ago
The problem with UBI is a logical flaw. Only the people that do work actually end up paying taxes. You can use UBI as a democratic allocation mechanism for landownership or resource rights where the UBI is the carrot and the taxes are the stick.

If you raise taxes and prices a lot, UBI will become basically useless, because it's effects will be eaten up by inflation. Hell, why wouldn't I increase rent to the UBI amount?

bryanlarsen 5y ago

If UBI doesn't increase the money supply (aka it is paid for with taxing), it shouldn't increase inflation.

pc86 5y ago
Strictly speaking this isn't the case. If you define inflation with a set CPI basket, and your redistribution moves money to people whose purchasing is more correlated with that basket than the people you're taking the money from, inflation will increase.
collegeburner 5y ago
Wrong, money velocity and demand (both probably go up under this scheme) can increase inflation. So can shortages caused by a big demand spike.
- bryanlarsen 5y ago
  Demand for food and housing doesn't go up with UBI, there are still the same number of people.
  - collegeburner 5y ago
    More desirable food (organic, grass fed, whatever) and more desirable housing will both have increased demand, especially short term. Also even if we hold food and housing constant, more money frees up what people formerly spent on food and housing to spend on other stuff so demand increases there. America has very high marginal propensity to consume so most of this will be spent. An additional tax that redistributes primarily will also be spent much more because poor and middle class have higher MPC than rich.
    - bryanlarsen 5y ago
      And the opposite effect happens too: UBI makes it easier to move to cheaper areas and to take the time to make food from scratch rather than relying on quick take out. Any changes will be very marginal. Fundamental demand isn't changing, it's just a redistribution of demand. Some prices will go up, some will go down, but neither will move much. Unless of course UBI isn't fully costed. Then the money supply increases and we will likely see inflation.

BuyMyBitcoins 5y ago

I predict that a UBI system will evolve from direct cash payments to a voucher system in order to try and escape the inflation -> higher UBI -> higher taxes -> higher inflation spiral. At some point, a politician will realize that there just isn’t enough money going around and the “solution” will be to dole out resources directly. Why constantly adjust the amount of money needed to buy essential items like say, toilet paper or menstrual products, when you can just print a voucher for said items?

DocTomoe 5y ago
Because unless the state starts producing menstrual products and toilet paper himself, including the supply chain to create and distributing that, there will be a price hike. Me as a toilet paper manufacturer would happily raise my prices and lower the quality when I know the state HAS to buy a certain number of sales units from me.

telxosser 5y ago

Of course that is what would happen. Of course prices are relative. The idea of UBI without a massive increase in apartment/housing supply is frankly moronic. Even then though, it will all be captured. Being poor is still relative exactly like prices. Ultimately, it will all pool upwards to the equity markets. All UBI will really end up being is a giant stimulus to the ultra rich.

imtringued 5y ago

The problem with UBI is a logical flaw. Only the people that do work actually end up paying taxes. You can use UBI as a democratic allocation mechanism for landownership or resource rights where the UBI is the carrot and the taxes are the stick.