4 ms·

While I like the idea of universal income, something I don’t quite understand: How would it prevent inflation such that the bar for survival isn’t just adjuste

While I like the idea of universal income, something I don’t quite understand: How would it prevent inflation such that the bar for survival isn’t just adjusted to be higher?

zie 4y ago
Like Social Security, it could be tied to inflation.
- nobodyandproud 4y ago
  Social security is generally restricted to a certain age or older. It also scales to how much you “put in”. Therefore wouldn’t have the same inflationary impact that a truly universal income would have.
  - zie 4y ago
    True, but that wasn't remotely my point. If you link the UBI to inflation(CPI-U or the like) it doesn't really matter if inflation goes up, so does the UBI payments. Some things are already linked to inflation like Taxes, Social Security, etc.
    - nobodyandproud 4y ago
      Yes, but you’re not answering my original question: How does UBI avoid contributing significantly to inflation? Your response of inflation adjustment doesn’t address the concern of high, unchecked inflation caused by injecting more money into the economy: If everyone has more money, then prices will creep up as businesses realize they can ask for more. My primary concern is that program like these makes everyone (especially workers) other than the very wealthiest, extremely poor. We already see the effects of this from Trump’s Covid payments.
      - zie 4y ago
        tldr; We don't know anything about inflation, we know less how UBI will or won't affect it and it doesn't matter anyways, because UBI will not become a thing anytime soon. People thought the same thing would happen with Social Security, which is tied to inflation. It didn't happen. Though it of course generally only applies to a portion of the population, where a UBI would apply to everyone. Let's assume your doom and gloom is true, that everyone gets a UBI that is linked to inflation and inflation goes up by 5%/yr instead of the target 2%/yr. The UBI payment will also go up 5% yr, so it can't possibly make people worse off, since the UBI payment will go up along with the inflation, just like social security. So this inflation would ruin the low-income is ridiculous on it's face. Of course it could become a death spiral, and we have ever increasing inflation, and ever increasing UBI payments. Eventually we would have to hit an equilibrium somehow. Despite common opinion, we really know very, very little about inflation. So far we only know the broad strokes: large demand and low supply. We think high interest rates stop inflation(as it has worked historically, by supposedly drying up demand). We also think people's perception of inflation is also very important somehow. We also just sort of assume 2%/yr inflation is a great thing(a number that was mostly invented out of thin air it turns out). That's about all we really know, but there are lots and lots of possible theories out there, like the covid payments somehow caused inflation. It's possible, but the evidence is hardly rock solid. So many other things also happened that could be the cause or part of the cause as well. So called experts will crow on and on about their knowledge of inflation and common lay-people assume they know it all as well, but honest academics will mostly shrug and say, we don't really understand it at all, because it's a weird mix of behavioural and traditional economics that is very hard to test, so all we have are some historical data points, each one different than the last enough that it's hard to say much with certainty anything about inflation. Personally, if we stop all the other systems we have to help out the less well off, and replace it all with what is essentially an expansion of SSI, then chances are we would be better off, if only because of the savings the govt would have in not having to run and staff all of the current programs and simplifying all the rules around SSI we already have. Of course all of this is a moot point, since there is zero chance the current political parties will ever come together thinking UBI is a good idea.
        4y ago
carapace 4y ago
Inflation shouldn't be happening in an economic regime where UBI makes sense. UBI makes sense when science and technology make production so efficient that normal people are shut out of the economy, they can't compete with corporations for the available economic opportunities. What to do with the surplus population? The simplest solution is to give them money. It really doesn't matter what form it takes, so long as there's a way to get food and material needs met once robots take all the jobs.
- nobodyandproud 4y ago
  That seems more like science fiction than fact. Food we’re producing efficiently but housing & land, clothes, potable water, and infrastructure not so much.
  - carapace 4y ago
    > That seems more like science fiction than fact. It's not evenly distributed yet but the future is here: radio-networked pocket supercomputers; print-on-demand machines, and DNA; etc... > housing & land, clothes, potable water, and infrastructure Except for land itself, all of those things have become exponentially cheaper in the last few decades. That is, cheaper to make. Housing in particular is kept artificially scarce, largely due to its role as a financial instrument.
    - nobodyandproud 4y ago
      > Except for land itself, all of those things have become exponentially cheaper in the last few decades. That is, cheaper to make. Housing in particular is kept artificially scarce, largely due to its role as a financial instrument. You have that backwards. Housing is a financial instrument, because demand for housing remains high in specific areas; far in excess of supply. Choose a less popular rust-belt city and the home cost will be one third to one quarter of the coastal cities. Housing is also expensive because of the labor involved.
BitwiseFool 4y ago
>"How would it prevent inflation such that the bar for survival isn’t just adjusted to be higher?" Most proposals suggest indexing UBI to inflation, but it seems like a period of severe inflation has the potential to rapidly turn into hyperinflation. Assuming a UBI were implemented, I have a feeling keeping up with inflation would prove to be such a challenge that proposals would be made to issue people vouchers for specific goods in lieu of continually adjusting the dollar amount based on the market price of those goods. I can easily see a government choosing to nationalize some of the factories that produce essential consumer goods like toothpaste or toilet paper as a way of controlling costs. A market would still probably exist for 'premium' non-free versions of the same goods.
- nobodyandproud 4y ago
  > I can easily see a government choosing to nationalize some of the factories that produce essential consumer goods like toothpaste or toilet paper as a way of controlling costs. A market would still probably exist for 'premium' non-free versions of the same goods. A voucher for basics makes sense, though that basically means a dual-currency system. We’re subsidizing agriculture so it’s really just smoke-and-mirrors. Housing and land would still remain a problem, however. I have no answers, but I want neither extremes of winner-takes-all capitalism; nor a pure socialist system.
- Clent 4y ago
  Very recently, parents were given $300 per child, per month. It was very close to becoming permanent. That was an UBI for households with dependent children. The argument for inflation is hard to refute given how short the program ran. The effect was that some parents could now afford to work. Perhaps, daycare rates go up to consume that $300 but unlikely as it is already a tight margin business as are many business and services. There is nothing in capitalism that says UBI must lead to inflation. All economic systems are built on rationale actors. It more like it will create artificial price ceilings. Let's say the government gives everyone a $300 voucher for daycare. Savvy business people are going to find a way to run a daycare for $300 per kid and collect that sweet government backed cash flow and lock their services to that amount. The cash flow from the first $300 is guaranteed by the federal government. Anything over $300 requires a separate billing process. At $305 that is $5 that requires an additional billing setup. There would be a gap before the return would be worth it. A scientific approach would be to weigh the cost between UBI and our current solutions. Unfortunately, politicians typically only favor the science that backs their ideology. Currently there are already subsidizes in place, some people can qualify for reduced daycare rates. This is the bureaucratic way to implement such support, there is massive overhead as there are many people in the middle ensuring that all the paperwork is perfect. What is the total cost of delivering these reduced rates vs a UBI for children? Are we doing the more frugal approach? Almost certainly not. A swath of American's stop expecting a functioning federal government and things have stagnated since.

