28 votes

If Universal Basic Income would be introduced, how would you stop prices from rising uncontrollably?

This question has been going through my head for quite some time. UBI has been talked about quite a bit now, and usually the question is if it should be introduced and if yes, how much should everyone get?

But how would you stop UBI from inflating the economy? If everyone suddenly gets 1000€/month purely because they exist, how do you stop rent from suddenly going up 1000€/month? How do you stop it from going up gradually?

52 comments

  1. [13]
    skybrian
    Link
    This is something of an FAQ. One answer is, what keeps prices from rising now? Competition will still exist and supply versus demand will balance out at some point. However, that depends on the...

    This is something of an FAQ. One answer is, what keeps prices from rising now? Competition will still exist and supply versus demand will balance out at some point.

    However, that depends on the market, and it's not much comfort for renters in desirable cities. Probably rent would go up if more housing isn't built. But it would make moving away, or not moving there in the first place, more attractive, too. Many people move to expensive cities for the high-paying jobs, and UBI would make it more feasible to live somewhere else if that's your preference, because people would need those jobs less.

    UBI gives people more freedom to do what they want and how they would use it in the longer term isn't easy to predict. It's like predicting suburbs and drive-through restaurants based on the invention of the automobile. But we do see different housing preferences for retirees. Places with a lower cost of living are often more popular for people on fixed income.

    19 votes
    1. [4]
      Adys
      Link Parent
      Nothing. They constantly are rising. Inflation is a given in any healthy economy. As purchasing power increases, prices increase. With UBI, the risk is that everyone's purchasing power increases...

      One answer is, what keeps prices from rising now?

      Nothing. They constantly are rising. Inflation is a given in any healthy economy.

      As purchasing power increases, prices increase. With UBI, the risk is that everyone's purchasing power increases pretty significantly and the effect of it is felt much, much faster. In a vacuum, this is not so much of an issue, but we don't live in vacuums and people's bank accounts have money in them today that will be worthless in a week if precipitated inflation happens.

      I have yet to be convinced of an argument that "UBI will not cause inflation [high enough to cancel it out [or worse]". But I'm still generally in favour of it, at least at the experimental level.

      6 votes
      1. [3]
        skybrian
        Link Parent
        Well, yes, some inflation is normal and even healthy (up to 2% or 3%) but when people ask about this they want to know why UBI won't cause high inflation? You talk about UBI like it's a sudden...

        Well, yes, some inflation is normal and even healthy (up to 2% or 3%) but when people ask about this they want to know why UBI won't cause high inflation?

        You talk about UBI like it's a sudden shock to the system and I agree that would be bad, but I don't see why it can't be phased in gradually?

        1 vote
        1. [2]
          Adys
          Link Parent
          Well, nobody's saying it can't be. And maybe that'll help. Maybe not. It's so hard to tell; my instinct tells me that it'll cause inflation regardless of the way it's phased in. My instinct is...

          I don't see why it can't be phased in gradually?

          Well, nobody's saying it can't be. And maybe that'll help. Maybe not. It's so hard to tell; my instinct tells me that it'll cause inflation regardless of the way it's phased in. My instinct is likely wrong.

          I don't think anyone telling you "UBI [will / won't] cause inflation" actually knows, everyone's just guessing, and it's a scary thing to throw that at an economy.

          5 votes
          1. skybrian
            Link Parent
            Well, nobody knows the future but I'm not too concerned about inflation. Preventing inflation is the Fed's primary job, they seem to be good at it, and the standard way to do it is to raise...

            Well, nobody knows the future but I'm not too concerned about inflation. Preventing inflation is the Fed's primary job, they seem to be good at it, and the standard way to do it is to raise interest rates. (Raising taxes also helps too.) Also, doing things gradually should help quite a bit because they have more time to see what's happening and respond.

    2. [2]
      Leonidas
      Link Parent
      But wouldn't not needing a high-paying job still mean that people would have to shell out even more for retraining and/or going back to school? And for some people, there would also be expenses...

      But wouldn't not needing a high-paying job still mean that people would have to shell out even more for retraining and/or going back to school? And for some people, there would also be expenses like buying a car, which aren't needed in high-density cities but pretty much a necessity almost everywhere else. I'm not sure $1K a month is enough to make major life changes like that so easily doable.

      2 votes
      1. skybrian
        Link Parent
        Not everyone will do it, but people do change careers sometimes and more of them might make that leap when they have some extra income. Also, for new grads it's more about making different career...

        Not everyone will do it, but people do change careers sometimes and more of them might make that leap when they have some extra income. Also, for new grads it's more about making different career choices when they expect to have some extra income.

        Hard to say what people will do, but more money generally does means having more options.

        1 vote
    3. [2]
      Grzmot
      Link Parent
      I suppose you're right, attempting to predict the effects of UBI is pretty hard. I only worry that people moving to rural areas won't solve anything, as those rural areas do not have the...

      I suppose you're right, attempting to predict the effects of UBI is pretty hard. I only worry that people moving to rural areas won't solve anything, as those rural areas do not have the infrastructure to provide for such a surge in people moving there. It might break down, or it might drive building that infrastructure up, depending on how the local communities handle it.

      1. skybrian
        Link Parent
        Yes, new infrastructure would be needed, but I think second and third tier cities also have more room to grow? It seems like it would be easier than places like New York or San Francisco. High...

        Yes, new infrastructure would be needed, but I think second and third tier cities also have more room to grow? It seems like it would be easier than places like New York or San Francisco. High real estate prices make everything more difficult and expensive.

        2 votes
    4. [4]
      mike10010100
      Link Parent
      Correct me if I'm wrong, but generally people move to or from a place because of their job. By saying that it would make things easier or more feasible to live someone else, you're also saying...

      But it would make moving away, or not moving there in the first place, more attractive, too.

      Correct me if I'm wrong, but generally people move to or from a place because of their job. By saying that it would make things easier or more feasible to live someone else, you're also saying that somehow they'd find a desirable job elsewhere.

