If UBI was implemented fully (everyone in the country gets £x per month) what’s the likelihood basic/essential goods would rocket in price largely negating the impact of the UBI?
I think that’s why UBI is dangerous. Because if anyone for some reason ceases to receive it after the prices have inflated, then they will be effectively removed from the economy. Forced into levels of poverty we haven’t seen in the Western world. Think about not being able to afford clothes.
Someone should do a UBI trial in a restricted geographical area. Maybe a small town somewhere remote so people cannot easily leave it for shopping. I think most money would just be absorbed by companies through price hikes in the area, and they would be further disincentivised to pay their people fairly. Now the people won’t protest and riot if they are paid $0 on top of their basic income.
I think people benefit from UBI a lot. But it is too easy for corporate greed to exploit. I just can’t imagine the fiduciary responsibility to shareholders not being used to deliver value in UBI markets. It seems naive to think that business, especially big corporations, will be okay with forgoing growth. They already crap on a ton of ethics, morals, and even basic long-term business sense to deliver quarterly growth.
So I’m skeptical of UBI. I want it for the sake of humanity. But I can’t see it not being abused by corpo grift.
This is a common first thought folks new to UBI put forth.
More people with more money to spend means manufacturing volume goes up, so economies of scale go up, so the prices go down.
There can be instabilities initially as supply moves to meet demand. But folks didn't used to 'need' those things, got along without them (didn't have the money for them) and so can make their own decisions about what they'll spend their money on. The fundamental property of UBI is, let people sort out what their needs are themselves.
That property doesn't hold for housing, which makes up the largest chunk of a person's "necessities" spending.
Ny guess is that rents rise since landlords know everyone has an extra cash infusion now. Until it settles out merchants will pick over this until it is eaten up.
Was part of sales in gov subsidized market and the gov grant was a big part of figuring price. That is to say "inflating" the price for the customer.
Just human nature. UBI will be the same.
The alternative to 'a wealthier populace' is 'keep them poor', right? This argument that 'don't bother helping people, it'll just be wasted' smacks of marxism to me. Society needs the hard-working poor/slave labor class or everything will fall apart. So make sure we have the poor, at all costs!
I have a more optimistic view of society - that we're now capable of providing plenty for everybody. Due to automation etc.
Why cash? Why not a free apartment, free local transportation, free food, free doctor, and free TV. That would cover 90% of the people 100% of the time.
The reason is that cash is fungible and will therefore flow more freely to the actual recipients of the handouts, which are merchants who price necessities according to what the market will bear. If anyone would like to debate that last assertion, I'd be interested in a counter-example where the price of essentials just kept on getting lower and lower.
I'm not sure UBI is any different than all the prior plans to spend our way to prosperity. To learn the truth, we will have to ask our descendants when they are paying for all this. (Of course this assumes we don't bankrupt first.)
Might work for buying cheaper gadgets.
Doesn't work for any cost that really matters, like rent, healthcare, education, utilities, and so on.
The FRBSF has a good article about supply, demand and inflation here:
https://www.frbsf.org/economic-research/publications/economi...
But it's a one dimensional view of a many dimensional problem. Some people will be able to start a business, but if UBI is pitched at comfortable survival level, many more will do nothing, and there will be a big increase in employee turnover.
The rational solution would be to pay much more and improve conditions, so the rewards for work would be much higher than now, and the pointless frustrations much lower.
But current work environments are usually geared towards creating and maintaining hierarchy, not rational effectiveness.
So I think it's likely that UBI would just raise prices of essentials and they wouldn't be any more affordable than they are now.
If I were the benevolent king, I'd personally push through some sort of guaranteed housing program. The housing would be small, modest, and safe. Everyone would be entitled to such housing if they wanted it for minimal cost, and it would be provided at no cost for those at the very bottom rungs of the economic ladder.
Back of the envelop, there are 260 million adults in the U.S., and 1600 GBP is $2000 a month for each of them. So, that's $6.2 trillion dollars a year that manufacturing efficiencies would have to make up for, in an economy with a GDP of about $23T. And that's assuming that mechanism would even solve the inflation problem, which is hurting my head to think about.
For the UK, it works out to about one trillion a year, off a GDP of three trillion, so an amount of money roughly a third of the entire economy would have to be made up for by ... companies getting better deals buying in bulk, and workers coming up with better processes than what they have now, and... uhh... other things of that nature? That sounds like wishful thinking to me.
I'm not against UBI, I just don't understand how this response actually addresses the most obvious problem with it. In fairness, I have not seen a better argument than the one you gave. Maybe there is another one.
That's why non-uniform distribution of money doesn't have the same effect. If a country were to print £500 billion, and just hand out £500 billion to 10 wealthy people, it won't bring the same inflationary effects on housing/rentals, food, services and goods. However, if you print £10 trillions and distribute to everyone who makes more than £60K per annum, yes, housing and other stuff skyrockets.
Unlike food, fuel, etc, housing is artificially capped at a level lower than demanded, thus prices of housing (either in terms of rent, mortgage payments etc) increase to soak up every spare penny.
Our economy is not currently structured to support this, but I don't see any other options for the future. It's also quite a nice step forward in humanity to use our technology to increase everyone's quality of life.
I personally believe MMT is an option to make this happen. Print money to basically zero out all debt with inflation but provide everything someone needs to live while you do it. The first step on the path to a post-scarcity reality.
If you do that without having a post-scarcity economy/reality, surely the result will look more like mad max and not Star Trek? Zeroing out debts would be a huge boon to the rich, although they would need to invest in guns to protect the property they no longer have to pay a mortgage for.