While I like the idea of universal income, something I don’t quite understand: How would it prevent inflation such that the bar for survival isn’t just adjusted to be higher?

zie 4y ago

Like Social Security, it could be tied to inflation.

nobodyandproud 4y ago
Social security is generally restricted to a certain age or older. It also scales to how much you “put in”. Therefore wouldn’t have the same inflationary impact that a truly universal income would have.
- zie 4y ago
  True, but that wasn't remotely my point. If you link the UBI to inflation(CPI-U or the like) it doesn't really matter if inflation goes up, so does the UBI payments. Some things are already linked to inflation like Taxes, Social Security, etc.
  - nobodyandproud 4y ago
    Yes, but you’re not answering my original question: How does UBI avoid contributing significantly to inflation? Your response of inflation adjustment doesn’t address the concern of high, unchecked inflation caused by injecting more money into the economy: If everyone has more money, then prices will creep up as businesses realize they can ask for more. My primary concern is that program like these makes everyone (especially workers) other than the very wealthiest, extremely poor. We already see the effects of this from Trump’s Covid payments.
    - zie 4y ago
      tldr; We don't know anything about inflation, we know less how UBI will or won't affect it and it doesn't matter anyways, because UBI will not become a thing anytime soon. People thought the same thing would happen with Social Security, which is tied to inflation. It didn't happen. Though it of course generally only applies to a portion of the population, where a UBI would apply to everyone. Let's assume your doom and gloom is true, that everyone gets a UBI that is linked to inflation and inflation goes up by 5%/yr instead of the target 2%/yr. The UBI payment will also go up 5% yr, so it can't possibly make people worse off, since the UBI payment will go up along with the inflation, just like social security. So this inflation would ruin the low-income is ridiculous on it's face. Of course it could become a death spiral, and we have ever increasing inflation, and ever increasing UBI payments. Eventually we would have to hit an equilibrium somehow. Despite common opinion, we really know very, very little about inflation. So far we only know the broad strokes: large demand and low supply. We think high interest rates stop inflation(as it has worked historically, by supposedly drying up demand). We also think people's perception of inflation is also very important somehow. We also just sort of assume 2%/yr inflation is a great thing(a number that was mostly invented out of thin air it turns out). That's about all we really know, but there are lots and lots of possible theories out there, like the covid payments somehow caused inflation. It's possible, but the evidence is hardly rock solid. So many other things also happened that could be the cause or part of the cause as well. So called experts will crow on and on about their knowledge of inflation and common lay-people assume they know it all as well, but honest academics will mostly shrug and say, we don't really understand it at all, because it's a weird mix of behavioural and traditional economics that is very hard to test, so all we have are some historical data points, each one different than the last enough that it's hard to say much with certainty anything about inflation. Personally, if we stop all the other systems we have to help out the less well off, and replace it all with what is essentially an expansion of SSI, then chances are we would be better off, if only because of the savings the govt would have in not having to run and staff all of the current programs and simplifying all the rules around SSI we already have. Of course all of this is a moot point, since there is zero chance the current political parties will ever come together thinking UBI is a good idea.
      - 4y ago

