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It depends on what you believe about how prices are set. Many opponents of UBI claim that a UBI will cause inflation and reduce the value of money because the s

by t-3 5y ago

It depends on what you believe about how prices are set. Many opponents of UBI claim that a UBI will cause inflation and reduce the value of money because the supply increased. Proponents reject this, pointing to MMT and the concept of fiat currency. The truth is probably in between - opportunists and highly sought-after items will raise prices to offset UBI gains, while most commodities should be relatively unaffected. There will definitely be more opportunity for tiered services so that rich types can avoid UBI peasants sharing their activities.

anonymouse008 5y ago
The 'how' both can be true is by increasing the supply and fuzzing around with the economic 'utility' of goods. Sure, today's goods and services are extremely mobile - economically viable cross country shipping is basically the norm. This enables your butcher, baker and brewer to be thousands of miles away. By increasing this supply radius, the total number of goods drastically increase, decreasing the price. A question becomes when do we 'use up' the cost savings of technology and transportation efficiencies through inflationary practices. I'd argue we just ran the greatest real world experiment with Covid, but do not even begin to have a gauge on this metric -- which would allow one to thoughtfully apply 'fiat practices' But lurking in the background is the 'utility' of the goods and services we use. Many times my well respected economist professor would say that Great Value Butter is as economically equal as any other in terms of sustenance -- which pains me. In a simple function, sautéing vegetables - there's a marked quality difference between GV and 'higher priced' brands, but I'm forced to reckon that, yes, there is buttery flavor in a dish with vegetables, so at base... they are equal. This is just a long winded way to say that people who have a diverse set of preferences will find inflation to be very real - while those who can live starkly monotone in their utility will have their inflation padded by economically efficient institutions fuzzing and redefining 'unnoticed properties' of goods and services.
gruez 5y ago
>Many opponents of UBI claim that a UBI will cause inflation and reduce the value of money because the supply increased. Proponents reject this, pointing to MMT and the concept of fiat currency. To be clear, MMT doesn't say you can print money and hand it out without causing inflation. It only says that if the money printing is offset somehow (eg. taxes), there won't be inflation.
- dagw 5y ago
  Most 'serious' UBI implementations I've read about have a mechanism for clawing back some to all of UBI from higher earners via raised income tax on those people. I guess that is what is being hinted at.
dragonwriter 5y ago
> Many opponents of UBI claim that a UBI will cause inflation and reduce the value of money because the supply increased. So do sane proponents, the disagreement is over whether that inflation necessary negates the gains from transfers on the lower end or not. > Proponents reject this, pointing to MMT and the concept of fiat currency. MMT says that government spending causes inflation (and taxes causes deflation) and, moreover, that those monetary concerns, and not fiscal concerns like a need for artificial balance between revenues + debt and spending when currency is a government creation, is the only real constraint on government taxing and spending policy. MMT is not a basis for rejecting inflation concerns about UBI; it’s a basis for rejecting deficit-based concerns.

by t-3 5y ago

anonymouse008 5y ago

The 'how' both can be true is by increasing the supply and fuzzing around with the economic 'utility' of goods. Sure, today's goods and services are extremely mobile - economically viable cross country shipping is basically the norm. This enables your butcher, baker and brewer to be thousands of miles away. By increasing this supply radius, the total number of goods drastically increase, decreasing the price. A question becomes when do we 'use up' the cost savings of technology and transportation efficiencies through inflationary practices. I'd argue we just ran the greatest real world experiment with Covid, but do not even begin to have a gauge on this metric -- which would allow one to thoughtfully apply 'fiat practices' But lurking in the background is the 'utility' of the goods and services we use. Many times my well respected economist professor would say that Great Value Butter is as economically equal as any other in terms of sustenance -- which pains me. In a simple function, sautéing vegetables - there's a marked quality difference between GV and 'higher priced' brands, but I'm forced to reckon that, yes, there is buttery flavor in a dish with vegetables, so at base... they are equal. This is just a long winded way to say that people who have a diverse set of preferences will find inflation to be very real - while those who can live starkly monotone in their utility will have their inflation padded by economically efficient institutions fuzzing and redefining 'unnoticed properties' of goods and services.

gruez 5y ago

>Many opponents of UBI claim that a UBI will cause inflation and reduce the value of money because the supply increased. Proponents reject this, pointing to MMT and the concept of fiat currency. To be clear, MMT doesn't say you can print money and hand it out without causing inflation. It only says that if the money printing is offset somehow (eg. taxes), there won't be inflation.

dagw 5y ago
Most 'serious' UBI implementations I've read about have a mechanism for clawing back some to all of UBI from higher earners via raised income tax on those people. I guess that is what is being hinted at.

dragonwriter 5y ago

> Many opponents of UBI claim that a UBI will cause inflation and reduce the value of money because the supply increased. So do sane proponents, the disagreement is over whether that inflation necessary negates the gains from transfers on the lower end or not. > Proponents reject this, pointing to MMT and the concept of fiat currency. MMT says that government spending causes inflation (and taxes causes deflation) and, moreover, that those monetary concerns, and not fiscal concerns like a need for artificial balance between revenues + debt and spending when currency is a government creation, is the only real constraint on government taxing and spending policy. MMT is not a basis for rejecting inflation concerns about UBI; it’s a basis for rejecting deficit-based concerns.