Comment by keiferski | Hacker News Reader

Comment by keiferski | Hacker News Reader

I am generally a bit skeptical of the concept of basic income, mostly because I think costs would just rise to match new spending power. IMO it would be better framed as Guaranteed Basic Needs (food, shelter, entertainment, etc.)

That said – one thing that has made me change my mind recently, though, is that UBI might serve as a buffer against the profit motive taking over everything. Increasingly it seems like other value systems are being overtaken by the desire to earn money. By "other value systems" I mean a huge variety of things that aren't driven by money: living a non-materialistic lifestyle in line with numerous religions, mastering a centuries-old craft that doesn't have much market demand, being a philosopher/thinker not defined by participation in academia (or the market), and so on.

Part of the growth of the profit motive can be attributed to the general precarious economic situation, unpredictability of future jobs, etc. But it's also because there are fewer and fewer cultural institutions that make up the ecosystem, because no one wants to make that bet anymore. Everything seems to default back to monetary/professional success, whether that be the "creator economy" or getting a professorship at a top university.

So I do wonder if UBI would be a mechanism for encouraging people to say, "I can count on making a basic living, so I'm going to study XYZ art form and become great at it."

Assuming that UBI is funded from taxes, poorer people would end up with more money, richer people would make less overall, and somewhere in the middle there's a level where the additional taxes are exactly offset by the UBI.

Prices for some things may rise, but it seems unlikely that they'd rise in a way that consumes everyone's UBI. Lots of people wouldn't have any more money. Many would have a bit more money. Some would have a lot more money. Any price rise would correspond to the change somewhere in the middle of that, so people who earn less than that point would still be able to buy more. Concretely, if UBI is $1,000/month, and someone is currently struggling on $1,000/month, they're going to have more purchasing power, because that level of UBI won't double prices.

> it seems unlikely that they'd rise in a way that consumes everyone's UBI

We really need a state or small country to trial this before writing this off on a hunch.

It's a lot more than a hunch, it's standard economic principles. The standard sources of inflation are money supply increases and supply crunches. The OP specified a UBI that doesn't increase the money supply. Nor would UBI cause a supply crunch. So why would you expect inflation?

> OP specified a UBI that doesn't increase the money supply. Nor would UBI cause a supply crunch

These are assumptions. I’m sceptical of both, but think an experiment at the state or small-country level is worth a try.

Not increasing the money supply isn't an assumption, it's a choice.

> Not increasing the money supply isn't an assumption, it's a choice

Then it works at the state or local level. My point is in interrogating the reason state and local experiments don’t scale to a national example.

Providing the "needs" vs money to buy the needs would result in just as much inflation. Those goods and services still need to be paid for, even if it's the government paying for them.

Money is just the simplest way to give assistance because it's fungible. Fewer rules to make, less administrative overhead, extremely flexible, responsive to changes in the market.

If the government built giant housing blocks, so that anyone could have a basic apartment, how would that lead to inflation in the housing market? If anything the abundance of supply would dramatically deflate the costs.

Note that I'm talking about orders of magnitude more of construction than current public housing projects.

> how would that lead to inflation in the housing market?

If the government buys up all the contractors’ labour, that increases their prices for everyone else. At the same time, if the cash flow consumers once directed to housing is now freed for e.g. whoever is buying 10+ cartons of eggs at Wegman’s, that too drives inflation.

Good policies can be good without dismissing their drawbacks.

1. No reason why contractors have to be the only laborers. You could pay regular people to build them, as was done in the Depression.

2. This would potentially lead to inflation in the construction market, not the housing market as a whole.

3. Even then, the increased amount of work would likely increase the labor pool.

4. And any of these effects would probably be temporary, as it's not like the housing units would need to be reconstructed yearly.

But honestly, this whole debate is entirely uninteresting to me and was only an offhand comment in my original comment. Shame that no one seems interested in the artistic part, only the drab economic one.

> You could pay regular people to build them

You’re still bidding up massive amounts of labour and materials suitable for construction.

> would potentially lead to inflation in the construction market, not the housing market as a whole

Yes.

> any of these effects would probably be temporary

Temporary inflation is still inflation. It will be unpopular if not acknowledged.

> Shame that no one seems interested in the artistic part, only the drab economic one

So basically a sham argument?

The government doesn't do anything. It is the people that do. If the poor people all choose to live off UBI then who will be building these giant housing blocks since it isn't the rich people that build housing?

1. You can pay people to build them, as was done in the Great Depression.

2. UBI does not exclude the ability of people to work for money. If workers wanted to earn money on top of the UBI, presumably they would do so.

3. The number of workers required to build housing is also a tiny fraction of the number of people that can be housed in said building.

4. Furthermore, the question here is between UBI and giving "basic resources." So presumably if the government is going to spend money on UBI, they could spend that money on just directly building stuff. (Which makes more sense to me.)

Housing is a bit different because it's so supply-constrained, so I do think that building social housing would have a huge positive impact. Other supply-constrained goods and services may be similar, but I don't think many are as obvious as housing. Maybe doctors?

Various demand-side subsidies seem roughly as likely to raise prices, whether that's giving money to consumers or buying the goods on their behalf.

I wonder about that too, but I think there's two things in its favor that pretty much outweigh everything else:

1. Prevent low-wage, low-skill workers from being exploited. If the manager at a fast food restaurant is a creep or a jerk, desperate people feel they have to stay and put up with it so they can make rent that month. If they instead had a safety net and were able to quit without being put out on the street, then they'd be less likely to tolerate being taken advantage of.

2. Like you mentioned, art. Many people work to survive so they can pursue their real passion. Musicians, artists, anyone you see at a booth in the farmers market with handmade trinkets, and so on. UBI would allow them to focus on their art, and more people to participate and experiment, and I think the world would be better for it.

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