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Comment by wesapien | Hacker News Reader

Isn't UBI just going to raise inflation? People who don't need it will claim it and use the existing tax loopholes. Tax laws will need to be rewritte.

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The "U" in UBI is for "Universal". There is no means-testing. Everyone gets it regardless of assets or income, which means there is no need to spend any effort on checking whether someone is "poor enough".

Though the state would have to make sure the person receiving the benefit actually exists, is still alive, etc.

I understand what UBI means but it's the effect is what I think people do not understand. Based on the Cantillon effect, UBI will just accelerate the separation between the rich and the poor.

I'm not sure that Cantillon effect is majorly at play.

The very nature of Cantillon is unequally obtained new money, whereas UBI is universal. Any effect it has would be related to the poorest/neediest spenders now purchasing the sort of goods they do (and, realistically, no increase in spending by the richest). You might see increased consumption in neighborhoods/regions with high concentrations of poor, too.

The better fit for "UBI creates an economic problem" seems to be pricing stickiness. The above commenter focused on controlling general inflation through monetary/fiscal policy (keeping money supply stable, using tax mechanisms), but didn't actually address the concern about producers simply raising prices to absorb the UBI.

No, you can do a UBI that keeps the money supply the same, and use it as a way to stabilize the economy. With a $2000/mo UBI, 50% flat tax on other income, 25% VAT, phase it in by doing 10% of that the first year (and 90% of your current taxes, 90% of current support payments), second year 20% and 80%, so the impact isn't too disruptive. Adjust the flat tax rate as the Federal budget changed (a spending bill is automatically a tax bill as well). Adjust the VAT to control inflation.

You've got to be kidding. As a regular middle class citizen my taxes are high enough already. There's no way I'll vote for UBI so that some slackers can sit around getting high and playing Xbox.

Based on your comments you are in US. Your taxes are very low among Western countries.

That slacker is already getting high and playing on Xbox. With UBI they will have less worries about staying alive and the opportunity to try things to get more money. UBI is a great insentive for people to try new things without there being a financial risk of you losing your income. Just check the trials and their results - people are more productive and happy in general.

And instead, you vote for billionaires chilling on their yachts, paid for by your labor?

> Isn't UBI just going to raise inflation?

Even assuming this scaremongering scenario, the world would be in a far better place if society assured everyone would be guaranteed a certain income.

Also, the scenario that supports the hypothesis of higher inflation is that more people in society are suddenly able to afford goods and services that were out of their reach without UBI. Can anyone actually put to words why that is undesirable?

I think one criticism is that prices would change to capture the UBI.I think I read the idea in "Progress and Poverty," although I've certainly seen it elsewhere since:

- If everyone suddenly has more money (say $2 more per day)

- And milk is a basic necessity

- The milk seller knows everyone needs milk and now has $2 more to spend

- They can gradually raise the price of milk by close to $2

- Consumers must still buy milk at the higher price

- The intended benefit of the extra $2 is effectively captured by the milk seller

The increases in general purchasing power can be absorbed by suppliers of essential goods. If you have just excess discretionary income in the general case, then non-essential goods can bump in price, too.

The milk seller doesn’t even need to consciously increase prices to match the raise in household income. It will happen organically.

For the sake of argument, imagine UBI provides everyone with a million dollars a year. That doesn’t make everyone a millionaire. It just makes everyone’s money less valuable.

It’s no different on a smaller scale.

It's gonna be complex and messy. On the one hand yes, many people receiving UBI = inflation. On the other hand many highly paid software devs (And soon after - accountants, lawyers, marketers, sales people etc etc) are losing their incomes = very deflationary.

It's gonna be interesting that's for sure.

UBI has less friction as far as implementation since we don't need qualify anyone. With AI, we can afford to have that extra step (nuance) and be able to make sure its a needs based approach. The future requires various combinations of changes. Fix the tax system and then UBI (in this specific order) OR !UBI (needs based distribution).

Implement UBI as part of fixing taxes. A UBI combined with a flat tax plus a national sales tax, and including universal healthcare, can continue to be a progressive tax while eliminating a lot of the overhead of keeping track of it all. Look at the effective tax rates with a 50% flat tax, 25% sales tax, and $2000 per month UBI with UHC.

If it's truly universal, no. Several experiments (controlled and natural), have shown this.

Has there been experiments/testing at city/state scale. UBI is country scale and it's way more complex than testing it on a small town of people who I assume are selected for their needs.

Indeed it would as the landlords would just raise rents accordingly.

We saw a bit of that with Covid cheques.

I think you'll find rising rents are more correlated with rising interest rates than Covid cheques, but given one of the key grievances perceived by UBI advocates is class inequality and lack of social mobility, if UBI became politically possible then so would rent controls and controls on prices of key essential commodities while waiting for it to "settle in".

Good point about the interest rates. However, in the UK landlords adjusted their rents accordingly when the Govt introduced Housing Benefits (years before interest rates began to rise). A lot of govt MPs are landlords.

I'm not against the idea of UBI, I just see the landlords eating it up like they do with peoples wages.

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