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I'm UBI-curious, but surely inflation would be inevitable if everyone suddenly had $x more disposable income per year? Landlords and grocery stores and everyone

• lotsofpulp 7mo ago
  > I'm UBI-curious, but surely inflation would be inevitable if everyone suddenly had $x more disposable income per year? This does not have to be the case if higher taxes decrease purchasing power for some.
  • nostrebored 7mo ago
    This does not address the relative purchasing power change on the left of the bell curve.
    • lotsofpulp 7mo ago
      The whole purpose of UBI is to increase the relative purchasing power on the left of the bell curve. But inflation (sum total) is a moot point if total supply of dollars for total demand stays the same. Prices might temporarily increase for staples, such as shelter and food, but that should incentivize sellers in the economy to supply more staples, and fewer luxury goods. The additional supply will eventually bring prices down, but end result is more people have more of the basics.
      • shahmeern 7mo ago
        I don't think that line of reasoning has worked our particularly well for shelter.
        • lotsofpulp 7mo ago
          Just because supply of shelter in certain locales has not kept up with demand for that specific locale, and/or is affected by numerous legalities regarding things like eviction and zoning codes and fire codes and animals, does not mean invalid the theory of higher prices incentivizing sellers to increase supply.
          • nostrebored 7mo ago
            … why would incentivizing supply of staples be a good idea? If I make 2,000,000,000 more eggs you would expect that the vast majority of those would not be consumed, because people already consume staples at a near optimal rate. The sales of substitute goods would go down, but you’d almost certainly expect a rotating set of WICesque price fixing to combat the natural rise in price?
• throwaway94275 7mo ago
  In places that consist of many people with subsidized incomes, like elderly housing complexes, why aren't local grocery stores and gas stations higher than elsewhere? Also, aside from that question, prices will only rise if there's no competition. In a working market, if more people can afford a higher rent more apartments will be built.
  • nostrebored 7mo ago
    Because “many” is different than all and these stores would otherwise not exist?
  • estearum 7mo ago
    Because the subsidies aren't on top of base income? The subsidy isn't the problem per se, it's the net increase in income. It is obviously self-evident everywhere that high incomes create high cost of living, which can be traced through higher costs all the way down to the land rents (the rent someone is willing to pay to have market access to the high local incomes).
    • NicuCalcea 7mo ago
      I don't see why UBI would necessarily be an increase of income for everyone. It could be that, but it could also be a decrease in hours worked, or a more equal distribution of wealth, or any combination of these. I don't want a higher income, I want to benefit from the productivity gains I and everyone else made happen by having more time to do things I like.
      • estearum 7mo ago
        > I don't want a higher income, I want to benefit from the productivity gains I and everyone else made happen by having more time to do things I like. Why don't you just do that now and work half the amount of hours you're currently working?
        • NicuCalcea 7mo ago
• SoftTalker 7mo ago
  It would not be inflationary if it's paid for with a tax on real value or income. Maybe somewhat inefficient, and prone to political meddling, but it's not introducing new money into the economy. If it's just printed money, it would be.
  • randerson 7mo ago
    It would be in a sense, because that money is otherwise mostly hoarded by the wealthy, whose spending would look the same whether or not they are taxed. If money is saved and not spent, it is not really part of the economy in this sense. But if the money is transferred to others and spent on additional goods & services that is when it increases demand and raises prices.
    • PaulDavisThe1st 7mo ago
      Ah yes, the old "we should actually be grateful to the ultra-rich, because by not spending all the financial resources they accumulate, they save us from inflation!"
      • randerson 7mo ago
        I see it more as, we should have taken their money sooner so that we don't have this problem now!
    • marcosdumay 7mo ago
      It wouldn't be inflationary. What it would do is to make the government's inflation policy have effects immediately, instead of delayed by a decade. That would happen for whatever direction the government policy is pushing.
• deleted 7mo ago
  [deleted]
• alpaca128 7mo ago
  If UBI is so high that people can afford paying extra without working for it then maybe, but I don't think that is the idea behind UBI. There still needs to be an incentive for people to work, they should just be in a place where they actually have a choice instead of living in survival mode every day.
  • estearum 7mo ago
    Doesn't matter at all how much it is. It'll be (almost entirely or entirely) eaten by landlords. I am a landlord. I am setting prices for renewal. I have come to learn that 100% of my possible customer base now has $200/mo more to spend. I raise prices $200/mo with absolute certainty that I will find a renter. Congrats, mission accomplished.
    • SoftTalker 7mo ago
      How do you control what other landlords do? Why won't any undercut you by $200 and get your tenants?
