4 ms·

If UBI was implemented fully (everyone in the country gets £x per month) what’s the likelihood basic/essential goods would rocket in price largely negating the

• JoeAltmaier 3y ago
  None at all. This is a common first thought folks new to UBI put forth. More people with more money to spend means manufacturing volume goes up, so economies of scale go up, so the prices go down. There can be instabilities initially as supply moves to meet demand. But folks didn't used to 'need' those things, got along without them (didn't have the money for them) and so can make their own decisions about what they'll spend their money on. The fundamental property of UBI is, let people sort out what their needs are themselves.
  • UtopiaPunk 3y ago
    In a universal system, what stops the landlord from raising rent an extra £1600 (or whatever the UBI amount is)?
    • ceejayoz 3y ago
      The answers to this vary from public housing options to rent control to guillotines.
      • Simulacra 3y ago
        In other words, the only way it could work is through total government control of the market to keep businesses from raising prices. Completely illogical in western society.
        • ceejayoz 3y ago
          Western society has plenty of existing controls on price gouging. Housing is often especially heavily regulated.
        • UtopiaPunk 3y ago
          I'd personally be more supportive of a robust UBI system if it came with such house pricing regulations. But I'd argue we need such house pricing regulation now, and in fact enacting would have a greater positive impact than the UBI itself. Politcally, though, I'm skeptical that would happen. There's a right-wing propoent of UBI, but they see it as a way of gutting the rest of the meager welfare system the U.S.A has, and I couldn't stand for that. If I were the benevolent king, I'd personally push through some sort of guaranteed housing program. The housing would be small, modest, and safe. Everyone would be entitled to such housing if they wanted it for minimal cost, and it would be provided at no cost for those at the very bottom rungs of the economic ladder.
    • JoeAltmaier 3y ago
      The market. Folks can spend their UBI money on anything.
  • fastball 3y ago
    There is a lag though, so if (as you say) the demand goes up, the price will indeed go up as well until supply can catch up.
  • Baader-Meinhof 3y ago
    Any sources on this? "None at all" feels like a very bold claim when we've seen recently that a large increase to monetary supply does increase inflation.
    • Kinrany 3y ago
      UBI is orthogonal to increasing money supply, it's a single item in the budget among all others.
      • coldtea 3y ago
        Single budget item vs many items is an irrelevant distinction, if the size of the single item, or the distribution (everybody), and intended use (to people for buying stuff) disproportionally affects the average-person's money supply and thus the market.
    • noughtme 3y ago
      Didn’t all the problems occur when COVID income supplements were canceled, and the private sector response to reduced demand was to raise prices to maintain profits?
    • camillomiller 3y ago
      It wasn’t monetary supply to individuals, it was an unusually lower price of debt. This is not what we’re talking about here. Moreover, it’s lower cost of debt/money paired with a black swan one of a kind pandemic shock event.
  • nightski 3y ago
    The key segment that tends to soak up extra cash is housing/rent, and I'm not sure you'd see the economy of scale theory play out there. If anything I could see this just far increasing the wealth disparity. But I'd love to be proven wrong.
  • gruez 3y ago
    >More people with more money to spend means manufacturing volume goes up, so economies of scale go up, so the prices go down. That property doesn't hold for housing, which makes up the largest chunk of a person's "necessities" spending.
  • askin4it 3y ago
    Probably quite a lot. Ny guess is that rents rise since landlords know everyone has an extra cash infusion now. Until it settles out merchants will pick over this until it is eaten up. Was part of sales in gov subsidized market and the gov grant was a big part of figuring price. That is to say "inflating" the price for the customer. Just human nature. UBI will be the same.
    • JoeAltmaier 3y ago
      Everybody knows there's more money around. That's transparent. The alternative to 'a wealthier populace' is 'keep them poor', right? This argument that 'don't bother helping people, it'll just be wasted' smacks of marxism to me. Society needs the hard-working poor/slave labor class or everything will fall apart. So make sure we have the poor, at all costs! I have a more optimistic view of society - that we're now capable of providing plenty for everybody. Due to automation etc.
      • askin4it 3y ago
        I actually agree with you, and I know for a fact that the planet (which includes human society) has a huge untapped potential for supporting many billions if everyone just allows things to work. Why cash? Why not a free apartment, free local transportation, free food, free doctor, and free TV. That would cover 90% of the people 100% of the time. The reason is that cash is fungible and will therefore flow more freely to the actual recipients of the handouts, which are merchants who price necessities according to what the market will bear. If anyone would like to debate that last assertion, I'd be interested in a counter-example where the price of essentials just kept on getting lower and lower. I'm not sure UBI is any different than all the prior plans to spend our way to prosperity. To learn the truth, we will have to ask our descendants when they are paying for all this. (Of course this assumes we don't bankrupt first.)
  • coldtea 3y ago
    >More people with more money to spend means manufacturing volume goes up, so economies of scale go up, so the prices go down. Might work for buying cheaper gadgets. Doesn't work for any cost that really matters, like rent, healthcare, education, utilities, and so on.
  • super256 3y ago
    You realize the FED is currently doing what it is doing to curb demand, right? The FRBSF has a good article about supply, demand and inflation here: https://www.frbsf.org/economic-research/publications/economic-letter/2022/june/how-much-do-supply-and-demand-drive-inflation/ https://www.frbsf.org/economic-research/publications/economi...
