4 ms·

I haven't researched this too much, but I haven't found a plain explanation for my question either: Isn't giving everyone $1,000 just like giving nobody $1,000

by rday 12y ago

I haven't researched this too much, but I haven't found a plain explanation for my question either: Isn't giving everyone $1,000 just like giving nobody $1,000? It would improve the lives of the homeless dramatically I'm sure. But wouldn't rent/food just inflate at the same time? If apartment supply remains constant, but now the market of renters increases substantially, prices rise right? Edit: I like these answers. So if I gave a quick overview, this isn't printing money, its a basic redistribution which gives those with less money much more purchasing power. So prices don't rise because of this. Things like leases and rent are generally fixed over a period of time. So you aren't getting a sudden increase in cost. You are getting the ability to do things like pay off your credit cards, student loans, and catch up on other payments. Now you are (hopefully) not in debt and living paycheck to paycheck. Maybe you don't have to work a second job to make interest payments, and you can invest in education or something along those lines.

sz4kerto 12y ago
No, it's not the same. If you have 11 people, one of them has 10 units of money, the rest have 1, then there's 20 units of money ($) in the system. Let's also assume you have 100 units of resources (R) that people can buy. So $1 is convertible to 5R. Now you print money and give everyone $1. There is now $31 in the system, so $1 can buy 3.22R. However, the purchasing power of the people who had $1 now increased from 5R to 6.44R. The purchasing power of the 'rich' guy decreases from 50R to 35R. Or you can take money away from the 'rich' and redistribute it. That also has some effect on prices because of other reasons (changes the consumer baskets). But as you can see, money printing is basically tax on cash reserves.
- DaFranker 12y ago
  Playing the Enemy here: What happens if what you have isn't 100R, but a company that hires one contractor part-time to build houses and make food at a flat 1$ upstream resource cost using machines that currently have 90% idle time? Wouldn't this situation mean that giving everyone that second 1$ let everyone have a home and food and solve the problem entirely? The company is also happier due to more profits and higher efficiency.
TTPrograms 12y ago
Those sorts of prices generally scale up, not increase by a fixed amount. Generally you would be right if everyone all of a sudden had 20% more money. Effectively by giving everyone a fixed amount we give poor people X>50% more money and we give rich people X<10% more money. Which is in principle similar to a progressive tax, except for those who have no money, who now can survive to learn to increase their economic output.
CapitalistCartr 12y ago
We aren't short of housing for people. We are short of fancy housing for everyone, but almost everyone already has a home. What they need is breathing room. My wife wants to go to Law school, and has been offered a partial scholarship, but we can't afford the difference. That would be enough to just cover it. Many people would like to have enough surplus to live comfortably, without fear. Buy medical insurance; go to school; replace/repair their car; pay off debts, etc. My personal doubts on Basic Income is that people would use the money any more effectively than they do their present money. But the fact that it wold stop companies such as Walmart from profiteering on the backs of the present welfare system trumps all to me.
- mcherm 12y ago
  You write: > almost everyone already has a home > My personal doubts on Basic Income is that people would use the money any more effectively than they do their present money I am not so sure your statements here are accurate. There are roughly 600,000 people in the US who are homeless on any given night (the number who are homeless at some point in the year is much higher). That doesn't include the huge number (probably several times as big) who are "couch surfing": staying with family or friends because they have no housing. And a huge portion of these are children; I doubt these children have sufficient income for a home. As for your second statement, I cannot point to specific statistics, but all of the information I have seen suggests that most poor people are actually extremely efficient with their money -- that the problem is mostly one of not having enough income, not one of poor spending choices. And it is because of these that a basic income program (or "citizens' dividend") would, indeed, make a difference. It would actually change the income distribution by setting a floor on the minimum amount of income any particular person can have. [1] https://www.hudexchange.info/resources/documents/ahar-2013-part1.pdf https://www.hudexchange.info/resources/documents/ahar-2013-p...
  - CapitalistCartr 12y ago
    The United States is a big country; 600,00 people is about 0.002 of the population, meaning that 99.8% have a place to sleep.
RobertoG 12y ago
Inflation is a function of the quantity of money in the system. Basic income money doesn’t come from “printing” more money but from taxes, so, it’s a redistribution scheme. You could expect to see some price changes but not general inflation.
- JoeAltmaier 12y ago
  That's far from a foregone conclusion. Printing new money could be an excellent way to create a BI while leveling the economic inequalities present in the present economic system. I.e. reducing the hoarded wealth of the 1%.
flurdy 12y ago
The minor rise in inflation wont equal anywhere near the $1000 handed out. Sure, there will be more people that can spend a little, but that all is minute compared with general additional income of the vast majority.
Retra 12y ago
I feel like the more general concern for what you are trying to address is that we may have cultural or systemic problems that funnel money away from the people who we hope to benefit, and basic income seems to do little to change this. What's to stop my landlord from increasing rent by $1000? What's to stop all of the landlords in town from doing the same? Well, there's the fact that, if my landlord did this, I would start looking to move, and probably look into buying a house. Assuming the housing costs didn't also increase at the same rate. I just doesn't feel like there's anything to prevent this. I already have to pay what my landlord asks or spend weeks trying to find a suitable alternative, and it feels like the fact that my landlord thinks their time is more valuable than mine is the only thing actually stopping that. If they knew their renters could bear such a rate increase...
