5 ms·

If we print money to fund it, yes. If we fund with taxes without printing money, then no.

eqvinox 4y ago
Was about to comment exactly this. The question makes no sense, whether or not inflation happens has nothing to do with universal basic income itself, it's a question of where the money comes from.
- chaostheory 4y ago
  The question is fine and it makes sense. The issue is that it’s a mistake to ignore reality around it. For example, death penalty proponents tend to ignore the financial cost, which is being increased due to litigation from opponents of the death penalty. They can’t wish away anti-death penalty lawyers doing pro-bono work, or pretend that they don’t exist. In a similar fashion, UBI proponents will ignore the likelihood that the government will likely fund the program by printing more money. The other reality being ignored is that the supply and availability of goods doesn’t change. What happens with more demand for those goods? Prices rise.
- trgn 4y ago
  It might not be that simple. Even if UBI is funded by taxes, UBI would be a wealth redistribution, increasing money on the lower end, generally pushing up demand for goods and services that fulfill basic needs, and lowering the money on the top-end, which is spent differently, like on luxury goods, put on the sideline as savings, or spent chasing assets. This redistribution may cause inflation too, even though the overall money supply is not increased.
  - SketchySeaBeast 4y ago
    It's a bizarre thought that the only way for society not to spiral into inflation requires that the poor not be able to purchase the good and service that fulfill their basic needs. Not just be handed the money through UBI as that would cause inflation, but even gain it through jobs - either way it would increase those basic need demands.
    - willnonya 4y ago
      There are always two halves to this, the demand and the value of the money. Demand steadily increases over time, a UBI would cause a spike in that demand so there would be inflation at a higher rate while the market stabilizes. Without an increase in the rate the money is devalued this inflation should stabilize. The problems come when we devalue our money at the same time we're increasing demand causing changes at a rate faster than the markets can compensate. UBI is a shotgun approach and a political tactic rather than a real plan for helping those who need it. A negative income tax and other options that target this help where it's needed would be better options. either way though the trick is to get money where its needed without increasing debt or the money supply while doing so at a rate that doesn't shock the system.
willnonya 4y ago
If we print money to fund it, yes. If we fund with taxes without printing money, then yes, but by less. FTFY No matter what you do here you're increasing the demand for goods. Without an increase in the total money supply that would stabilize but there would still be some inflation because of it.
freemint 4y ago
If we are talking about an idealized world with spherical consumers and a single product, then yes. However inflation is a scalar measure of the development of the prices given some basket of goods. An UBI will change what stuff people buy hugely. The economy will need to shift around a lot to accomodate that. Any use of a "steady-state" model is really inappropriate and you can't draw any conclusion from that.
RHSeeger 4y ago
This answer seems to treat inflation as "the cost of everything". If, rather, we focus only on the items that are needed to survive (food, shelter, etc), I think the answer changes. The taxes to pay for the UBI will generally come from the middle and higher income households; who are already spending the money they need to on those items. Losing some of their money to taxes won't do much to reduce the amount they spend on those. However, the lower income segment, where UBI will have a much higher impact, will start spending a lot more on these items. Because, in theory, they were not spending as much as they would want to on them previously (bad housing, cheap food, etc.. could be improved). As such, the demand for those "survival" items could increase a fair amount, causing the prices for them to increase. If you consider this inflation (which I would, since it's a rise in prices for things that matter), then there would likely be inflation.
- ItsMonkk 4y ago
  This is exactly why a UBI funded through a Land Value Tax is such a good idea. A land value tax taxes the land such that the market cost of the home is equal to the cost to build the housing on top of the unit. The land tax will put the land to best use, and that will drive up the supply of housing units, which means the cost to rent will go down. All of this while the average person sees lower tax rates and the person who sits on an empty lot sees much higher tax rates. The money available to collect from NYC and SF land taxes alone could fund a nation-wide UBI.
  - dragonwriter 4y ago
    > A land value tax taxes the land such that the market cost of the home is equal to the cost to build the housing on top of the unit. To do that, an LVT would have to be calibrated so that it was enough to bring the market price of unimproved land to zero, plus (or minus, in certain market conditions) an additional amount needed compensate for dynamic supply and demand effects (lots of people wanting to move in plus building lag driving prices up above expected long-term equilibrium, lots of people moving out doing the opposite.) > The land tax will put the land to best use, Perhaps, but if so... > and that will drive up the supply of housing units ...then not if housing units aren't the most profitable use of land in the local area it won't. > All of this while the average person sees lower tax rates Confiscatory (and the level of LVT you suggest is exactly that) taxes on land don't reduce tax rates for the average person in a country with a nearly 65% pre-policy homeownership rate. > The money available to collect from NYC and SF land taxes alone could fund a nation-wide UBI. No, even if that were true pre-policy it couldn't after you enacted it, because you are ignoring dynamic effects. Confiscatory taxation on land will catastrophically drive down land value.