      In addition, you seem to be assuming that people work at "desirable" jobs in "desirable" cities because they "need" those jobs. "Needing" jobs usually means that someone moves for that job. If, as you say here, someone no longer "needs" certain jobs and has the freedom to move elsewhere, then it becomes a question of "wanting" certain jobs. In which case, they will generally congregate in those "desirable" cities. Which, as we've already agreed, will drive up the costs of living in said cities.

      Jobs don't just pop up places because housing is suddenly affordable. And giving people the money to move doesn't mean they necessarily will, especially if they like their existing job.

      What would give people far more freedom is if we invest heavily in public housing, or, even more radically, significantly reduce the housing market as a whole.

      Summary: when people need jobs, they move for said job. If they don't need jobs, they'll live wherever they can. In either example, the costs of living are driven up by giving them the money to cover said cost of living.

      1. [3]
        skybrian
        Link Parent
        You're thinking too much in binary terms, treating all jobs the same, but they can be very different. Here's a hypothetical example: someone wants to be a teacher but decides to go into...

        You're thinking too much in binary terms, treating all jobs the same, but they can be very different.

        Here's a hypothetical example: someone wants to be a teacher but decides to go into programming because that pays better, and they move to San Francisco because they got a job there. But if they had another source of income, maybe they'd choose the other way? And teachers are needed in many places, which gives you more flexibility to live where you want. (I assume.)

        Having flexibility means people could spread out more to second and third tier cities, which means demand for housing spreads out more rather than housing prices getting bid up in a few desirable locations. The idea is that high housing prices are a load-balancing problem and anything that results in more balance makes everyone better off.

        But I don't know if that's what would really happen. It depends what choices people make when they have more freedom and flexibility.

        6 votes
        1. [2]
          mike10010100
          Link Parent
          But no matter what, more money is more than less money. Therefore, being able to cover the cost of living doesn't really factor into whether or not "more money" or "less money" is a deciding...

          But if they had another source of income, maybe they'd choose the other way?

          But no matter what, more money is more than less money. Therefore, being able to cover the cost of living doesn't really factor into whether or not "more money" or "less money" is a deciding factor.

          someone wants to be a teacher but decides to go into programming because that pays better

          Then their motivation is due to more money and not necessarily "what will pay the bills".

          Having flexibility means people could spread out more to second and third tier cities

          They could do that now. They could live in areas with lower cost of living, but lower wage jobs, but people generally don't. And it's not because they need to cover their cost of living bills. The fact is that under capitalism, people like more money more than they like less money.

          So the question is: is the overwhelming desire to simply pay the bills? Because if so, people should be fleeing the city en masse regardless of their income levels. Or, perhaps, is it that people think that the benefits of having more money and living in city centers with more commerce, generally outweighs the greater percentage of cost of living?

          1. skybrian
            (edited )
            Link Parent
            Yep, it's a good question and I don't know. The way I think about this is that when there is a decision to make with costs and benefits on both sides, there are probably some people who are on the...

            Yep, it's a good question and I don't know.

            The way I think about this is that when there is a decision to make with costs and benefits on both sides, there are probably some people who are on the edge of deciding the opposite way, and others for whom it's not a close decision so there's no effect. But I don't have a way of putting numbers on that, so all I can say is that it seems plausible that some people would act differently if they had a source of income not tied to a job. The result of this speculation (and that's all it is) is not to prove anything but to show that it's an interesting question.

  2. [2]
    Amarok
    Link
    The short answer is that economics isn't that simple. There are a lot of factors for the price of anything, and those factors are again changed by the location, the demographics, etc. Human...

    The short answer is that economics isn't that simple. There are a lot of factors for the price of anything, and those factors are again changed by the location, the demographics, etc. Human economic activity is as complex as anything gets in this world.

    Simple competition is enough to shut this particular argument down, though. The landlord who doesn't raise his rents is going to rent out all of his properties before the other landlords who do raise their rent. If you're in a competitive market, the UBI isn't going to affect rent at all. It's more likely to make sure more people can afford to pay rent. If you run out of places to rent, that's when prices rise... and people start buying or building instead of renting.

    If you're in an already inflated market, where there aren't any places left to rent in the first place, rent may well go up because of UBI. I'd make the case that it doesn't matter, though, because those places are already expensive as hell and UBI isn't going to change much for the people who can afford that in the first place.

    What really sets off inflation is when the supply of money exceeds the demand for that money. That leads to prices skyrocketing and into a hyperinflation feedback loop if not dealt with. History is full of examples of this playing out.

    In most rural areas of America, the demand for money is well ahead of the supply of money, due to the gutting of local businesses and regional economies. Some states can't even collect enough tax revenue to meet their budget requirements. How many people reading this thread are putting off something like car repairs or home improvements or even something as simple as cutting back on your nights out on the town to save money? That's demand outpacing supply.

    Yang's proposal has the UBI pegged to CPI annually, and tailored to provide an amount at or around the federal poverty level of $12,000/year income. The UBI itself meets the federal poverty level for a single adult. That's a pretty safe place to start with a policy like this. It's not making anyone rich, but it's definitely enough government assistance for anyone lacking means to start making more progress towards their own goals with less uncertainty.

    If this were a proposal to give everyone $10,000 per month, that very well could cause runaway inflation. Keeping it small is keeping it safe. UBI isn't meant to take us into a Star Trek future. It's just meant to take some of the pain out of capitalism and provide a solid foundation for everyone to rely upon. Welfare done evenly, reliably, and fairly for everyone, as part of your rights as a citizen.

    Inflation will happen gradually, it's inevitable. Time was we allowed deflation to happen too, but that's been out the window ever since we all embraced today's batshit-crazy profit-at-any-cost model. The key is that if both remain small, it's no big deal either way. You want them in the low single digits all the time. That's stability.

    15 votes
    1. mike10010100
      Link Parent
      Does that landlord have infinite properties to rent? If so, doesn't that kind of make him a monopoly? If not, then how does that prevent natural market cost increase simply due to scarcity? But...

      The landlord who doesn't raise his rents is going to rent out all of his properties before the other landlords who do raise their rent.

      Does that landlord have infinite properties to rent? If so, doesn't that kind of make him a monopoly? If not, then how does that prevent natural market cost increase simply due to scarcity?

