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Raising the income for the entire population would indeed just inflate the currency. But a basic income would not in fact raise the income of the entire popula
by aetherson 12y ago
Raising the income for the entire population would indeed just inflate the currency.
But a basic income would not in fact raise the income of the entire population. It would lower the income of the rich and raise the income of the poor. Because it would be paid for with taxes, not deficit spending.
The rich would GET basic income, yes -- but their taxes would increase by an amount that would more-than-compensate for the higher influx of money. Their after-tax income would be lower.
- bduerst 12y agoAssuming that housing is fungible, sure. But it's not. There are different segments by quality, location, etc. What percentage of the housing market is only for "the rich"? What extra tax percentage is middle-income going to pay? Lower income isn't going to be taxed more, so lower income housing prices are going to raise, as their market segment gets a boost in income. And now you're back at people who couldn't afford housing before still being unable to afford it - which was part of the problem that basic income was trying to solve.
- aetherson 12y agoIt is certainly possible that some goods or services that are inelastic in supply will experience cost inflation if they are goods or services that are mostly or entirely consumed by a market segment that becomes richer from basic income. I'm not convinced that housing is generally an example of such a good, but some housing may well be. However, the same is true of targeted assistance to only the poor for only housing -- it increases their effective wealth for the purposes of competing only for housing, and, if anything, it will make it worse than a more general guaranteed income would.
- bduerst 12y agoThat was my point - Basic Income doesn't provide any additional benefits to targeted assistance, and would actually be a detriment in markets with income-elastic demand.
- aetherson 12y agoI know what your point is, but if you imagined that I repeated your point, you're wrong. What I said was that targeted assistance was MORE likely to cause price inflation in areas like, say, housing than guaranteed income was, precisely because it generates "income" that can only be spent in competition for this particular housing category. The benefit of basic income over targeted assistance is that basic income is relatively low-administration cost to flexibly meet the needs of people who don't have housing needs, and in that it is a relatively non-market-distorting intervention.
- bduerst 12y agoBureaucracy has overhead, I'll give you that, but I assume you're saying that UBI is a replacement for assistance programs, rather than being used alongside them? That's the only way for cost administrative cost savings. What about when UBI isn't enough for something as trivial as Medicaid? Would UBI cover the cost of health insurance for everyone, since it's replacing the "expensively adminsitrative" medicaid? Even if you took away employer insurance today, many people with steady income can't even afford their own health insurance.
- aetherson 12y agoI don't think that basic income could replace healthcare programs. It might replace section 8 housing and food stamps and at least some kinds of disability and unemployment insurance and some kinds of child credits and so forth. I actually don't think it would successfully replace any of those things, which is one of the reasons I don't really support it. But it's an intriguing idea that should be debated on its merits.
- bduerst 12y agoFor sure. I think that switching healthcare over to being a public utility would open the door to debating a lot of different programs, including basic income. Maybe then someone will figure out a way to handle the housing issue.
- dragonwriter 12y ago> Lower income isn't going to be taxed more, so lower income housing prices are going to raise, as their market segment gets a boost in income. Predictably, it will raise less proportionately than the increase in income in that segment, so housing will become more affordable, though not as much more affordable as it would be considering only the income increase and not the effect on price levels.
- bduerst 12y ago>Predictably, it will raise less proportionately than the increase in income in that segment, How are you predicting this?
- dragonwriter 12y agoIts the consequence of assuming no change in supply and assuming that there are other competing goods (e.g., food) which will compete for the marginal dollars for the same population of buyers (and hence that demand is not perfectly inelastic.)
- bduerst 12y agoEngel's law (the food example) doesn't really impact it that much because the income elasticity of food is between 0 and 1. By your logic nothing has an income elasticity of demand greater than 1 because of competing with food.
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- ende 12y agoThis assumes that a UBI would be funded by redistributive income taxation. Many formulations of a UBI actually fund it through a land value tax. Connecting the two concepts basically amounts to land owners paying rent to society. Your overall point stands, I just want to point out the LVT aspect as UBI is increasingly discussed as a topic separated from that original context.
- dragonwriter 12y ago> But a basic income would not in fact raise the income of the entire population. It would lower the income of the rich and raise the income of the poor. Because it would be paid for with taxes, not deficit spending. Realistically, it would be paid for with both. Marginal increases in spending might be paid for purely with tax increases, but that rarely actually happens.