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Would everyone getting a paying job lead to inflation? And if it would, would that mean that we should rig the system in a way that it can never happen?

• sparkie 5y ago
  Good question. It would depend on whether the newly employed are broadly working "bullshit" (unproductive) jobs, or whether they are adding to productivity. Inflation occurs when there is an increase in available money (or transiently, in the velocity of money) in excess of any increase in productivity. Increased productivity (absent of manipulation of the money supply) would suggest that goods get cheaper to produce and are produced in more abundance, leading to decreasing prices. If the newly employed are not broadly productive, employers would have increased expenditures (wages), without decreasing other expenses. Since the employer doesn't want their own earnings to decrease, the only way they can maintain the standard of living they are used to is to either increase their revenues by increasing prices, or fire the unproductive. An exception of course, is government, which can simply increase revenues by increasing taxes, which allows them to continually employ unproductive people at the cost of taxpayers. If you extend this logic to UBI, then every employer now has additional expenses (taxes) to cover the costs of UBI. To maintain the standard of living they are used to, and if they wish to avoid raising prices, they would need to reduce expenses, which would typically mean either: reducing wages, or reducing the number of employees they have. So the result of UBI would suggest one or more of the following outcomes: 1. Fewer people are employed. 2. Employed people earn less. 3. Prices generally increase. I would guess at all three occurring simultaneously. Almost like the devil is rubbing his hands in anticipation.