I like to think I am progressive but I think this is the wrong approach.
Costs will rise to the minimum that everyone is known to afford (or higher to deny the minimum income).
So rent will go up, food costs will go up, clothing etc.
You are just transfering wealth from the state to a few individuals who own property and own chain stores.
Better to have rent control and other cost-of-living regulation.
How do you support such a claim? If I was a business and all my competitors did this, I would undercut them and make a killing!
Basic income (or something similar) is an inevitable outcome of our development as a civilization. As technology continues to drive up productivity, the demand for labour falls. As the demand for labour falls, so does employment and consequently the demand for goods and services fall as well.
It may be a very rough transition to get there but eventually we will have a society where robots make everything we need and we are forced to devise a system for allocating these products to the people.
Similarly to how cartels work, free money just creates inflation.
But you'd still have raised your prices.
Because we have unlimited hospitals and doctors and yet a Tylenol in the hospital is hundreds of dollars (Obamacare won't fix that either because now more people can pay hundreds).
Internet, Cable, Cellphone service, all seem to rise to the most people can afford. Rent on apartment complexes near each other owned by different management companies magically stay within a several percent of each other.
If you gave everyone $1000 a month, rent will magically rise to at least half that for even the smallest efficiency.
New hospital constructions will often require a 'Certificate of Need' - existing hospitals can essentially veto any expansions.
We haven't expanded our medical school supplies in 30 years either. We essentially graduate the same # of doctors as we did in 1980, although demand for medical services has increased significantly over that period. https://www.aamc.org/download/153708/data/charts1982to2012.p...
That's a MASSIVE amount of overlapping resources. Yet every cost in a hospital, even to get to one via ambulance, is breath-taking.
There are countries with far fewer resources (ie. Canada) with far lower costs.
You do realize that there is a minimum wage in The Netherlands (Euro 1469 per month gross) and welfare (e.g. for a married couple Euro 1323, single up to Euro 926 per month)? So, that should've happened already.
Besides that, we have a system for social housing, which everyone with a low income can use, which is regulated. E.g. when I was still a PhD candidate, I made a bit over 2000 Euro (gross) per month, but could rent a house with three bedrooms for 390 Euro. The price is determined based on size, facilities, etc.
I like the idea of a basic income, since it would kill a lot of bureaucracy that checks that people who are able to work actively solicit positions, etc. It'd be nice if the CPB (the organization that is responsible for making guestimations of economic effects) could work it through.
In which case basic income guarantees could work.
In the USA it would become a predatory market to squeeze money from.
To my mind, competition (in the meager form we have today) is the only force our healthcare system has keeping prices low. And the prices are not low, at least in most medical fields, which goes to show how little competition we have. Third-party payers drive prices upward because the first-party consumer has no incentive to seek a fair trade. Many of us with health insurance use the insurance to pay for everything including routine visits and check-ups. It's as if oil changes were covered by car insurance—you wouldn't care how much an oil change cost—or replacement batteries were included in cell phone loss insurance—you wouldn't care how much a battery cost. Oh, my battery is being finicky, better get a new one since they're free.
I prefer a basic income versus the current central-planning approach to safety netting. The central planners cause the price problems by inhibiting the market's ability to transmit unmolested price signals.
Internet, cable, cellphone service—all services with significant terrestrial regulation. Periodically an innovator attempts to get around the regulation by delivering via a new means (e.g., Internet by line of sight), but it can hardly be said that, for example, cable is not a public/private hybrid. Regulatory capture means we don't have market competition.
> Rent on apartment complexes near each other owned by different management companies magically stay within a several percent of each other.
Yeah.
Wait, are you saying this is inherently bad?
Which feels great for maybe a month or maybe a day, but with everyone making more money, goods in that area will rise in price, as landlords find they can make more money etc... and then we're back in the same situation. In theory goods outside of this economy with a floor would remain the same, but since the people that need to import it, store it, etc... would also be affected by the inflation in the end it doesn't net anything.
TLDR; a basic income is an illusion, and inflation would quickly catch up.
You've misunderstood the concept. Everybody gets this. If you're currently making 900 a month, then you now make 1900 a month. You go to work because you want more than the basic 1000.
I don't understand why peoples with small income will suddenly feel entitled for a raise. After all they just got a 1000 euros raise on top of their small income?
