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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

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.

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.