4 ms·

With basic income, wouldn't the economy adapt to the fresh money supply and rents and other costs raise to account for it? It would effectivly be additional cu

by brador 13y ago

With basic income, wouldn't the economy adapt to the fresh money supply and rents and other costs raise to account for it? It would effectivly be additional currency inflation by a different name?

alexvr 13y ago
Maybe instead of giving everyone cash, the government could provide people with a default shelter, food plan, etc.
- dllthomas 13y ago
  That'd be a whole lot more expensive, not meet people's individual needs as well, and have more opportunity for corruption and abuse.
- dragonwriter 13y ago
  > Maybe instead of giving everyone cash, the government could provide people with a default shelter, food plan, etc. The problem that BI advocates see with that is that there is much greater overhead in managing a default shelter program, food plan, non-food-non-shelter-necessities-of-life-plan, etc., than just establishing and managing a single universal cash allowance plan.
  - tomjen3 13y ago
    It has a higher overhead now, but how many people would actually use it, versus BI? Also you can always increase BI (and if everybody gets it, that is going to be a fairly popular campaing promise), but people can only eat so much food.
    - dragonwriter 13y ago
      > It has a higher overhead now, but how many people would actually use it, versus BI? It has a higher overhead even with a much smaller number of people using it, because the overhead is involved in enforcing the conditions which don't exist for unconditional basic income. (That is, the overhead in existing social welfare programs is largely costs expended to prevent people from using them, either at all or in the incorrect amounts for their particular qualifications. A fixed universal unconditional entitlement doesn't have that overhead because it doesn't have that function.) > Also you can always increase BI (and if everybody gets it, that is going to be a fairly popular campaing promise), but people can only eat so much food. People can recieve and derive utility from virtually unlimited amounts of food (just like money), even if they can only eat a limited amount, as food is a commodity. And as much as the point you make about the politics of raising BI is frequently made about any social benefit, I don't think there's much reason to believe its true of BI. There are quite a lot of people who are already aware that benefits have costs (both personal and social), and the people who have the most interest in focussing on the personal cost also have the most resources to bring the social costs to the public eye. That being said, there's no reason BI levels couldn't be managed by a politically insulated group (something like the Federal Reserve), and plenty of reasons why a legislature might prefer to leave those kinds of decisions to such a body.
- JonFish85 13y ago
  How's the government going to decide where to put people? The poor people get to live in the richest neighborhoods in NYC? Or do they get pushed out to the cheaper areas of Harlem? In the first scenario, the costs are insanely high. In the second, you're forcing the poor into a bad neighborhood. Food: who decides who gets what? Vegan options OK? Food allergies? Only organic? Whenever personal decisions are left to the government, things get bad.
  - alexvr 13y ago
    No, I'm suggesting that the government should offer only the bare minimum with very little freedom of choice if anything at all.
    - jlgreco 13y ago
      Why is that better? That sounds much worse in just about every way that I can conceive.
      - ihateloggingin 13y ago
        The point is to punish the undeserving poor.
- danielweber 13y ago
  Yes, public housing projects worked so well. You can go look up economics papers on Google Scholar or SSRN about the benefits of direct payments versus in-kind payments. You might worry that someone will use their direct payment and spend it on hooch, but you can't stop that: if you give them food stamps they will trade that for money and then spend it on hooch.
  - tomjen3 13y ago
    Actually you can stop it, by doing exactly what he says - you can eat free food at this particular place, but so can everybody else. It stops hunger, but it has a resale value of 0.
BWStearns 13y ago
There would likely be inflation. However I would bet that it would not be to the point where the BI amount of money resulted in 0 value. Also another thing to consider is the effect it would have on salaries: they would rise (and not just in an inflationary way). Since now you have people grabbing any job they can even at shitty salaries (HN crowd likely largely excluded) companies would actually have to "compete" against the BI since the pressure to take an underpaid job is relieved. Not entirely sure the system would work, but it seems more viable than the current efforts ("Let's do X again, but this time we'll call it Y!"). Great article.
- saalweachter 13y ago
  You'd have pressure both ways. If people are working for a combination of extra cash and personal satisfaction (as opposed to "not eating catfood under a bridge"), you could safely eliminate minimum wage and some jobs would probably be priced at close to or near $0. I can't tell you how many times I've gone to a bookstore or even library and had to fight my brain telling me to rearrange all the books in the correct order. Given unlimited free time, you'd have to pay someone to stop me. On the other hand, I'd expect unsatisfying or unpleasant jobs to pay more, since people could fearlessly tell their bosses where to put it. If I had to guess, though, you'd also have an uptick in part-time jobs, especially the shitty ones. Maybe most people don't want to be a garbage man 5+ days a week, but if the pay is good you might find quite a few people who are willing to be garbage man once a week or once a month.
AndrewDucker 13y ago
The idea would be that you'd tax it back from most people, so that the only people who gained much were the very poor. It's basically a way of making sure that people don't starve to death while unemployed, but without having to put any kind of bureaucracy in place.
dragonwriter 13y ago
If the range of current monthly incomes in society is from $M to $N, and you add $X to all incomes, you'd expect price levels for goods to rise by varying ratios depending on the good but generally somewhere between (N+X)/N and (M+X)/M, meaning that goods would generally become more affordable for those on the lower end of the scale and less affordable for those on the higher end of the scale. EDIT: Fixed parens
licnep 13y ago
It's not the same, with inflation people still own the same percentage of wealth (people with 0 still have 0). With UBI the distribution of income changes, it's minimum is no longer 0 but some hardcoded amount. So even if prices would adapt, you'd end up not only with different prices, but with a different distribution of wealth. In the extreme case, if the basic income was huge, everyone would pretty much be able to buy the same things, with the basic income set to 0, the distribution of wealth would be more exponential as wealthy people naturally get more and more wealthy and people with 0 stay at 0. You probably want something in between, with good incentives to work hard, but also good conditions for poor people and a higher velocity of money (if you give money to people with no money they'll spend a higher percentage of it, fueling the economy in the right areas).

