Comment by steven2012 | Hacker News Reader

Comment by steven2012 | Hacker News Reader

Basic income can succeed on a small level definitely but it can never succeed on a national or even city or state level. The reason is simple economics: inflation.

When money comes so easily it will drive up prices. If it's done on a spot level it won't make an impact but once you increase the size of the population that received this free money, it will just drive up prices.

For example look at there mortgage interest deduction. It's purpose was to make home ownership cheaper but what it ends up doing is causing house prices inflation, at least in areas like the bay area. The deduction gets factored into the financial engineering required to figure out how much you can afford to pay for a house, which causes there prices top rise.

The same thing will happen when people get free money every month. Just like how rent prices increased around face book when they offered a subsidy if they lived within 3 miles of HQ, the same type of increase will happen if a larger enough population gets this free money.

As a question:

* How much more food will be consumed if we add a Basic Income? Most people are already eating enough food to keep them alive. It might go up at the margins as people who are currently food-insecure would be able to consume more, so let's say the overall consumption of food rises by 1-2%.

* How much more housing will be consumed if we add a Basic Income? Most people are again already consuming enough housing to keep themselves sheltered. It, again, might up up at the margins as more homeless participate in housing programs and people move up a little bit. But, again, the overall consumption of housing will only increase by a couple of percentage points.

Will Basic Income increase inflation on bare necessities? Yes, a little bit. But significantly less inflation than the income provides. The real increase in inflation will be in discretionary spending (movie theatre tickets, video games, investment portfolios, etc). But, bare necessities won't see a massive increase in inflation simply because, by definition, people are already mostly getting these.

However, ever-larger scale studies are the only ways to get real data on these effects.

Where exactly do you think the money for BI will come from?

Reply on news.ycombinator.com