      I'd make the case that it doesn't matter, though, because those places are already expensive as hell and UBI isn't going to change much for the people who can afford that in the first place.

      But those places are where both desirable and undesirable jobs are. Which means that gentrification will only be magnified by the fact that slightly outlying areas will now be flooded with people who can "afford" to live in the area where desirable and undesirable jobs exist.

      Because, let's face it, those "undesirable" jobs still need to be filled.

  3. [10]
    Rez
    Link
    Has Alaska's oil fund dividend ever been linked to a rise in rent? For all I've heard of that policy and basic income I've never heard that accusation levied before. That to me acts as...

    Has Alaska's oil fund dividend ever been linked to a rise in rent? For all I've heard of that policy and basic income I've never heard that accusation levied before. That to me acts as preliminary, limited evidence that a basic income wouldn't be a doomsday for your rent.

    There is a housing crunch in big cities but overall in the U.S. there are plenty of empty units, and land available to be developed. If you have to work for a living you may as well try to score a professional job in a big city rather than work a service job in a rural area because the former gives you more opportunity. But basic income gives you opportunity anywhere in America - I think a lot of people would seize the chance to move to a low cost of living area if it didn't condemn them to poverty.

    12 votes
    1. [9]
      Grzmot
      Link Parent
      I don't know if UBI is enough to make you move to a rural part of the world when infrastructure might be lacking there. Internet is famously quite a problem in the US, it's expensive, falsely...

      I don't know if UBI is enough to make you move to a rural part of the world when infrastructure might be lacking there. Internet is famously quite a problem in the US, it's expensive, falsely advertised and unreliable due to decades of successful lobbying by the ISPs. Even with UBI, you're still going to need a job, and rural communities usually don't have enough of those, even if new business ventures get founded there by people who have moved in.

      4 votes
      1. [2]
        Leonidas
        Link Parent
        Also, not to play into the stereotype as rural-dwelling people as "uneducated hicks who don't take kindly to outsiders," but is anyone asking whether this idea of a surge of people moving into...

        Also, not to play into the stereotype as rural-dwelling people as "uneducated hicks who don't take kindly to outsiders," but is anyone asking whether this idea of a surge of people moving into those communities wouldn't cause a backlash?

        3 votes
        1. Grzmot
          Link Parent
          It would definitely put a generational strain on rural communities I think.

          It would definitely put a generational strain on rural communities I think.

          2 votes
      2. [6]
        Spel
        (edited )
        Link Parent
        That’s not true. In some poorly thought out versions of UBI, sure, but generally the idea is that the money should be enough to live on. This is for example how it can replace any assistance...

        Even with UBI, you're still going to need a job

        That’s not true. In some poorly thought out versions of UBI, sure, but generally the idea is that the money should be enough to live on. This is for example how it can replace any assistance intended to help the poor or unemployed, significantly reducing bureaucracy.

        1. [4]
          Omnicrola
          Link Parent
          To dig into the semantics a bit, a UBI at the poverty line (12k) is enough to survive but not too live. The general idea is to supplement the resources people have already. My favorite example is...

          To dig into the semantics a bit, a UBI at the poverty line (12k) is enough to survive but not too live. The general idea is to supplement the resources people have already. My favorite example is the folks who are disabled, but want to work for a few hours to feel useful or for extra cash around holidays. However if they do, then their income exceeds a certain threshold and they don't get benefits, and they actually have less money than if they didn't contribute to society. UBI pays those people regardless.

          It smooths over a lot of things. Lose your job? Now you've got some extra weeks or months of breathing room while your search for the next thing. Car broken? $1k/month can either fix it, or pay for a pretty decent used one in a few months. Going to school? Partially disabled? Want to spend more time with your kids? Want to help care for a family member who's sick? Now there's a buffer where you can work part time, and still make ends meet while spending your time going the things that matter the most to you.

          6 votes
          1. [3]
            Amarok
            Link Parent
            People forget how bad current US welfare actually is. It has never been anything but a sick, twisted, insulting joke in how it's implemented - all so that conservatives can invade people's...

            People forget how bad current US welfare actually is. It has never been anything but a sick, twisted, insulting joke in how it's implemented - all so that conservatives can invade people's privacy. It proceeds from the assumption that if you are poor, you desperately need the government to tell you how to do everything because you're too stupid to do it yourself. Poor is proof of delinquency.

            There's a lot of required reporting, so get used to going in monthly and detailing everything you do for the state. Lie about anything, make a mistake about anything, change anything, or get new income, and the whole apparatus does its best to deny you or take your new earnings out of your benefits (and then some). There are even required drug tests for some programs/states - positive for even something as harmless as cannabis and you're denied. The forms are built to trip you up, not help you out. We're up to what, 130 such programs now? It's hard to keep track.

            A lot of benefits are on a first come, first served basis - if the program runs out of money, it simply stops paying out benefits until next year and everyone who was relying on it is screwed. Most benefits have ridiculous requirements - food stamps, for example, the only protein you can buy with them is peanut butter. You can't have a healthy/nutritious diet for your kids on food stamps, it just doesn't happen. Google around and you can find plenty of horror stories. You have to supplement it yourself.

            The entire system really just screams, "we don't want to help these useless people, they should just die and go away." Republicans couldn't stop welfare, so they contented themselves with twisting it into this perversion so they could feel superior to poor people.

            Given such hostile programs and the fact that the overwhelming majority who are on those programs don't get anywhere near $1000/mo in benefits, it's obvious what will happen if the freedom dividend becomes real. Almost everyone on welfare is going to switch over immediately. This has the benefit of freeing up resources within those programs for the people who, for whatever reason, choose to stay with them.

            Now you have larger benefits in your pocket as cold hard cash, all of your time is back in your own hands, and there are no government employees hanging around your neck like a boat anchor. What's more, every other adult you know has a lot more spare change in their pockets, too. More local spending means more local jobs means more employed people means more spending etc. Gas for the engine.

            I never see anyone pitch this as taxing the nation's economy and then giving those taxes back to the nation's citizens. Why is it never framed that way? I like this idea that from an economic standpoint, the job of the humans in the post-work world is to spend money and direct economic activity. Your dollar has always been your best vote. What happens when we give everyone this kind of infinitely renewing voting power? Could we actually manage to merge markets and democracy together at the ground level and get the money/people on the same side? I want to find out.