by brador 13y ago

With basic income, wouldn't the economy adapt to the fresh money supply and rents and other costs raise to account for it? It would effectivly be additional currency inflation by a different name?

alexvr 13y ago

Maybe instead of giving everyone cash, the government could provide people with a default shelter, food plan, etc.

dllthomas 13y ago
That'd be a whole lot more expensive, not meet people's individual needs as well, and have more opportunity for corruption and abuse.
dragonwriter 13y ago
> Maybe instead of giving everyone cash, the government could provide people with a default shelter, food plan, etc. The problem that BI advocates see with that is that there is much greater overhead in managing a default shelter program, food plan, non-food-non-shelter-necessities-of-life-plan, etc., than just establishing and managing a single universal cash allowance plan.
- tomjen3 13y ago
  It has a higher overhead now, but how many people would actually use it, versus BI? Also you can always increase BI (and if everybody gets it, that is going to be a fairly popular campaing promise), but people can only eat so much food.
  - dragonwriter 13y ago
    > It has a higher overhead now, but how many people would actually use it, versus BI? It has a higher overhead even with a much smaller number of people using it, because the overhead is involved in enforcing the conditions which don't exist for unconditional basic income. (That is, the overhead in existing social welfare programs is largely costs expended to prevent people from using them, either at all or in the incorrect amounts for their particular qualifications. A fixed universal unconditional entitlement doesn't have that overhead because it doesn't have that function.) > Also you can always increase BI (and if everybody gets it, that is going to be a fairly popular campaing promise), but people can only eat so much food. People can recieve and derive utility from virtually unlimited amounts of food (just like money), even if they can only eat a limited amount, as food is a commodity. And as much as the point you make about the politics of raising BI is frequently made about any social benefit, I don't think there's much reason to believe its true of BI. There are quite a lot of people who are already aware that benefits have costs (both personal and social), and the people who have the most interest in focussing on the personal cost also have the most resources to bring the social costs to the public eye. That being said, there's no reason BI levels couldn't be managed by a politically insulated group (something like the Federal Reserve), and plenty of reasons why a legislature might prefer to leave those kinds of decisions to such a body.
JonFish85 13y ago
How's the government going to decide where to put people? The poor people get to live in the richest neighborhoods in NYC? Or do they get pushed out to the cheaper areas of Harlem? In the first scenario, the costs are insanely high. In the second, you're forcing the poor into a bad neighborhood. Food: who decides who gets what? Vegan options OK? Food allergies? Only organic? Whenever personal decisions are left to the government, things get bad.
- alexvr 13y ago
  No, I'm suggesting that the government should offer only the bare minimum with very little freedom of choice if anything at all.
  - jlgreco 13y ago
    Why is that better? That sounds much worse in just about every way that I can conceive.
    - ihateloggingin 13y ago
      The point is to punish the undeserving poor.
danielweber 13y ago
Yes, public housing projects worked so well. You can go look up economics papers on Google Scholar or SSRN about the benefits of direct payments versus in-kind payments. You might worry that someone will use their direct payment and spend it on hooch, but you can't stop that: if you give them food stamps they will trade that for money and then spend it on hooch.
- tomjen3 13y ago
  Actually you can stop it, by doing exactly what he says - you can eat free food at this particular place, but so can everybody else. It stops hunger, but it has a resale value of 0.