      • kbelder 7mo ago
        In a normal market, they would. But housing is highly regulated with artificial shortages, so that pricing is very distorted.
        • estearum 7mo ago
          Regulation is not what suppresses production, but the actual profit margins. It's extremely hard to make money building housing because the cost of land and labor are so high. These costs are high because we now live in an advanced economy where land can do much more valuable things than "be housing", and laborers can do much more productive things than "build housing."
          • cogman10 7mo ago
            Yup. Development companies contract when the housing market contracts. They aren't building houses for the fun of it, they are building them because they believe the 100 houses they build in a hot market will ultimately pay back the land purchase rights. They will never build so many houses as to decrease the cost of a home. I actually got my home from a developer right after the housing bubble. They confided in me that they were giving away these homes pretty much at cost and that they had to fire a huge portion of their staff because the market was just crap at the time. Really, the only way to actually achieve lower housing prices is through the state ownership and build out. The state could also spend a premium on building homes that it sells at a loss or rents at lower rates. But that will be pretty unpopular with the general public.
• Spooky23 7mo ago
  That’s one of the flawed arguments used against minimum wage. The answer is, no.
• georgemcbay 7mo ago
  > What if you want, say, a human hair stylist or therapist: who would do such a job if they don't have to? I have no faith in Musk's vision of an abundance utopia for many reasons, but I suspect a lot of people would still want to do the job of being a human therapist or hair stylist even if they technically didn't need to for money. They may want to work less than 40 hours a week, but most people do have an inate need to feel like their life has some sort of productive value beyond just base level existing.
• clhodapp 7mo ago
  It depends. On its own, UBI puts a downward pressure on the value of money. Some other things (e.g. setting low interest rates) also put a downward pressure on the value of money. However, some things (e.g. taxes) put an upward pressure on the value of money. So it comes down to how all of those factors balance out.
• jmyeet 7mo ago
  So there are two basic versions of UBI: 1. The right-wing UBI is a tool to dismantle the social safety net. The idea of the likes of Milton Friedman is to replace all social safety programs with UBI. This doesn't make sense because, for example, being disabled in today's society makes everything more expensive; and 2. Left-wing UBI would seek to have everyone share in the wealth they create by supplementing social safety programs with UBI. UBI becomes a form of super-progressive taxation because it can be viewed as negative taxation. As for your inflation comment, you have a point, to which I'll say: UBI alone isn't sufficient. You need economic reform and planning on top of that. A good example is the US military. If you live off-base you get a housing allowance (ie BAH). Now around military bases, in the US and overseas, all the landlords know this so you'll find that weirdly all the houses to rent cost pretty much what BAH is. So a more equitable economic system, including UBI, needs social housing. That is, the government needs to be a significant supplier of quality, affordable housing so landlords (private and insitutional) can't artificially drive up prices, as is the case now. A prime example is Vienna [1]. Housing simply can't be a speculative asset in a healthy economy. If you wnat to see what an equitable planned economy looks like, look at China. [1]: https://www.youtube.com/watch?v=41VJudBdYXY https://www.youtube.com/watch?v=41VJudBdYXY
  • OneDeuxTriSeiGo 7mo ago
    It's worth noting that Left-wing UBI can still be seen as a mechanism to replace social safety programs. It just requires that disability payments, etc be merged with the UBI system such that added disability needs can be treated like additional tax credits that get applied to the fixed-interval interest-free loan disbursement from the government based on your taxes that UBI effectively is. In such a system you get your base UBI tax credit which pushes your tax burden into the negative. Additional UBI-elligible tax credits can push that tax burden even further negative. You can file the paperwork to adjust this at any point in the year and if it's for the current year the tax credit is prorated relative to the date of the next disbursement date (and the full amount for the next year). Then your UBI disbursement updates and you get it. It works the same way as updating your W-4 tax withholding for a standard W-2 position. At the end of the year of course your taxes all need to zero out still and if not you either get a bill or a refund. And this also moves all of the social safety program fraud prevention together into the same system within your tax agency (IRS for the US, or state/local agency, or whatever else). So instead of a bunch of different agencies and systems for avoiding and finding fraud it all rolls together into the responsibility of the IRS tax assessors, auditors, and the IRS Criminal Investigation unit. And while the rich hate the IRS and common media frames them as incompetent, the people at the IRS are in general extremely competent and more than willing to help and accommodate your average person (less so for the rich who get caught systematically trying to defraud the IRS).
• lyu07282 7mo ago
  This is kind of like social security, medicare or the 5 day work week, if everyone suddenly had $x more disposable income per year? Landlords and grocery stores and everyone else would raise prices because they know people can afford it.