            12 votes
            1. [2]
              Greg
              Link Parent
              This surprised me enough that I did exactly that, and the food list from the primary source seems fairly sensible to me. I can quite believe that the programs are hostile, and probably even...

              Most benefits have ridiculous requirements - food stamps, for example, the only protein you can buy with them is peanut butter. You can't have a healthy/nutritious diet for your kids on food stamps, it just doesn't happen. Google around and you can find plenty of horror stories.

              This surprised me enough that I did exactly that, and the food list from the primary source seems fairly sensible to me. I can quite believe that the programs are hostile, and probably even intentionally so, but that particular example doesn't seem to hold up.

              5 votes
              1. Amarok
                Link Parent
                Here's a more comprehensive study on SNAP nutrition deficiency. If you check the other articles that cite that particular study, you'll find plenty more exploring this idea in detail. I didn't...

                Here's a more comprehensive study on SNAP nutrition deficiency. If you check the other articles that cite that particular study, you'll find plenty more exploring this idea in detail.

                I didn't actually realize that almost half of the people on SNAP in the USA are children until reading that just now. Yikes.

                7 votes
        2. Grzmot
          (edited )
          Link Parent
          That depends on your living situation. Generally the ideas I've see float around suggested UBI at around ~1000€/month, And that's maybe enough for rent and really, really cheap food, but kiss...

          That depends on your living situation. Generally the ideas I've see float around suggested UBI at around ~1000€/month, And that's maybe enough for rent and really, really cheap food, but kiss goodbye to any kind of other purchases. If you live together with a partner or have a roommate though, it's a good bonus.

          3 votes
  4. [22]
    NaraVara
    (edited )
    Link
    Not really. There are exogenous forces, like geography and zoning restrictions, that constrain housing supply. This is the big issue with UBI. You're increasing demand without increasing supply....

    Competition will still exist and supply versus demand will balance out at some point.

    Not really. There are exogenous forces, like geography and zoning restrictions, that constrain housing supply.

    This is the big issue with UBI. You're increasing demand without increasing supply. In fact, you might even be lowering supply of many low-cost goods and services. This cannot help but raise costs substantially, possibly above the level of income your UBI provides thereby canceling out the value of the benefit. A jobs guarantee is likely to work much better.

    Paying people to produce some kind of value will always be a better move than paying them for nothing. The only way this wouldn't hold is if you have faith that the UBI benefit will mostly go towards productive investment, but based on what we've seen of consumer behavior around other exogenous sources of money this is extremely unlikely. Most likely it will be used to pay down debts, get swallowed up in more rent, or just boost access to credit which is just exacerbating the debt peonage and financialization problems with our economy.

    Some countries do things like provide stipends for students, artist, entrepreneurs, etc. specifically to get around this problem. The other move is to just decommoditize essentials like healthcare, education, and housing so the prices don't get bid up. But this means the UBI would have to be supplemental to a comprehensive social welfare system, not a replacement for it as it is conventionally pitched.

    8 votes
    1. [6]
      MimicSquid
      Link Parent
      What keeps the supply from increasing to match the new demand? I mean, certainly they're not making any more land in the current desirable cities, but for most things if there's a new demand...

      What keeps the supply from increasing to match the new demand? I mean, certainly they're not making any more land in the current desirable cities, but for most things if there's a new demand nothing keeps people from supplying it.

      Also, what's wrong with people paying down their debts? I agree that there will be some concerning financing trends related to essentially selling off the future UBI payments for a cash payment now, but I'm confused as to why you have a reduction in consumer debt in among the potential ills of a UBI.

      2 votes
      1. [5]
        NaraVara
        Link Parent
        Same thing that keeps supply from matching demand now. Market based systems don’t produce adequate, affordable housing (or really any goods with long horizons for financing). Every country/city...

        What keeps the supply from increasing to match the new demand?

        Same thing that keeps supply from matching demand now. Market based systems don’t produce adequate, affordable housing (or really any goods with long horizons for financing). Every country/city that actually has affordable middle class housing in economically vital population centers has aggressive subsidized home building programs or fairly libertine zoning laws. The American model for housing is batshit crazy.

        Also, what's wrong with people paying down their debts?

        It doesn’t address anything about the predatory nature of the credit system. It just means your UBI scheme functionally becomes a subsidy for usury.

        5 votes
        1. [4]
          MimicSquid
          Link Parent
          I think you're well into letting the perfect be the enemy of the good here. If part of your complaint is that a UBI won't fix capitalism by itself, I think you should reconsider whether that's a...

          I think you're well into letting the perfect be the enemy of the good here. If part of your complaint is that a UBI won't fix capitalism by itself, I think you should reconsider whether that's a good reason to resist implimenting one. No one action will make capitalism tolerable for coexistence with a good life for most people, but do you disagree that it's a step in the proper direction?

          2 votes
          1. [3]
            NaraVara
            (edited )
            Link Parent
            No. I pointed out all the ways that the root problems will mean the long run consequences of a UBI will either render the benefit useless or, more likely, make long standing problems worse. Edit:...

            No. I pointed out all the ways that the root problems will mean the long run consequences of a UBI will either render the benefit useless or, more likely, make long standing problems worse.

            Edit: To clarify, the usury example is a good one. Rather than getting people the means to get their heads above water or some seed money to build wealth, you'd be allowing their benefit to get taxed away by loan-sharks. This functionally doesn't help the people you want to help at all and just pays off some of the worst, value destroying forces in the economy.

            3 votes
            1. [2]
              MimicSquid
              Link Parent
              Ok, and I'd be very happy to have stronger limits on usury, capping maximum interest rates for any debt (there would never be unforeseen consequences to that, I'm sure.) But you're throwing the...

              Ok, and I'd be very happy to have stronger limits on usury, capping maximum interest rates for any debt (there would never be unforeseen consequences to that, I'm sure.) But you're throwing the baby out with the bathwater here. Even if some people do mismanage their money, why is that a reason to not do this thing? Most of the evidence to date is for the majority of people using the money reasonably and it increasing quality of life across the board, though there is definitely data out of Alaska that some people won't handle it well.