  • HPsquared 3y ago
    Your argument seems to say that if you give people UBI, they will work more. I doubt that.
    • TheOtherHobbes 3y ago
      I think the argument is that if you give people UBI, some people will work more. But it's a one dimensional view of a many dimensional problem. Some people will be able to start a business, but if UBI is pitched at comfortable survival level, many more will do nothing, and there will be a big increase in employee turnover. The rational solution would be to pay much more and improve conditions, so the rewards for work would be much higher than now, and the pointless frustrations much lower. But current work environments are usually geared towards creating and maintaining hierarchy, not rational effectiveness. So I think it's likely that UBI would just raise prices of essentials and they wouldn't be any more affordable than they are now.
  • karaterobot 3y ago
    > More people with more money to spend means manufacturing volume goes up, so economies of scale go up, so the prices go down. Back of the envelop, there are 260 million adults in the U.S., and 1600 GBP is $2000 a month for each of them. So, that's $6.2 trillion dollars a year that manufacturing efficiencies would have to make up for, in an economy with a GDP of about $23T. And that's assuming that mechanism would even solve the inflation problem, which is hurting my head to think about. For the UK, it works out to about one trillion a year, off a GDP of three trillion, so an amount of money roughly a third of the entire economy would have to be made up for by ... companies getting better deals buying in bulk, and workers coming up with better processes than what they have now, and... uhh... other things of that nature? That sounds like wishful thinking to me. I'm not against UBI, I just don't understand how this response actually addresses the most obvious problem with it. In fairness, I have not seen a better argument than the one you gave. Maybe there is another one.
• ta1243 3y ago
  It's more likely the money would go to landowners, just as it does now. Unlike food, fuel, etc, housing is artificially capped at a level lower than demanded, thus prices of housing (either in terms of rent, mortgage payments etc) increase to soak up every spare penny.
  • bluefishinit 3y ago
    I think you need to pair UBI with public housing, public health care and ideally a nice sack of healthy groceries delivered to your door every week. Provide a baseline of dignified living for all. Our economy is not currently structured to support this, but I don't see any other options for the future. It's also quite a nice step forward in humanity to use our technology to increase everyone's quality of life. I personally believe MMT is an option to make this happen. Print money to basically zero out all debt with inflation but provide everything someone needs to live while you do it. The first step on the path to a post-scarcity reality.
    • seanmcdirmid 3y ago
      > I personally believe MMT is an option to make this happen. Print money to basically zero out all debt with inflation but provide everything someone needs to live while you do it. The first step on the path to a post-scarcity reality. If you do that without having a post-scarcity economy/reality, surely the result will look more like mad max and not Star Trek? Zeroing out debts would be a huge boon to the rich, although they would need to invest in guns to protect the property they no longer have to pay a mortgage for.
      • bluefishinit 3y ago
        Like I said, it needs to be paired with public issuance of everything someone needs to survive a dignified existence (not the case for Mad Max).
        • seanmcdirmid 3y ago
          That’s fine if society can afford it. If we do it, we must already be at a post scarcity economy, otherwise it will be disastrous. It can’t just be in the path to a post scarcity economy. People have really high standards on what dignified living means.
• Simulacra 3y ago
  Monumentally. I cannot think of a single corporation or landlord that would not raise their prices to account for the higher amount of money in the system. It's like going to a car dealership and telling them how much money you have. A UBI would feel great in the short run but would quickly get swallowed up by the economy, but in the short term it feels good so it gets public support.
• clnq 3y ago
  I don’t see how investors would not demand price raises in any retail company in a UBI market. Especially for inelastic demand goods. I think that’s why UBI is dangerous. Because if anyone for some reason ceases to receive it after the prices have inflated, then they will be effectively removed from the economy. Forced into levels of poverty we haven’t seen in the Western world. Think about not being able to afford clothes. Someone should do a UBI trial in a restricted geographical area. Maybe a small town somewhere remote so people cannot easily leave it for shopping. I think most money would just be absorbed by companies through price hikes in the area, and they would be further disincentivised to pay their people fairly. Now the people won’t protest and riot if they are paid $0 on top of their basic income. I think people benefit from UBI a lot. But it is too easy for corporate greed to exploit. I just can’t imagine the fiduciary responsibility to shareholders not being used to deliver value in UBI markets. It seems naive to think that business, especially big corporations, will be okay with forgoing growth. They already crap on a ton of ethics, morals, and even basic long-term business sense to deliver quarterly growth. So I’m skeptical of UBI. I want it for the sake of humanity. But I can’t see it not being abused by corpo grift.
• raincom 3y ago
  Inflation skyrockets, because essential goods, services, housing, etc are NOT uniformly distributed. One can't print 50 million homes, even though a govt can distribute £x per month to all of its citizens. This is one of the reasons why the wealthy class don't keep their assets in nominal currencies (say, pounds, dollars), they would rather own assets (homes, businesses, land, shares of companies that produce goods, provide services, etc). As currency gets inflate, debased, printed on demand, borrowed (pick the right phrase depending on one's political inclinations, ideologies), the price of underlying assets (commodities, land, businesses, etc) also rise. That's why non-uniform distribution of money doesn't have the same effect. If a country were to print £500 billion, and just hand out £500 billion to 10 wealthy people, it won't bring the same inflationary effects on housing/rentals, food, services and goods. However, if you print £10 trillions and distribute to everyone who makes more than £60K per annum, yes, housing and other stuff skyrockets.