- logfromblammo 12y ago
  Me. I'd stop them. If basic income ever became a reality, my first startup business would be factory-manufactured housing units that fit inside intermodal shipping containers. The per-area costs of site-built homes are nearly double those for factory-built homes. Making additional concessions for trans-pacific transport and re-shipment from low-occupancy sites to low-vacancy sites should approach the minimum marginal cost for housing one additional person in any place that a regular shipping truck can reach. Then I ship the first units to the city with the highest low-end housing costs. It's really too bad that I can't afford to fail even once...
mikeash 12y ago
Demand won't go up much. There aren't that many homeless people, nor that many starving people. What will change is how people get a place to live and food to eat. A lot of people who go begging for it now will be able to buy it for themselves (for values of "for themselves" that include being given $1,000/month). They were eating before, and thus somebody was buying that food before, it's just happening more efficiently and less stressfully now.
karmacondon 12y ago
Since the OP was an analogy, I'll attempt one as well. Say we both operate hot dog stands on opposite corners of the street, each charging $1 per hot dog. Basic Income goes into effect and suddenly 2X as many people can afford hot dogs. You raise your price to $2 in response. If I have any sense, I'll keep my price at $1 or maybe lower it slightly. More people will buy from me, significantly increasing the amount of money I make despite the fact that I haven't raised my prices. This concept applies to most sectors of the market. People will still be price conscious, and businesses will benefit as much from more customers as they will from higher prices. Even with housing. If more people can afford apartments, more people will decide to convert existing real estate or rent out rooms which will hopefully increase the price competition. This all assumes that there isn't open collusion between market participants of course, which there very well could be. But the general idea is that prices won't rise uniformly in every sector of the economy at once.
- logfromblammo 12y ago
  Whoa whoa, right there. You forgot something. When basic income goes into effect, a few more guys quit their hell jobs and buy food carts with the last of their meager savings. In addition to the hot dog guy on the opposite corner, there's now a tacos and tamales guy on the 3rd corner, and a gyro guy on the 4th. A barbecued pork and corn-on-the-cob guy takes the spot next to you on "your" corner. People still want a good deal. If you raise your prices now, customers just walk 5 paces to your left. It doesn't matter if the pulled pork and corn costs $5 and your hot dog costs $2. People know that your markup is higher, and they don't want to feel like chumps. Or they can walk a little further and get a hot dog that still costs $1. The basic income lowers the barriers to entry, particularly for low-capital businesses. What happened was increased commoditization of the food cart business. Your pricing power evaporated. You can only charge based on the marginal cost of serving one more customer, rather than what the market will bear. Charge too much over your marginal cost, or allow that cost to rise too high, and another vendor appears to eat your lunch (literally). But the good news is that your marginal cost is now lower than a multi-cart company with vendor employees. You don't need to pay yourself; you just need to pay the costs of operating the cart. You can definitely undercut anyone who still has to be paid to work the cart. But you probably still want to pay yourself a little bit. The smart thing for you to do is to work out a coordination plan (or an actual cartel) with the other owner-vendors at your intersection, to establish some ground rules. Foremost would probably be an agreement to not charge less than a minimum markup over marginal costs. That doesn't really have anything to do with basic income, though.
whybroke 12y ago
Indeed it's more likely to boost the economy since people living on basic income would almost certainly spend ever penny such money would flow instantly into the economy. Also it could actually create new business opportunities. If there are large numbers of people who currently have zero purchasing power (eg the homeless) who suddenly have some cash, they will likely want different products than middle class people at a different price.
danielweber 12y ago
For positional goods, like spots in elite colleges or homes in upper-class neighborhoods, the price is determined more by demand than supply. But for things like basic housing, food, and water, our society has gotten efficient and competitive enough that those things are supplied nearly at cost.
VLM 12y ago
The main systemic effect of zeroing out back office workers is they're going to be really pissed off and all of them will be unemployed. They all vote for one political party, BTW, as a block, so guess which party likes this idea and which hates it? Another way to look at it is if you had a magic oracle to make sure only the "right" people were being helped, you could safely fire all those back office people and cut taxes for everyone by $1000 by relying on the magic oracle to save a grand of back office dough per year. Well, lacking that magical oracle, why not just fire the whole back office and mail out $1K reimbursement checks to everyone? I mean, fundamentally, if the back office isn't providing $1K per resident of value per year, is there any inherent value in keeping them employed other than buying votes or something? So fire them and give the money back to the citizens it was stolen from, by writing a check...
2noame 12y ago
As the author of OP's link, you may be interested in reading what I've written about this question as well, this idea of inflation eroding everything, or what I call "The New Zero Argument": https://medium.com/basic-income/wouldnt-unconditional-basic-income-just-cause-massive-inflation-fe71d69f15e7 https://medium.com/basic-income/wouldnt-unconditional-basic-... Yes, it's not a printing of new money, but a transfer of existing income towards an economically and socially healthier distribution less tilted towards the incredible extremes we have now.

