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The teacher is likely to spend a higher proportion of the money given to them on consumption than the law partner who paid for it. This is the positive intenti

The teacher is likely to spend a higher proportion of the money given to them on consumption than the law partner who paid for it. This is the positive intention of UBI, but I cannot understand how people think “some people are so low paid that they don’t save or invest while others are able to accumulate large nest eggs” doesn’t imply that it we shift money from the latter to the former that we won’t see an increase in the consumption that will exceed the increase in production.

AnthonyMouse 1y ago
That's conflating investment with production. Here's a fun example: Suppose the investor was buying condos and speculating on real estate prices without renting them out. If you transfer money from the investor to the spender, the spender uses it to buy a condo for consumption because they want to live in it. The amount of production hasn't changed at all and the amount of consumption has increased by converting waste (a vacancy) into use/consumption. Or suppose if you give someone more money they'll use it to buy a new phone. Then more phones have to be produced -- but the vast majority of the production cost of a phone is from amortizing the fixed costs of the R&D and buying the manufacturing equipment etc. The incremental cost of making another phone when those are all sunk costs is tiny. Meanwhile the gross profit from those additional purchases goes to the seller which they can use in lieu of investment to cover the incremental increase in the cost of production. It can even make the average price of the phone go down by allowing the fixed costs to be amortized over more units.
- sokoloff 1y ago
  There are a lot of brainstormable scenarios about how an increase in spending on consumption would make society more productive without causing inflation. I think a lot of those fall into fanciful or wishful thinking, but the way to know what happens is to craft and execute experiments to learn about people's actual behavior and extrapolate only as we must rather than positing scenarios and arguing without data.
  - AnthonyMouse 1y ago
    You started off proposing logic, but the logic is flawed because investment isn't the same as production and production can be funded by sales revenue from consumers as well as by investment. If you want data then you're arguing what we should do a large-scale UBI so we can see what happens.

AnthonyMouse 1y ago

That's conflating investment with production. Here's a fun example: Suppose the investor was buying condos and speculating on real estate prices without renting them out. If you transfer money from the investor to the spender, the spender uses it to buy a condo for consumption because they want to live in it. The amount of production hasn't changed at all and the amount of consumption has increased by converting waste (a vacancy) into use/consumption. Or suppose if you give someone more money they'll use it to buy a new phone. Then more phones have to be produced -- but the vast majority of the production cost of a phone is from amortizing the fixed costs of the R&D and buying the manufacturing equipment etc. The incremental cost of making another phone when those are all sunk costs is tiny. Meanwhile the gross profit from those additional purchases goes to the seller which they can use in lieu of investment to cover the incremental increase in the cost of production. It can even make the average price of the phone go down by allowing the fixed costs to be amortized over more units.

sokoloff 1y ago
There are a lot of brainstormable scenarios about how an increase in spending on consumption would make society more productive without causing inflation. I think a lot of those fall into fanciful or wishful thinking, but the way to know what happens is to craft and execute experiments to learn about people's actual behavior and extrapolate only as we must rather than positing scenarios and arguing without data.
- AnthonyMouse 1y ago
  You started off proposing logic, but the logic is flawed because investment isn't the same as production and production can be funded by sales revenue from consumers as well as by investment. If you want data then you're arguing what we should do a large-scale UBI so we can see what happens.