  • bryanlarsen 7mo ago
    And UBI would give people the freedom to move to a place with cheap rent and groceries. Rent is high in places with jobs and low in places without. Supply and demand will work better, lowering prices.
    • lyu07282 7mo ago
      These people would argue against the weekend on economic grounds too if we didn't have it already, everything seems unimaginable until it becomes real. Its like trickle down economics, you can make the "economic" argument fit whatever you want to appeal to the oligarchy.
• skybrian 7mo ago
  UBI is not luxury communism, or at least not any of the proposals I've seen. A guaranteed $1000 a month would help a lot of people, but $12000 a year is not a high income and many people will want to keep working to earn more money than that. Maybe they'd be able to retire sooner, though? As for inflation, a lot depends on how gradually it's adopted. As we saw in the pandemic, supply chains need time to adjust and bad things happen after sudden changes.
• pjmorris 7mo ago
  Agreed. I tend to think a job guarantee would work better than UBI: have the government provide a job to anyone who can't find one somewhere else, something like what was done in the 1930's in the US. Come up with a list of things needed (can you think of anything that needs fixing?), and pay people a living wage and benefits to take care of those things. Call it 'Universal Basic Work.' Beyond spending government money to take care of the country and beyond providing those hired with enough to take take of themselves, it'd force private employers to pay and provide benefits at least as well as the government UBW jobs if they want to hire employees. I further imagine that a person making enough to get by would be less prone to being hopeless and frustrated, supporting social cohesion. And that there's a dignity in that both for the individual and the community they are a part of.
  • zozbot234 7mo ago
    The government already does this by subsidizing low income earners via the EITC. It just outsources the actual job provision to the private sector, which is an effective alternative to wasteful make-work.
    • neilwilson 7mo ago
      Except that doesn’t work as there remains a systemic shortage of jobs on offer. The societal deal with the private sector is that it employs everybody at a rate that allows an individual to live in return for the chance to make a profit. A job guarantee ensures that the private sector overall cannot shirk that responsibility. If the private sector does its job, nobody will be employed on a job guarantee.
      • zozbot234 7mo ago
        An income subsidy does the same thing at lesser cost. Whether that subsidy is a UBI or a wage supplement is to some extent a political choice: we got the EITC instead of a proper UBI (managed as a "negative" income tax bill for low-earning folks) largely due to political objections to the notion of getting money "for doing nothing".
• jltsiren 7mo ago
  Is that what UBI has become these days? That everyone is supposed to get some extra money on top of whatever they already have? ~20 years ago, when UBI was a popular idea in my country, it was understood as a technical fix to the welfare and tax systems. It was supposed to simplify the systems and make them easier to understand. It was supposed to fix the perverse incentives people with low wages face, such as the extremely high (often >80%) effective marginal tax rates. It was supposed to automatically give people the benefits they are entitled to, without having to deal with the punitive bureaucracy. It was supposed to help people who fall between the categories in the existing welfare system. And so on. And it was supposed to be funded by making it an accounting technicality, at least for the most part. Most basic welfare benefits, tax credits, and tax deductions would go away. Progressive taxation would go away. Standard deduction would either go away or become substantially smaller. And the highest income tax bracket would start at 0.
  • nout 7mo ago
    The current UBI frame is nothing like what you said. And I think this is the issue with UBI - the incentives are not aligned for it to be stable and reasonable over time, but rather to get much worse and misused over time.
  • AnthonyMouse 7mo ago
    That's exactly what it's supposed to be, but then opponents (or just people who are confused) will often characterize it as something else which is easier to find fault with.
  • Izkata 7mo ago
    All of that sounds nice, but the current understanding is what fell out when people started questioning the specifics of how all of that would work.
  • elevatortrim 7mo ago
    Everything you say is still the idea and I agree but where does the idea that progressive taxation would go away coming from? What does it have to do with UBI?
• marcosdumay 7mo ago
  Inflation is a common red herring that people arguing in bad faith throw at policies they don't like, because most people don't know enough to reject it. The monetary side of the economy deals with money volumes orders of magnitude larger than the real side, and reacts to change also orders of magnitude faster. Because of that, inflation is almost always completely determined by monetary policy. A real shock that can out-impact monetary policy looks like the end of the world.
  • BJones12 7mo ago
    > Inflation is a common red herring that people arguing in bad faith throw at policies they don't like, because most people don't know enough to reject it. That's very dismissive. Since you know so much, why don't you try to reject it?