by rday 12y ago

sz4kerto 12y ago

No, it's not the same. If you have 11 people, one of them has 10 units of money, the rest have 1, then there's 20 units of money ($) in the system. Let's also assume you have 100 units of resources (R) that people can buy. So $1 is convertible to 5R. Now you print money and give everyone $1. There is now $31 in the system, so $1 can buy 3.22R. However, the purchasing power of the people who had $1 now increased from 5R to 6.44R. The purchasing power of the 'rich' guy decreases from 50R to 35R. Or you can take money away from the 'rich' and redistribute it. That also has some effect on prices because of other reasons (changes the consumer baskets). But as you can see, money printing is basically tax on cash reserves.

DaFranker 12y ago
Playing the Enemy here: What happens if what you have isn't 100R, but a company that hires one contractor part-time to build houses and make food at a flat 1$ upstream resource cost using machines that currently have 90% idle time? Wouldn't this situation mean that giving everyone that second 1$ let everyone have a home and food and solve the problem entirely? The company is also happier due to more profits and higher efficiency.

TTPrograms 12y ago

Those sorts of prices generally scale up, not increase by a fixed amount. Generally you would be right if everyone all of a sudden had 20% more money. Effectively by giving everyone a fixed amount we give poor people X>50% more money and we give rich people X<10% more money. Which is in principle similar to a progressive tax, except for those who have no money, who now can survive to learn to increase their economic output.

