3 ms·

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 an

by 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.

nobodyandproud 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 Not true. We understand the causes of inflation. Creating models that accurately forecasts inflation is a different matter, and it’s not helped by big financial actors manipulating and hiding their actions. The reasons Social Security doesn’t lead to rampant inflation is because Social Security is funded by the working age residents—decreasing the disposable income available to peak spenders at their peak consumption age. And also because it’s distributed starting at an ever increasing age so it’s far from universal. If UBI becomes necessary nationwide due to the “investment class” owning everything, that’s a sign that our system has failed completely. Perhaps it’s inevitable.
- zie 4y ago
  > Not true. We understand the causes of inflation. I assume you are talking about the monetary theory of inflation, MV=PY? I've never met an economist that thinks it tells the whole story. John Cochrane(a world class economist) is in the process of writing a new book that covers inflation, and he doesn't think he has all the answers. You and the rest of the "we" in your sentence needs to publish some academic papers informing the rest of us, as we clearly didn't get the memo. > The reasons Social Security doesn’t lead to rampant inflation is because Social Security is funded by the working age residents It's just a different form of a tax, perhaps it's sold to the people differently enough that they think of it the way you think of it, but it doesn't change the economics any. Taxes pay for it just like taxes would pay for a UBI.
  - nobodyandproud 4y ago
    > I assume you are talking about the monetary theory of inflation, MV=PY? I've never met an economist that thinks it tells the whole story. John Cochrane(a world class economist) is in the process of writing a new book that covers inflation, and he doesn't think he has all the answers. Okay. But your position is that we know nothing about inflation. Which simply isn’t true. Since you’re name dropping John Cochrane (I don’t subscribe to said individual, but you seem to respect them): https://www.johnhcochrane.com/research-all/fiscal-inflation https://www.johnhcochrane.com/research-all/fiscal-inflation from an essay: “The future is not hopeless. Inflation control simply requires our government, including the central bank, to understand classic lessons of history. Forestalling inflation is a joint task of fiscal, monetary, and micro-economic policy. Stabilizing inflation once it gets out of control is a joint task of fiscal, monetary, and micro-economic policy. Expectations are “anchored” if people believe such policy is in place, and politicians and Fed officials are ready to act if needed.” That doesn’t read like inflation is some vast, major unknown. What I think you’re saying is that our knowledge and models of inflation are imperfect, therefore we can’t say with certainty that UBI will cause inflation. Which is essentially the same as “I don’t know.” > You and the rest of the "we" in your sentence needs to publish some academic papers informing the rest of us, as we clearly didn't get the memo. I asked a question; you provided non-answer; when you push the SS narrative I posit why SS is a poor analogy. Trump’s covid payment is far closer to UBI. > It's just a different form of a tax, perhaps it's sold to the people differently enough that they think of it the way you think of it, but it doesn't change the economics any. Taxes pay for it just like taxes would pay for a UBI. I’m pointing out that SS is nothing like UBI, unless you’re saying that UBI is also meant for a subset of the population. I’m well aware of the dent it makes in my paycheck.

by zie 4y ago

nobodyandproud 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 Not true. We understand the causes of inflation. Creating models that accurately forecasts inflation is a different matter, and it’s not helped by big financial actors manipulating and hiding their actions. The reasons Social Security doesn’t lead to rampant inflation is because Social Security is funded by the working age residents—decreasing the disposable income available to peak spenders at their peak consumption age. And also because it’s distributed starting at an ever increasing age so it’s far from universal. If UBI becomes necessary nationwide due to the “investment class” owning everything, that’s a sign that our system has failed completely. Perhaps it’s inevitable.

zie 4y ago
> Not true. We understand the causes of inflation. I assume you are talking about the monetary theory of inflation, MV=PY? I've never met an economist that thinks it tells the whole story. John Cochrane(a world class economist) is in the process of writing a new book that covers inflation, and he doesn't think he has all the answers. You and the rest of the "we" in your sentence needs to publish some academic papers informing the rest of us, as we clearly didn't get the memo. > The reasons Social Security doesn’t lead to rampant inflation is because Social Security is funded by the working age residents It's just a different form of a tax, perhaps it's sold to the people differently enough that they think of it the way you think of it, but it doesn't change the economics any. Taxes pay for it just like taxes would pay for a UBI.
- nobodyandproud 4y ago
  > I assume you are talking about the monetary theory of inflation, MV=PY? I've never met an economist that thinks it tells the whole story. John Cochrane(a world class economist) is in the process of writing a new book that covers inflation, and he doesn't think he has all the answers. Okay. But your position is that we know nothing about inflation. Which simply isn’t true. Since you’re name dropping John Cochrane (I don’t subscribe to said individual, but you seem to respect them): https://www.johnhcochrane.com/research-all/fiscal-inflation https://www.johnhcochrane.com/research-all/fiscal-inflation from an essay: “The future is not hopeless. Inflation control simply requires our government, including the central bank, to understand classic lessons of history. Forestalling inflation is a joint task of fiscal, monetary, and micro-economic policy. Stabilizing inflation once it gets out of control is a joint task of fiscal, monetary, and micro-economic policy. Expectations are “anchored” if people believe such policy is in place, and politicians and Fed officials are ready to act if needed.” That doesn’t read like inflation is some vast, major unknown. What I think you’re saying is that our knowledge and models of inflation are imperfect, therefore we can’t say with certainty that UBI will cause inflation. Which is essentially the same as “I don’t know.” > You and the rest of the "we" in your sentence needs to publish some academic papers informing the rest of us, as we clearly didn't get the memo. I asked a question; you provided non-answer; when you push the SS narrative I posit why SS is a poor analogy. Trump’s covid payment is far closer to UBI. > It's just a different form of a tax, perhaps it's sold to the people differently enough that they think of it the way you think of it, but it doesn't change the economics any. Taxes pay for it just like taxes would pay for a UBI. I’m pointing out that SS is nothing like UBI, unless you’re saying that UBI is also meant for a subset of the population. I’m well aware of the dent it makes in my paycheck.