              2 votes
              1. NaraVara
                Link Parent
                Why do you think we're obligated to do a UBI scheme if it's demonstrable that theoretically it's unlikely to achieve any of its stated policy goals, may exacerbate other existing economic problems...

                But you're throwing the baby out with the bathwater here.

                Why do you think we're obligated to do a UBI scheme if it's demonstrable that theoretically it's unlikely to achieve any of its stated policy goals, may exacerbate other existing economic problems we have, and will be taking resources away from programs and initiatives that have actually been shown to work?

                Most of the evidence to date is for the majority of people using the money reasonably and it increasing quality of life across the board

                What evidence is this? All I know of is the Alaska permanent fund (which is not heartening BTW), a tiny pilot program in Finland where they feel like it hasn't really done much that you couldn't have accomplished with more targeted credits or tax credits, and the fustercluck of citizenship dividends in some of those Emirati countries that basically run on slave labor, which I'm not sure is a model we want to emulate.

                A similar goal could be achieved better through something like a social wealth fund or dividend. Because that way, we have a defined contribution program that actually creates a stake in overall performance rather than a process for handing out scraps from the billionaire table while dismantling the welfare state. But even that would have to be implemented carefully. As in, the dividends of the fund MUST go straight to people. If you start using it to fund government spending you create a principal agent problem that pushes people out of paying proper attention to public spending and underfunding future-looking investments in favor of present consumption as the Alaskans are currently doing as they dismantle their public university system.

                1 vote
    2. [15]
      skybrian
      Link Parent
      Your argument boils down to saying that we're supply-limited and can't make enough stuff for everyone to have enough, so poor people are just going to have to do without like they do now. Of...

      Your argument boils down to saying that we're supply-limited and can't make enough stuff for everyone to have enough, so poor people are just going to have to do without like they do now. Of course that's an exaggeration and I don't really think you're that heartless! But part of the point is to reduce inequality a bit so poor people can buy more stuff. We do that by making sure everyone has some money to buy stuff with.

      Nobody's saying we should fund UBI just by printing money, so richer people will be paying taxes to keep the money supply stable. To the extent that we really are supply-limited, poorer people would get a larger share and richer people somewhat less, and that seems like a good result if you're serious about reducing inequality. Rich people will still be able to buy what they need.

      But, treating this as necessarily zero-sum seems pessimistic? It's true of some things (like housing in some areas) but not others where businesses could respond to demand by making more stuff. (Not everything is labor-intensive.) Also, technology is improving, and every so often we talk about bullshit jobs that don't really need to be done. It seems like there's room for productivity improvement, and increased demand will provide incentive to do that.

      Another concern is that if too many people quit their jobs, actually it's negative sum. Yes, probably some people will be able to retire earlier than they would otherwise, and to the extent that's a drag on economy, it has to be made up for by productivity gains. This depends on which effect is bigger, which is hard to predict in advance. But the UBI proposals I've seen (including Yang's) probably don't pay enough to make retirement attractive to most people. Maybe you could live on $12,000 in some places (or $24,000 for a two-person family) but most people will want to make more money than that, especially if they're used to a higher standard of living and/or have a family. Money is still going to be attractive and people will work to get it.

      But, that's handwavy and I would also argue that Yang's proposal is a bit on the high side and we could start lower, which would make the transition less scary due to not having much experience with UBI yet. Alaska seems to be doing okay at a lower level. Social Security when it started didn't provide as much in benefits as today either. We could increase it more gradually and adjust based on what really happens.

      1. [14]
        NaraVara
        Link Parent
        No it doesn’t. Read the last paragraph again. . That’s how tax expenditure works though. Government prints money (or provides money equivalent services) and then constrains inflation by sucking...

        Your argument boils down to saying that we're supply-limited and can't make enough stuff for everyone to have enough, so poor people are just going to have to do without like they do now.

        No it doesn’t. Read the last paragraph again.

        Some countries do things like provide stipends for students, artist, entrepreneurs, etc. specifically to get around this problem. The other move is to just decommoditize essentials like healthcare, education, and housing so the prices don't get bid up. But this means the UBI would have to be supplemental to a comprehensive social welfare system, not a replacement for it as it is conventionally pitched.

        .

        Nobody's saying we should fund UBI just by printing money, so richer people will be paying taxes to keep the money supply stable.

        That’s how tax expenditure works though. Government prints money (or provides money equivalent services) and then constrains inflation by sucking out cash via taxation. But if you’re just handing out money without fundamentally changing the economic relationships that allow rich people to extract all wealth in the first place then you’re not actually addressing the root causes behind privation or inequality.

        2 votes
        1. [13]
          skybrian
          Link Parent
          Yes, it doesn't change capitalism. I'm not very clear on what that would mean or how it would work? I like UBI in part because I think I understand what it would do. I would have to understand...

          Yes, it doesn't change capitalism. I'm not very clear on what that would mean or how it would work? I like UBI in part because I think I understand what it would do. I would have to understand root causes and what to do about them a lot better to get behind an alternative.

          Despite not changing anything fundamental, UBI would make capitalists work harder at serving poorer people because they have more money, so it's a bigger market. Generally speaking, businesses will go where the money is, and today they are too oriented towards serving the needs of rich people.

          I'm not sure what you mean by decommoditizing essentials, but it seems like commoditizing things is better because they get supplied cheaply in large quantities? Like, grocery stores are quite efficient at supplying a wide variety of food, as long as you have the money and know what to shop for. (Or it could be a problem if the whole neighborhood doesn't spend enough money, in which case you don't get a decent grocery store. But more buying power would help.)

          There are some parts of health care that are commoditized, like the over-the-counter drugs that are available in any drugstore or supermarket. If we could somehow do that with more health care services then I think that would be quite a good thing. When Costco went into the hearing aid business, it was a pretty big deal, and it looks like the FDA will allow some over-the-counter hearing aids soon.

          2 votes
          1. [12]
            NaraVara
            (edited )
            Link Parent
            There is some virtue in simplicity, but it sounds like most of its proponents don’t actually understand what it would do beyond the first order effect. You can’t understand everything. At some...