CapitalistCartr 12y ago

We aren't short of housing for people. We are short of fancy housing for everyone, but almost everyone already has a home. What they need is breathing room. My wife wants to go to Law school, and has been offered a partial scholarship, but we can't afford the difference. That would be enough to just cover it. Many people would like to have enough surplus to live comfortably, without fear. Buy medical insurance; go to school; replace/repair their car; pay off debts, etc. My personal doubts on Basic Income is that people would use the money any more effectively than they do their present money. But the fact that it wold stop companies such as Walmart from profiteering on the backs of the present welfare system trumps all to me.

mcherm 12y ago
You write: > almost everyone already has a home > My personal doubts on Basic Income is that people would use the money any more effectively than they do their present money I am not so sure your statements here are accurate. There are roughly 600,000 people in the US who are homeless on any given night (the number who are homeless at some point in the year is much higher). That doesn't include the huge number (probably several times as big) who are "couch surfing": staying with family or friends because they have no housing. And a huge portion of these are children; I doubt these children have sufficient income for a home. As for your second statement, I cannot point to specific statistics, but all of the information I have seen suggests that most poor people are actually extremely efficient with their money -- that the problem is mostly one of not having enough income, not one of poor spending choices. And it is because of these that a basic income program (or "citizens' dividend") would, indeed, make a difference. It would actually change the income distribution by setting a floor on the minimum amount of income any particular person can have. [1] https://www.hudexchange.info/resources/documents/ahar-2013-part1.pdf https://www.hudexchange.info/resources/documents/ahar-2013-p...
- CapitalistCartr 12y ago
  The United States is a big country; 600,00 people is about 0.002 of the population, meaning that 99.8% have a place to sleep.

RobertoG 12y ago

Inflation is a function of the quantity of money in the system. Basic income money doesn’t come from “printing” more money but from taxes, so, it’s a redistribution scheme. You could expect to see some price changes but not general inflation.

JoeAltmaier 12y ago
That's far from a foregone conclusion. Printing new money could be an excellent way to create a BI while leveling the economic inequalities present in the present economic system. I.e. reducing the hoarded wealth of the 1%.

flurdy 12y ago

The minor rise in inflation wont equal anywhere near the $1000 handed out. Sure, there will be more people that can spend a little, but that all is minute compared with general additional income of the vast majority.

Retra 12y ago

I feel like the more general concern for what you are trying to address is that we may have cultural or systemic problems that funnel money away from the people who we hope to benefit, and basic income seems to do little to change this. What's to stop my landlord from increasing rent by $1000? What's to stop all of the landlords in town from doing the same? Well, there's the fact that, if my landlord did this, I would start looking to move, and probably look into buying a house. Assuming the housing costs didn't also increase at the same rate. I just doesn't feel like there's anything to prevent this. I already have to pay what my landlord asks or spend weeks trying to find a suitable alternative, and it feels like the fact that my landlord thinks their time is more valuable than mine is the only thing actually stopping that. If they knew their renters could bear such a rate increase...

logfromblammo 12y ago
Me. I'd stop them. If basic income ever became a reality, my first startup business would be factory-manufactured housing units that fit inside intermodal shipping containers. The per-area costs of site-built homes are nearly double those for factory-built homes. Making additional concessions for trans-pacific transport and re-shipment from low-occupancy sites to low-vacancy sites should approach the minimum marginal cost for housing one additional person in any place that a regular shipping truck can reach. Then I ship the first units to the city with the highest low-end housing costs. It's really too bad that I can't afford to fail even once...

mikeash 12y ago

Demand won't go up much. There aren't that many homeless people, nor that many starving people. What will change is how people get a place to live and food to eat. A lot of people who go begging for it now will be able to buy it for themselves (for values of "for themselves" that include being given $1,000/month). They were eating before, and thus somebody was buying that food before, it's just happening more efficiently and less stressfully now.