Was about to comment exactly this. The question makes no sense, whether or not inflation happens has nothing to do with universal basic income itself, it's a question of where the money comes from.

chaostheory 4y ago
The question is fine and it makes sense. The issue is that it’s a mistake to ignore reality around it. For example, death penalty proponents tend to ignore the financial cost, which is being increased due to litigation from opponents of the death penalty. They can’t wish away anti-death penalty lawyers doing pro-bono work, or pretend that they don’t exist. In a similar fashion, UBI proponents will ignore the likelihood that the government will likely fund the program by printing more money. The other reality being ignored is that the supply and availability of goods doesn’t change. What happens with more demand for those goods? Prices rise.
trgn 4y ago
It might not be that simple. Even if UBI is funded by taxes, UBI would be a wealth redistribution, increasing money on the lower end, generally pushing up demand for goods and services that fulfill basic needs, and lowering the money on the top-end, which is spent differently, like on luxury goods, put on the sideline as savings, or spent chasing assets. This redistribution may cause inflation too, even though the overall money supply is not increased.
- SketchySeaBeast 4y ago
  It's a bizarre thought that the only way for society not to spiral into inflation requires that the poor not be able to purchase the good and service that fulfill their basic needs. Not just be handed the money through UBI as that would cause inflation, but even gain it through jobs - either way it would increase those basic need demands.
  - willnonya 4y ago
    There are always two halves to this, the demand and the value of the money. Demand steadily increases over time, a UBI would cause a spike in that demand so there would be inflation at a higher rate while the market stabilizes. Without an increase in the rate the money is devalued this inflation should stabilize. The problems come when we devalue our money at the same time we're increasing demand causing changes at a rate faster than the markets can compensate. UBI is a shotgun approach and a political tactic rather than a real plan for helping those who need it. A negative income tax and other options that target this help where it's needed would be better options. either way though the trick is to get money where its needed without increasing debt or the money supply while doing so at a rate that doesn't shock the system.

willnonya 4y ago

If we print money to fund it, yes. If we fund with taxes without printing money, then yes, but by less. FTFY No matter what you do here you're increasing the demand for goods. Without an increase in the total money supply that would stabilize but there would still be some inflation because of it.

freemint 4y ago

If we are talking about an idealized world with spherical consumers and a single product, then yes. However inflation is a scalar measure of the development of the prices given some basket of goods. An UBI will change what stuff people buy hugely. The economy will need to shift around a lot to accomodate that. Any use of a "steady-state" model is really inappropriate and you can't draw any conclusion from that.

RHSeeger 4y ago

This answer seems to treat inflation as "the cost of everything". If, rather, we focus only on the items that are needed to survive (food, shelter, etc), I think the answer changes. The taxes to pay for the UBI will generally come from the middle and higher income households; who are already spending the money they need to on those items. Losing some of their money to taxes won't do much to reduce the amount they spend on those. However, the lower income segment, where UBI will have a much higher impact, will start spending a lot more on these items. Because, in theory, they were not spending as much as they would want to on them previously (bad housing, cheap food, etc.. could be improved). As such, the demand for those "survival" items could increase a fair amount, causing the prices for them to increase. If you consider this inflation (which I would, since it's a rise in prices for things that matter), then there would likely be inflation.

ItsMonkk 4y ago
This is exactly why a UBI funded through a Land Value Tax is such a good idea. A land value tax taxes the land such that the market cost of the home is equal to the cost to build the housing on top of the unit. The land tax will put the land to best use, and that will drive up the supply of housing units, which means the cost to rent will go down. All of this while the average person sees lower tax rates and the person who sits on an empty lot sees much higher tax rates. The money available to collect from NYC and SF land taxes alone could fund a nation-wide UBI.
- dragonwriter 4y ago
  > A land value tax taxes the land such that the market cost of the home is equal to the cost to build the housing on top of the unit. To do that, an LVT would have to be calibrated so that it was enough to bring the market price of unimproved land to zero, plus (or minus, in certain market conditions) an additional amount needed compensate for dynamic supply and demand effects (lots of people wanting to move in plus building lag driving prices up above expected long-term equilibrium, lots of people moving out doing the opposite.) > The land tax will put the land to best use, Perhaps, but if so... > and that will drive up the supply of housing units ...then not if housing units aren't the most profitable use of land in the local area it won't. > All of this while the average person sees lower tax rates Confiscatory (and the level of LVT you suggest is exactly that) taxes on land don't reduce tax rates for the average person in a country with a nearly 65% pre-policy homeownership rate. > The money available to collect from NYC and SF land taxes alone could fund a nation-wide UBI. No, even if that were true pre-policy it couldn't after you enacted it, because you are ignoring dynamic effects. Confiscatory taxation on land will catastrophically drive down land value.