            I like UBI in part because I think I understand what it would do.

            There is some virtue in simplicity, but it sounds like most of its proponents don’t actually understand what it would do beyond the first order effect.

            I would have to understand root causes and what to do about them a lot better to get behind an alternative.

            You can’t understand everything. At some point you just need to listen to an expert’s take on it. This is like agreeing to homeopathy because it seems to make sense rather than listening to a doctor because the latter uses complicated medical terminology.

            I'm not sure what you mean by decommoditizing essentials, but it seems like commoditizing things is better because they get supplied cheaply in large quantities?

            How is that working out for supplying adequate housing, healthcare, childcare, or education? I’ll spoil it for you and point out that it’s worked terribly. Commodity logic doesn’t work for goods that aren’t easily fungible or that require significant public investment or collaboration to actually have any value.

            2 votes
            1. [11]
              skybrian
              Link Parent
              I don't think anyone knows what UBI does beyond the first order effect, but I am generally in favor of trusting people to make good choices and giving them the freedom to do so, rather than...

              I don't think anyone knows what UBI does beyond the first order effect, but I am generally in favor of trusting people to make good choices and giving them the freedom to do so, rather than restricting how they can spend their money. Sometimes that leads to disappointment but I think it's a good default.

              Also, I'm interested in learning about alternatives and there may be experts I should be listening to, but you're not giving me much to go on. What "doctors" do you recommend? What alternatives do you like? Any recommended reading? Maybe we should do a different topic about some approach that you like?

              1 vote
              1. [10]
                NaraVara
                Link Parent
                Economics and policy analysis are pretty well developed fields of social science with tools that can provide fairly reliably predictable explanations. I mean, follow my comments across this...

                I don't think anyone knows what UBI does beyond the first order effect

                Economics and policy analysis are pretty well developed fields of social science with tools that can provide fairly reliably predictable explanations.

                Also, I'm interested in learning about alternatives and there may be experts I should be listening to, but you're not giving me much to go on.

                I mean, follow my comments across this thread. I've walked through the logic and mechanisms behind the unintended negative consequences it is likely to have.

                3 votes
                1. [6]
                  Amarok
                  Link Parent
                  I'm curious about something. Are you in favor of a program that taxes the wealthy, and then uses that tax to provide welfare, but only provides that welfare to the people who actually need it? You...

                  I'm curious about something.

                  Are you in favor of a program that taxes the wealthy, and then uses that tax to provide welfare, but only provides that welfare to the people who actually need it? You only pay in if you're making a lot of money, and you only get paid out if you are below the assistance threshold. Does that avoid your issues with UBI?

                  1. [5]
                    NaraVara
                    (edited )
                    Link Parent
                    The issue isn't that people who "don't need it" are getting it. It's the macroeconomic effects of increasing consumption while constricting supply that will bring in inflationary pressure that...

                    The issue isn't that people who "don't need it" are getting it.

                    It's the macroeconomic effects of increasing consumption while constricting supply that will bring in inflationary pressure that will fall disproportionately on the most vulnerable people. I don't actually care who gets it, the issue is what the money gets spent on and what kind of economic behavior it will encourage. In this case, the concern is that it could encourage behavior that will hurt the long term prospects of the poorest people while not really helping the middle class very much at all and not soaking the rich nearly enough to have a meaningful effect on inequality.

                    Better functioning universalist programs that can move wealth downwards would be things like a jobs guarantee, a social wealth fund/dividend, or paying people to make specific productive investments like going to school, building a house, or starting a small business. You want to prod people towards being able to maintain financial security for themselves instead of fostering indefinite dependency on an income scheme that encourages people to "check out" of the formal economy while not actually giving them enough income to make substantive changes to their material circumstances.

                    If we were talking a UBI that was in the $30k a year range then we might be onto something transformative. $12k a year with a concomitant reduction in other public services ain't gonna do it. The other public services are likely to be adding far more social value and improving peoples' wealth (in the form of social and collective goods) than the extra $1,000 a month in spending money. For a poor neighborhood a $200,000 community center can do a whole lot more than giving 200 of them $1,000. $2,000,000 worth of public housing would do those people a lot more good than defraying their rent by $1,000 a month. You're missing out on all the economies of scale on spending that would actually improve community and civic life.

                    And then there's all the fundamental economic issues causing poverty that the UBI doesn't address, meaning the benefit of the UBI will disappear. The economy is structured to empower large businesses and the financial sector to reliably extract wealth from working people and vulnerable parts of society. If you don't address those fundamentals, UBI won't do anything. It's just more raw material to be extracted from them rather than resources for them to build wealth.

                    3 votes
                    1. [4]
                      Amarok
                      Link Parent
                      I have to give you credit for fielding a thorough argument that is concrete and different to those I've encountered in the past. I wasn't expecting you to be on the side of more welfare for bigger...

                      I have to give you credit for fielding a thorough argument that is concrete and different to those I've encountered in the past. I wasn't expecting you to be on the side of more welfare for bigger and better transformations in society, that's good to see. Yang's been saying repeatedly that his UBI is 'just the beginning' so he's on the same page. He's never pitched it as a solution to inequality. I'd like to see more proposals that stack on top of it to get a sense of the bigger picture.

                      It's the word 'guarantee' that sticks in my craw when it comes to jobs programs. That's a really difficult promise to keep even in a stable market, let alone one where automation is going to disrupt half of all jobs within the next half century. When I see that word, my mind equates it to purposeless, unfulfilling busywork - putting asses in seats just to meet the guarantee. I don't particularly trust government to handle the creation aspect as well as the market either. Seems like the market has a much better chance at creating jobs that serve a purpose.

                      Maintaining a national employment database for job finding? That's something government can do, and probably better than for-profit entities given how much data the government has access to on their citizens. Most US states already do this, but it's never been regularized and formalized into a national system. Everyone has their own, and data shared between them is sketchy. The rest is for-profit, and finding jobs for people isn't their primary goal.

