I like this idea a lot, but what would stop goods/housing from rising in price to meet the influx of free money?
Basic income could be implemented by NOT raising taxes. So it would NOT cause inflation. Eliminate current social services (and all the financial overhead associated to it: entire government departments who sole job is to administer these services, etc), and just redistribute the funds that would have gone to these services to be, instead, redistributed as basic income. There. All you are doing is shuffling money around to change its distribution while reducing financial overhead. You are not raising taxes or creating new money. Money is just better distributed and hence spent on different areas of the economy.
(I don't know why, in the article, James Manzi says tax increases would be required. Maybe he has a certain opinion that in order to be effective, basic income should be greater than a minimum level that would not be met by my description above? I think my basic income would be sufficient. The US spends $1.5 trillion per year on welfare and pensions. If you take that money, one could redistribute it as a basic income of $1070 per month per household. That's significant enough to very helpful for society IMHO.)
As a simplified example, let's say poor person A is renting an apartment from rich person B for $500/month. The new system gives everyone $500/month basic income, but to pay for this rich person B has to pay $1000/month more in tax (of which he gets back half as basic income), while poor person A doesn't pay more tax. So essentially poor person A is getting $500/month from rich person B. Obviously it wouldn't be that simple in reality, but roughly speaking that's what a universal basic income covered by taxes would mean - money flows from rich to poor, in varying degrees.
Now sticking to the simplified two-person version, rich person A thinks "well poor person B could afford my $500/month rent before, now their income has gone up $500/month, so if I charge them $1000/month rent I know they can still afford it". The end result would be wasting time on behalf of the government and indeed the individuals to update everything while money split would remain identical, the only difference being that $500 now flows from B to A (via tax and basic income) then back to B (via rent increase).
Obviously in the non-simplified world it wouldn't be as easy as saying "that person is now getting some money from my taxes so I can charge them that much more", and numbers wouldn't be exact... but as a rough theory, pricing definitely could alter at least to some extent.
All that said: I'm not an economist, I don't know if that would happen, or to what extent. And my personal non-educated opinion is that basic income would be a good thing anyway.
Prices might go up a bit, but not by that much. The poverty rate in the United States is about 15%. That means that, assuming that the cost of that $500/mo will be spread (unevenly) across the other 85% of the population, or a bit under $100 per taxpayer. That also assumes that the mincome program would exist alongside existing welfare programs, where in reality it would most likely replace them.
Now, that's not to say that a guaranteed income wouldn't necessarily cause inflation in some goods and services. It probably would! But the standard answer to "why doesn't the provider of a good or service just increase the cost of their service to the maximum disposable income of the buyer" is competition.
But yes, my comment was a very, very simplified example, to counter "prices won't change, we're not printing more cash" arguments - not a direct tale of what could happen in the real world.
Now, you MIGHT see increased demand in some areas! For example, some people who previously lived at home might look for an apartment if they had a higher income. Or people who are currently homeless might move into the housing market.
At the same time, some people would presumably graduate out the top of the lowest-income housing market, and put increased demand on the middle-income market. Or whatever. And of course we might say that it's a huge victory if a bunch of homeless people got out of the vicious cycle of homelessness, even if it does increase housing demand for the working poor.
The problem was not that your example was simplified, it was that it introduced a brand new element (monopoly) to the matter under discussion. If you want to make a simple example that actually shows some kind of demand-increase, rather than illustrating monopoly power, you should do so.
In other markets, there are houses that sit vacant. Bringing the minimum income up helps narrow the gap between the price floor on these properties, and the amount people are able to pay. That is, a basic income would help more efficiently distribute housing in less desirable areas.
If someone on basic income wants to move to NYC, they'll still need to work hard, and get enough money to compete with all the other people who want to live in NYC.
3 things can alter those prices: A change in supply, a change in demand, or general inflation/deflation.
The supply doesn't inherently change in this plan, nor does demand (*assuming everyone is getting these goods today.) And there's no inflation, as this is just redistribution, not printing new money.
What you are doing is being a good Keynesian and trying to make people believe that this stuff is too complicated for them to even start having an opinion on it. That strategy is condescending and not productive, and encourages helplessness in people.
Wouldn't that mean that inflation would also be caused by a decrease in production without an equivalent decrease in the money supply?
So I submit that your assumption isn't really valid.
People who were previously homeless and living on handouts could end up participating in the economy significantly more.
People who were extremely miserly might spend a little more on better quality food, different forms of entertainment, or taking holidays further from home than the local park.
Nothing is in place to stop basic income from causing housing prices to raise, and is one of the reasons we have food stamps and medicare instead of basic income.
Housing is a good/service with a price that is set by income-elastic demand. If you push up the income across the entire market (as true basic income would), then the price of housing and cars and other goods with income-elastic demand will increase. People who couldn't afford housing before wouldn't be able to afford housing still.
There are plenty of income-elastic affected goods that will increase increase in price to match or even exceed the amount of basic income per individual. Once you dissect the problem that basic income is trying to solve, you can address those needs individually without raising income for the entire population.
But a basic income would not in fact raise the income of the entire population. It would lower the income of the rich and raise the income of the poor. Because it would be paid for with taxes, not deficit spending.
The rich would GET basic income, yes -- but their taxes would increase by an amount that would more-than-compensate for the higher influx of money. Their after-tax income would be lower.
But it's not. There are different segments by quality, location, etc. What percentage of the housing market is only for "the rich"? What extra tax percentage is middle-income going to pay?
Lower income isn't going to be taxed more, so lower income housing prices are going to raise, as their market segment gets a boost in income.
And now you're back at people who couldn't afford housing before still being unable to afford it - which was part of the problem that basic income was trying to solve.
However, the same is true of targeted assistance to only the poor for only housing -- it increases their effective wealth for the purposes of competing only for housing, and, if anything, it will make it worse than a more general guaranteed income would.
The benefit of basic income over targeted assistance is that basic income is relatively low-administration cost to flexibly meet the needs of people who don't have housing needs, and in that it is a relatively non-market-distorting intervention.
That's the only way for cost administrative cost savings. What about when UBI isn't enough for something as trivial as Medicaid?
Would UBI cover the cost of health insurance for everyone, since it's replacing the "expensively adminsitrative" medicaid? Even if you took away employer insurance today, many people with steady income can't even afford their own health insurance.
I actually don't think it would successfully replace any of those things, which is one of the reasons I don't really support it. But it's an intriguing idea that should be debated on its merits.
Only if UBI replaces all other programs, and i'm guessing it won't be enough for people to afford a Medicaid replacement.
Typically you only qualify for unemployement, disability, etc. when you're been let go, not when you're quiting voluntarily (and it usually only takes a week to get).
Even then, it's certain percentage of your current income, so as to not disrupt your lifestyle. I doubt many people will voluntarily quit to be on a much lower UBI just so they can look for a new job. But then again maybe there are studies on this...?
Predictably, it will raise less proportionately than the increase in income in that segment, so housing will become more affordable, though not as much more affordable as it would be considering only the income increase and not the effect on price levels.
How are you predicting this?
Realistically, it would be paid for with both. Marginal increases in spending might be paid for purely with tax increases, but that rarely actually happens.
Your overall point stands, I just want to point out the LVT aspect as UBI is increasingly discussed as a topic separated from that original context.
Aside from any concerns about your basic premise, I think you've confused Medicare (the old-age/disability medical insurance system funded by payroll taxes) with Medicaid (the medical insurance system for the poor funded by general funds).