Hacker News Reader

Comment by ergothus | Hacker News Reader

That was my initial response when I first heard this concept a few years ago, and the answer is somewhat surprising (Note: I'm not an economist, so please someone correct me if I get anything wrong here):

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.

View on HN

You're right in general, but there are second order effects. The poor are more likely to spend all of their income than the rich. Also, even if there isn't a general increase in prices (i.e. inflation) there can still be a change in the relative prices. So for example, luxury housing might come down slightly in price as a consequence of the increased taxes, but entry level housing might come up to reflect new household formation enabled by the universal stipend.

If you think inflation's only source is 'printing money', you may not be qualified to speak on economic issues. Liquidity, the monetary supply, and the cost of exchange are quite a bit more complex than that, and far more prone to being manipulated and falling over, as both the Housing Crisis and Libor Scandal taught us.

I'm sorry but you are wrong. Inflation is nothing but the increase of money supply without an equivalent increase in production.

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.

> Inflation is nothing but the increase of money supply without an equivalent increase in production

Wouldn't that mean that inflation would also be caused by a decrease in production without an equivalent decrease in the money supply?

Yes. Google "stagflation".

The view that inflation is not solely driven by money supply is hardly limited to Keynesians. Especially since the 1990s, neoclassical economists also typically include other factors in their models, in part because a single-variable model doesn't appear to be empirically correct.

Doesn't demand go up, as more people can afford a given house?

In this world, market segmentation is a thing. By moving people from segment to segment, you are very much changing demand.

So I submit that your assumption isn't really valid.

A basic income would create a larger supply of labor by increasing mobility.

And increase demand for labour by increasing consumption.

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.

Reply on news.ycombinator.com