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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. Basi

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.
- undersuit 12y ago
  >guys quit their hell jobs That's what you want. The hell job has less leverage when I can start up my own food cart. The hell job must be improved to the point where someone wants it. There is no impetus right now to improve the hell job.

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.

undersuit 12y ago
>guys quit their hell jobs That's what you want. The hell job has less leverage when I can start up my own food cart. The hell job must be improved to the point where someone wants it. There is no impetus right now to improve the hell job.