                      I'd much rather see a government program that's built to find people jobs they are suited for. That's a good place to work in retraining as well, when appropriate. Better for the government to be the matchmaker than the adjudicator. If the government wants to invest in certain areas to promote growth in those sectors, thus creating new jobs in the process, I'm fine with that too - as long as those subsidies end when they've served their purpose. When they get lobbied into being permanent that seems a poor way to handle investment.

                      1 vote
                      1. [3]
                        NaraVara
                        (edited )
                        Link Parent
                        It's not hard to keep at all. When all else fails you can just pay people to dig ditches and fill them in again. It's not a good use of the labor, but it's a use. A jobs guarantee is basically...

                        It's the word 'guarantee' that sticks in my craw when it comes to jobs programs. That's a really difficult promise to keep even in a stable market

                        It's not hard to keep at all. When all else fails you can just pay people to dig ditches and fill them in again. It's not a good use of the labor, but it's a use. A jobs guarantee is basically harnessing the power of bureaucracy to expand to meet the needs of an expanding bureaucracy, and use it for something productive.

                        I don't particularly trust government to handle the creation aspect as well as the market either. Seems like the market has a much better chance at creating jobs that serve a purpose.

                        This is just an article of faith that's not really rooted in anything. What's more it doesn't logically jive with the premise behind a UBI, namely being that AI will obviate the need to employ people. If the problem is that there just won't be enough jobs, then it is necessarily the case that the market isn't going to be able to create purposeful work for people to do.

                        This is why I favor the social wealth fund framework. In that case, you can literally just nationalize the industries that produce and develop AI and consequently make all of society a beneficiary of AI productivity rather than whichever rich people happen to own all the robots. If the robots are owned by a trust that represents the commons, then you solve the problem of a handful of robot owners being our overlords. People would just rent AI time with the proceeds going back into the commons as a dividend payment.

                        You don't need to care about efficiency or productivity at all with a jobs guarantee (though you might want to just to make them not feel like miserable slogs). You just need to keep people occupied. They can hunt for and dig up invasive species. They can fix and build out hiking trails. They can plant trees, "re-wild" public lands, fix urban blight, or clean up superfund sites. You can keep people one all and pay them to do various temp projects like working as poll workers.

                        Remember, the point isn't to allocate labor here, it's just to provide a failsafe/fallback social insurance program. You can have plenty of slack in the day or have very flexible schedules for people based on need (like if they have family care obligations). The only objective is to put money back in the market for the unemployable without constraining output.

                        2 votes
                        1. [2]
                          Amarok
                          Link Parent
                          Ah, ok. We're stuck on semantics here. I see that sort of 'job' as a failure, and you're regarding it as a poor use of labor - so we're on the same page there, just using different words. I'd...

                          When all else fails you can just pay people to dig ditches and fill them in again. It's not a good use of the labor, but it's a use.

                          Ah, ok. We're stuck on semantics here. I see that sort of 'job' as a failure, and you're regarding it as a poor use of labor - so we're on the same page there, just using different words. I'd really like to see that labor put to better use. In lieu of that, I'd rather pay people to go out and volunteer at literally anything, other than just digging ditches so the next shift can fill them in.

                          They can hunt for and dig up invasive species. They can fix and build out hiking trails. They can plant trees, "re-wild" public lands, fix urban blight, or clean up superfund sites. You can keep people one all and pay them to do various temp projects like working as poll workers.

                          All wonderful. I'd be happy to see all of that funded as a way to keep people busy. I'd be happier if the government is giving those funds to orgs that already engage in those activities, rather than paying people directly. Partly that's on me, though. I have a hard time trusting government 'competency' at anything other than sending large numbers of checks around. I like them as a paper mill and nothing more. :P

                          It seems like the threat of AI is that it'll displace people faster than we can find them new work. The market will sort this mess out and find new meanings for 'work' but that takes time to play out. A lot of that work is going to be in human/robot teams, once the robots get smart enough to learn how to follow a human around and take directions from them. If we're automating jobs away faster than the market can replace them, we're in trouble.

                          3 votes
                          1. NaraVara
                            Link Parent
                            Why? This is functionally just an additional layer of bureaucracy. Now instead of just finding a thing that needs to be done, you have to have an office that decides what's needed. That office now...

                            I'd be happier if the government is giving those funds to orgs that already engage in those activities, rather than paying people directly.

                            Why? This is functionally just an additional layer of bureaucracy. Now instead of just finding a thing that needs to be done, you have to have an office that decides what's needed. That office now needs to go to a procurement office to define and scope a contract. That contract then has to go out for bid to get responded to by various organizations. Those organizations now have to employ teams of government contract response specialists to speak towards how they are the best at fulfilling the scope of the contract.

                            Next thing you know, you're selecting executors of the contract who are really good at writing proposals and overseeing their projects' for legal and contractual compliance rather than actually doing the thing you set out to do.

                            Now since the goal is to just keep people busy, this isn't all bad. You've created a bunch of--previously unnecessary--jobs in procurement, requirements specification, contracting, legal, sales and capture management, technical writing, etc. But those aren't exactly the kinds of "fulfilling" or "socially beneficial" work you said you were interested in.

                            I have a hard time trusting government 'competency' at anything other than sending large numbers of checks around. I like them as a paper mill and nothing more.

                            Why though? This is just ideology. What is this based in? Have you worked with or for the government in any capacity before?

                            It seems like the threat of AI is that it'll displace people faster than we can find them new work.

                            No, the threat is that you concentrate so much market power in the hands of so few people that we will live in a de-facto feudalist system. There might be more work for people to do eventually, but there is absolutely no guarantee that this work will bring in enough money to sustain what we would consider a "decent" or "dignified" standard of living. For most of human history there were wide chasms between haves and have nots. The idea of a middle class was an invention of the New Deal and it depended on a specific mechanisms for labor to extract and retrain the fruits of their productivity from management. Once that system broke inequality ballooned. Once you completely demolish the market power of labor it will reach a crisis point.

                            2 votes
                2. [3]
                  skybrian
                  Link Parent
                  Well, sure, I've been reading and I know your opinions and you know mine. But I don't think either of us are experts? And I do read some economics and other fields already. These are vast fields...

                  Well, sure, I've been reading and I know your opinions and you know mine. But I don't think either of us are experts? And I do read some economics and other fields already. These are vast fields with a lot of debate between experts that don't always agree on basic stuff. It can be quite political.