carapace 4y ago

Inflation shouldn't be happening in an economic regime where UBI makes sense. UBI makes sense when science and technology make production so efficient that normal people are shut out of the economy, they can't compete with corporations for the available economic opportunities. What to do with the surplus population? The simplest solution is to give them money. It really doesn't matter what form it takes, so long as there's a way to get food and material needs met once robots take all the jobs.

nobodyandproud 4y ago
That seems more like science fiction than fact. Food we’re producing efficiently but housing & land, clothes, potable water, and infrastructure not so much.
- carapace 4y ago
  > That seems more like science fiction than fact. It's not evenly distributed yet but the future is here: radio-networked pocket supercomputers; print-on-demand machines, and DNA; etc... > housing & land, clothes, potable water, and infrastructure Except for land itself, all of those things have become exponentially cheaper in the last few decades. That is, cheaper to make. Housing in particular is kept artificially scarce, largely due to its role as a financial instrument.
  - nobodyandproud 4y ago
    > Except for land itself, all of those things have become exponentially cheaper in the last few decades. That is, cheaper to make. Housing in particular is kept artificially scarce, largely due to its role as a financial instrument. You have that backwards. Housing is a financial instrument, because demand for housing remains high in specific areas; far in excess of supply. Choose a less popular rust-belt city and the home cost will be one third to one quarter of the coastal cities. Housing is also expensive because of the labor involved.

BitwiseFool 4y ago

>"How would it prevent inflation such that the bar for survival isn’t just adjusted to be higher?" Most proposals suggest indexing UBI to inflation, but it seems like a period of severe inflation has the potential to rapidly turn into hyperinflation. Assuming a UBI were implemented, I have a feeling keeping up with inflation would prove to be such a challenge that proposals would be made to issue people vouchers for specific goods in lieu of continually adjusting the dollar amount based on the market price of those goods. I can easily see a government choosing to nationalize some of the factories that produce essential consumer goods like toothpaste or toilet paper as a way of controlling costs. A market would still probably exist for 'premium' non-free versions of the same goods.

nobodyandproud 4y ago
> I can easily see a government choosing to nationalize some of the factories that produce essential consumer goods like toothpaste or toilet paper as a way of controlling costs. A market would still probably exist for 'premium' non-free versions of the same goods. A voucher for basics makes sense, though that basically means a dual-currency system. We’re subsidizing agriculture so it’s really just smoke-and-mirrors. Housing and land would still remain a problem, however. I have no answers, but I want neither extremes of winner-takes-all capitalism; nor a pure socialist system.
Clent 4y ago
Very recently, parents were given $300 per child, per month. It was very close to becoming permanent. That was an UBI for households with dependent children. The argument for inflation is hard to refute given how short the program ran. The effect was that some parents could now afford to work. Perhaps, daycare rates go up to consume that $300 but unlikely as it is already a tight margin business as are many business and services. There is nothing in capitalism that says UBI must lead to inflation. All economic systems are built on rationale actors. It more like it will create artificial price ceilings. Let's say the government gives everyone a $300 voucher for daycare. Savvy business people are going to find a way to run a daycare for $300 per kid and collect that sweet government backed cash flow and lock their services to that amount. The cash flow from the first $300 is guaranteed by the federal government. Anything over $300 requires a separate billing process. At $305 that is $5 that requires an additional billing setup. There would be a gap before the return would be worth it. A scientific approach would be to weigh the cost between UBI and our current solutions. Unfortunately, politicians typically only favor the science that backs their ideology. Currently there are already subsidizes in place, some people can qualify for reduced daycare rates. This is the bureaucratic way to implement such support, there is massive overhead as there are many people in the middle ensuring that all the paperwork is perfect. What is the total cost of delivering these reduced rates vs a UBI for children? Are we doing the more frugal approach? Almost certainly not. A swath of American's stop expecting a functioning federal government and things have stagnated since.