BWStearns 13y ago

There would likely be inflation. However I would bet that it would not be to the point where the BI amount of money resulted in 0 value. Also another thing to consider is the effect it would have on salaries: they would rise (and not just in an inflationary way). Since now you have people grabbing any job they can even at shitty salaries (HN crowd likely largely excluded) companies would actually have to "compete" against the BI since the pressure to take an underpaid job is relieved. Not entirely sure the system would work, but it seems more viable than the current efforts ("Let's do X again, but this time we'll call it Y!"). Great article.

saalweachter 13y ago
You'd have pressure both ways. If people are working for a combination of extra cash and personal satisfaction (as opposed to "not eating catfood under a bridge"), you could safely eliminate minimum wage and some jobs would probably be priced at close to or near $0. I can't tell you how many times I've gone to a bookstore or even library and had to fight my brain telling me to rearrange all the books in the correct order. Given unlimited free time, you'd have to pay someone to stop me. On the other hand, I'd expect unsatisfying or unpleasant jobs to pay more, since people could fearlessly tell their bosses where to put it. If I had to guess, though, you'd also have an uptick in part-time jobs, especially the shitty ones. Maybe most people don't want to be a garbage man 5+ days a week, but if the pay is good you might find quite a few people who are willing to be garbage man once a week or once a month.

AndrewDucker 13y ago

The idea would be that you'd tax it back from most people, so that the only people who gained much were the very poor. It's basically a way of making sure that people don't starve to death while unemployed, but without having to put any kind of bureaucracy in place.

dragonwriter 13y ago

If the range of current monthly incomes in society is from $M to $N, and you add $X to all incomes, you'd expect price levels for goods to rise by varying ratios depending on the good but generally somewhere between (N+X)/N and (M+X)/M, meaning that goods would generally become more affordable for those on the lower end of the scale and less affordable for those on the higher end of the scale. EDIT: Fixed parens

licnep 13y ago

It's not the same, with inflation people still own the same percentage of wealth (people with 0 still have 0). With UBI the distribution of income changes, it's minimum is no longer 0 but some hardcoded amount. So even if prices would adapt, you'd end up not only with different prices, but with a different distribution of wealth. In the extreme case, if the basic income was huge, everyone would pretty much be able to buy the same things, with the basic income set to 0, the distribution of wealth would be more exponential as wealthy people naturally get more and more wealthy and people with 0 stay at 0. You probably want something in between, with good incentives to work hard, but also good conditions for poor people and a higher velocity of money (if you give money to people with no money they'll spend a higher percentage of it, fueling the economy in the right areas).