  • deleted 7mo ago
    [deleted]
  • randerson 7mo ago
    Oil is up due to shortages due to the war in Iran. RAM is up in price due to supply shortages due to AI. During COVID much of the early inflation was caused by supply shortages due to factories shutting down. Then house prices shot up in suburbs as people moved out of cities so the demand went up there. None of that is due to monetary policy. Saying that the total money supply is the cause of inflation is a very simplified view. There are currently trillions of dollars in M2 doing nothing except sitting in wealthy people's bank accounts and investments as generational wealth. That does not raise the prices of anything until it is being spent.
    • marcosdumay 7mo ago
      Yes, we are in a situation today where the real economy may send inflation out of control in some countries. As we were at the early days of covid (but not an year or two later). I don't know what relation you see between that and UBI.
      • 7mo ago
• AnthonyMouse 7mo ago
  > I'm UBI-curious, but surely inflation would be inevitable if everyone suddenly had $x more disposable income per year? The money doesn't come from nowhere. It's a transfer payment. People who make a below average amount of money pay less in tax than they receive, people who make an above average amount still receive the UBI but then the UBI is less than the amount of taxes they pay. The result is not that "everyone has $x more disposable income per year" -- it's $0 on average, because lower income people have a little more and higher income people have a little less. Notice that the existing welfare system already does this, but in the process creates a bunch of perverse incentives and income cliffs (you lose your benefits if you take a job or work more hours), leading to de facto marginal tax rates that are often >50% on lower income people when you account for benefits phase outs and in some cases they're >100%, i.e. if you make more money you make less money. > Landlords and grocery stores and everyone else would raise prices because they know people can afford it. That isn't how competitive markets work. If people had more money and a grocery store tried to raise prices, people would go across the street to the other grocery store. It only works like that for products with fixed supply, i.e. things you can't make more of if the demand for them increases, because then if people have more money they have to outbid each other instead of sellers just producing more of what people are buying. This is one of the reasons zoning density restrictions screw people so hard -- land has fixed supply but housing doesn't, because you can build more than one housing unit on a piece of land. Unless the government bans that and mandates one unit per plot. Then people have to outbid each other. But your problem then is that, not people having more money. Notice that the same thing happens there if people get more money for any reason, e.g. more people go to college or the economy improves. It's a major problem that needs to be fixed regardless of what you use for transfer payments or if you do them at all. > Who decides who gets to buy the best properties on Earth if money is no longer a factor? The premise of that has always been pretty ridiculous. You can reduce the scarcity of some resource by making it more abundant, and that's generally a good thing. Good luck removing all scarcity from all resources. That's not a real thing.
• scarmig 7mo ago
  Inflation isn't inevitable, especially in the long term. But of course it depends on implementation. The goal of a UBI is to make sure people get their essentials to live. Right now, people get those essentials, one way or another (otherwise, they'd be dead; and to the extent people starve to death in the developed world, it's issues of distribution, not production or money). This makes the UBI an accounting trick: there's no actual goods not being produced that need to be produced, and it is just shifting costs from welfare, charity, family and friends, etc to the UBI program. This is not inflationary and frees up human effort to focus on higher needs than scraping together a basket of things merely to live. A lot of the time, though, people also want some non-essential but still pretty important things covered, which is a bit trickier. In this case, there is the potential for more money to be chasing a fixed supply of goods. This will drive inflation in the short term. However, in the longer term, capital will be redeployed to capture that increased demand (while being deployed away from the desires of those taxed to fund the UBI). This all assumes that the UBI is revenue neutral; if not, yeah, we will get a lot of inflation.
  • jdejean 7mo ago
    I find it hard to believe shifting spending from welfare to cash won’t result in inflation. It’s about accessibility and how liquid the assistance is. It’s also about how evenly that’s distributed. To the parent comment’s point, if UBI is evenly distributed across everyone (“Universal”) and exists as liquid spending power (“Income”), there’s no way that doesn’t result in a rate of inflation that perfectly counteracts the existence of UBI. Prices are only low when the seller wants to scale/reach more buyers. If low/no income buyers disappear, why would prices stay low? If there were an infinite number of high income buyers, cheap products wouldn’t even exist in a freely capitalistic system. Instead we have a limited number of buyers in a wide range of income levels, which drives a wide range of prices and sellers competing at every price point. It feels like the laws of physics, once you cut off one side of the scale it will fling in the other direction. I also hate everything I just said, I would love to exist in a world that wasn’t subject to these forces. Just seems impossible in a freely capitalistic system.
    • scarmig 7mo ago
• 6510 7mo ago
  > if everyone suddenly had $x more disposable income per year You mean as opposed to very few people? I'm told that if one is very curious about the topic one should not start by asking questions but read the 100+ years of the same questions being asked and answered again and again. I cant say I've followed the advice but it sounds very sensible.