For inflation I think the macro economic of Europe will not allow a drastic increase in prices. At least not in the prices of goods. Shops will still have to compete on prices and as there will probably be some people trying to live on the 1000 euro alone you might see very cheap shops flourish.
If there is enough vacancy in real estate, people that have now more money will be able to afford a nicer/bigger apartments and might just drive the price of the least interesting ones down. Landlords will be forced to fix their apartment or lower the price.
The situation at the end is that there a wealth redistribution that is guarantied and equal for everybody.
No not at all. The median dude will always live in the median house and nothing about this will change it.
The primary real estate related effect is a dramatic change in macro societal debt to income ratios which in the long term has some interesting effects on bank assets and liabilities. Its very much like a stealth interest rate cut, with pretty much identical effects. The price of real estate will of course increase across the board, because the sellers know the buyers will have more money to pay mortgages with. The median guy will still sit in the median home, it'll just involve larger numbers in some bank account.
"equal for everybody."
LOL capgains are going to asset holders aka land and business owners and banks, not the joe 6 pack. The primary effect on J6P is getting kicked into a higher income tax bracket thus paying more taxes on a percentage basis. So .gov wins. Pretty much everyone wins but J6P as usual, as designed.
No, it's even better. The basic income can create an effective negative interest rate without giving the bankers an infinite Santa Claus, and most of the money will turn the crank of the consumption machine instead of being parked in safe havens.
I don't think you understand the proposal. Everyone gets the minimum income. There is no means-test. It is not a welfare benefit. It comes with citizenship. If you work and earn $1000 a month, that is in addition to the $1000 a month basic income you receive. However, you will also now pay tax on that $1000 additional income, even if prior to the basic income you did not earn enough to pay taxes. However, you still come out ahead overall.
>> with everyone making more money, goods in that area will rise in price, as landlords find they can make more money etc... and then we're back in the same situation. >> inflation would quickly catch up.
The basic income amount would be inflation-adjusted each year. This is no different from how SSI and welfare benefits work now. Or for that matter regular wages and costs, which rise with inflation each year, to allow relative adjustments without the disruption of falling prices.
It is a controlled form of inflation however in that as a one time event, the median dude's fixed median debts are smaller as a fraction of his income and/or he can go deeper into debt in an absolute sense as a one time change.
"a lot more money to spend." Well thats relative because its a low fixed amount and personal incomes vary quite a bit. At my current income an extra 1000 would be nice but wouldn't really change anything at all in the short term. For a rich dude that's not even a rounding error. For a starving student it would be a huge amount of money. So I would expect no inflation in things appealing to the upper classes, minimal effect for the middle classes, but huge effect on the lower classes. Even on supposedly interchangeable things like food, this is going to have a huge effect on the price of hot pockets and malt liquor but not much change in the price of lobster tails and beef tenderloin.
However, it does remove the political power of the central planning committees. And that is concerning to some.
Rent control is much more prone to inefficient bureaucracy as the amount of regulation and border cases is higher.
It's time to start fresh and aim for a global optimum instead of just the local one we've been living with for so long. Is it guaranteed that we'll find it? No. Is it worth it? In my opinion, yes.
It's dangerous and very worrying that people are trying to repeat mistakes.
Isn't the point to have a minimum that everyone can afford?
There's also an unstated (and wrong) assumption that however much food / apartments / transportation / etc is fixed and unchanging, rather than a variable that tracks the demand for these products - so presumably if you add a lot of money you will have to produce/spend however much energy it costs to extract rocks and wheat from the ground, but everything after that is mostly free since the infrastructure for turning rocks and wheat into iphones and pizza already exists.
The right way to do that is to expand cities and build community housing. The correct assumption is that costs will rise above the minimum everyone can afford, keeping inequalities at bay.
I have no problem with giving people money so they can find a place to rent of their own from a landlord that will make profit. I just have a problem with landlords who then all raise their rents to the maximum amount they know people are going to get.
The only way to drive rent/cost of housing down is to produce more houses/apartments.
Rent control is another government program that messes with the natural order of things (aka the free market). It kills the incentive of developers to build affordable housing. Why build a building if you can't turn a profit? It keeps people from moving. Why move if your rent is 50% below market? Which in turn causes a shortage of new housing stock, which drives rental prices up.