karmacondon 12y ago

Since the OP was an analogy, I'll attempt one as well. Say we both operate hot dog stands on opposite corners of the street, each charging $1 per hot dog. Basic Income goes into effect and suddenly 2X as many people can afford hot dogs. You raise your price to $2 in response. If I have any sense, I'll keep my price at $1 or maybe lower it slightly. More people will buy from me, significantly increasing the amount of money I make despite the fact that I haven't raised my prices. This concept applies to most sectors of the market. People will still be price conscious, and businesses will benefit as much from more customers as they will from higher prices. Even with housing. If more people can afford apartments, more people will decide to convert existing real estate or rent out rooms which will hopefully increase the price competition. This all assumes that there isn't open collusion between market participants of course, which there very well could be. But the general idea is that prices won't rise uniformly in every sector of the economy at once.

logfromblammo 12y ago
Whoa whoa, right there. You forgot something. When basic income goes into effect, a few more guys quit their hell jobs and buy food carts with the last of their meager savings. In addition to the hot dog guy on the opposite corner, there's now a tacos and tamales guy on the 3rd corner, and a gyro guy on the 4th. A barbecued pork and corn-on-the-cob guy takes the spot next to you on "your" corner. People still want a good deal. If you raise your prices now, customers just walk 5 paces to your left. It doesn't matter if the pulled pork and corn costs $5 and your hot dog costs $2. People know that your markup is higher, and they don't want to feel like chumps. Or they can walk a little further and get a hot dog that still costs $1. The basic income lowers the barriers to entry, particularly for low-capital businesses. What happened was increased commoditization of the food cart business. Your pricing power evaporated. You can only charge based on the marginal cost of serving one more customer, rather than what the market will bear. Charge too much over your marginal cost, or allow that cost to rise too high, and another vendor appears to eat your lunch (literally). But the good news is that your marginal cost is now lower than a multi-cart company with vendor employees. You don't need to pay yourself; you just need to pay the costs of operating the cart. You can definitely undercut anyone who still has to be paid to work the cart. But you probably still want to pay yourself a little bit. The smart thing for you to do is to work out a coordination plan (or an actual cartel) with the other owner-vendors at your intersection, to establish some ground rules. Foremost would probably be an agreement to not charge less than a minimum markup over marginal costs. That doesn't really have anything to do with basic income, though.

whybroke 12y ago

Indeed it's more likely to boost the economy since people living on basic income would almost certainly spend ever penny such money would flow instantly into the economy. Also it could actually create new business opportunities. If there are large numbers of people who currently have zero purchasing power (eg the homeless) who suddenly have some cash, they will likely want different products than middle class people at a different price.

danielweber 12y ago

For positional goods, like spots in elite colleges or homes in upper-class neighborhoods, the price is determined more by demand than supply. But for things like basic housing, food, and water, our society has gotten efficient and competitive enough that those things are supplied nearly at cost.

VLM 12y ago

The main systemic effect of zeroing out back office workers is they're going to be really pissed off and all of them will be unemployed. They all vote for one political party, BTW, as a block, so guess which party likes this idea and which hates it? Another way to look at it is if you had a magic oracle to make sure only the "right" people were being helped, you could safely fire all those back office people and cut taxes for everyone by $1000 by relying on the magic oracle to save a grand of back office dough per year. Well, lacking that magical oracle, why not just fire the whole back office and mail out $1K reimbursement checks to everyone? I mean, fundamentally, if the back office isn't providing $1K per resident of value per year, is there any inherent value in keeping them employed other than buying votes or something? So fire them and give the money back to the citizens it was stolen from, by writing a check...

2noame 12y ago

As the author of OP's link, you may be interested in reading what I've written about this question as well, this idea of inflation eroding everything, or what I call "The New Zero Argument": https://medium.com/basic-income/wouldnt-unconditional-basic-income-just-cause-massive-inflation-fe71d69f15e7 https://medium.com/basic-income/wouldnt-unconditional-basic-... Yes, it's not a printing of new money, but a transfer of existing income towards an economically and socially healthier distribution less tilted towards the incredible extremes we have now.