                  You're saying I should be listening to different experts without saying who they are, and that's just not helpful. It gives me nowhere to start.

                  1. [2]
                    NaraVara
                    (edited )
                    Link Parent
                    I have a bachelors in political theory and a masters in economic development policy. I've worked as an advisor for municipal governments' urban economic development committees and targeted...

                    But I don't think either of us are experts?

                    I have a bachelors in political theory and a masters in economic development policy. I've worked as an advisor for municipal governments' urban economic development committees and targeted community lending for financial services companies' social responsibility units.

                    But that's mostly moot. You don't need to read a list of experts, you just need to follow the logic being explained.

                    2 votes
                    1. skybrian
                      Link Parent
                      Hmm, I think the problem might be that you're saying some things that are obvious to you, but they're not necessarily obvious to the reader. Remember that we have different backgrounds and don't...

                      Hmm, I think the problem might be that you're saying some things that are obvious to you, but they're not necessarily obvious to the reader. Remember that we have different backgrounds and don't know each other well. You say "follow the logic" and I think I do, but only in the sense that I can get some idea of your opinions. Sometimes you make assumptions, or refer to things rather than demonstrating them. (And I'm not saying there's anything wrong with that! It's perfectly natural and we all do it. It would be tedious to demonstrate everything in an online forum.)

                      I don't think it's a good idea to go through everything point by point, but for example, you have mentioned "root causes" or "root problems" in a way that's intriguing, because it hints at an underlying philosophy. But I don't know what root causes you mean, or whether I'd agree. I'd be interested in knowing more.

                      Or for another example, when you say "the predatory nature of the credit system", I can think of examples, but I don't think it's a given that credit is always predatory, so I'm not sure that's its inherent nature? It seems like credit can be useful or harmful depending on who is using credit and whether they use it wisely?

                      And so on. That's why I asked for more background, to follow up on hints of something that might be interesting to learn.

                      I don't believe there's any practical way to compel agreement online, or at least, it would take a lot more work than any of us is willing to put in. (There is a technique called "adversarial collaboration" that I think would be interesting, but it would take an awful lot of work, so I've never volunteered for it.) When we're chatting in a low-effort way, I think the best we can do is share views, links, interesting reading and so on.

                      Also: I got a little over-enthusiastic in this topic, but I don't think it's possible to prove that UBI is perfectly safe. At best I can get across why I think it deserves a chance and why I doubt common objections. This isn't proof of anything.

  5. [3]
    Sahasrahla
    Link
    Not really an answer (plenty of other comments for that) but a related thought: what's to stop prices from rising if a $15/h minimum wage is introduced? If poor people are given more money (either...

    Not really an answer (plenty of other comments for that) but a related thought: what's to stop prices from rising if a $15/h minimum wage is introduced? If poor people are given more money (either directly or through better pay) what's to stop prices, rents, etc. from rising to take away all that extra money and keep workers poor? Why bother trying to help poor people get out of poverty at all? Many opponents of UBI on the left who object to it because of fears of rising prices/rents still support a living minimum wage, but I think arguments for/against price rises happening apply to both.

    (Note also that not all forms of basic income propose cutting everyone a cheque for the same amount. Here in Canada the conversation is usually about mincome, a system to guarantee a minimum income by giving $X per year to everyone with no income and slowly lessening the amount as people make money. e.g. One might get $16K if they have no other income source, but if they make $5K working then their mincome amount might be $13.5K for a total of $18.5K from all sources, and at a salary of $32K+ you wouldn't get money from mincome at all.)

    6 votes
    1. NaraVara
      Link Parent
      The factor I mentioned above. Raising the minimum wage means you’re increasing output as well as demand. If someone is paying $15 an hour, that implies a person is doing $15 worth of work an hour....

      Not really an answer (plenty of other comments for that) but a related thought: what's to stop prices from rising if a $15/h minimum wage is introduced?

      The factor I mentioned above. Raising the minimum wage means you’re increasing output as well as demand.

      If someone is paying $15 an hour, that implies a person is doing $15 worth of work an hour. They might be doing that now and the money is being extracted by management or it means management and processes will develop to get $15 worth of productivity out of them. Either way, $15 of production is being generated for the $15 being paid. (It could also mean that all the jobs that aren’t worth $15 an hour will disappear, but empirically that doesn’t seem to pan out unless you’re talking about hard agrarian labor).

      The difference with UBI is you’re creating a disincentive for production while increasing consumption because the income isn’t tied to anything.

      system to guarantee a minimum income by giving $X per year to everyone with no income and slowly lessening the amount as people make money. e.g. One might get $16K if they have no other income source, but if they make $5K working then their mincome amount might be $13.5K for a total of $18.5K from all sources, and at a salary of $32K+ you wouldn't get money from mincome at all.

      This is even worse than a UBI when it comes to creating disincentives to work. Now rather than just making it easier to not work you’re literally making it cost more to earn money than to not earn it. If every dollar I make is tied to a loss in my benefits, you’re functionally taxing the incomes of the working poor at nearly 100%. Why would anyone earn a dollar from a job if they can earn $0.95 from not working a job?

      2 votes
    2. skybrian
      (edited )
      Link Parent
      I suspect they could be made mathematically equivalent by changing the tax rate? In the end, you take basic income, subtract taxes, and what's left is the net impact for you. A UBI that's the same...

      I suspect they could be made mathematically equivalent by changing the tax rate? In the end, you take basic income, subtract taxes, and what's left is the net impact for you.

      A UBI that's the same for everyone looks more expensive because taxes need to be higher to cancel it out on the high end. But I like the symbolism of making the check equal for everyone, even if it's actually a redistributive scheme.

      1 vote
  6. [2]
    mrnd
    (edited )
    Link
    One thing to note, is that $1000 UBI would not raise everyone's income by that amount. For high earners, UBI probably lowers their income because increased taxation For middle earners, a large...

    One thing to note, is that $1000 UBI would not raise everyone's income by that amount.

    • For high earners, UBI probably lowers their income because increased taxation
    • For middle earners, a large fraction of UBI would be taxed away
    • For low income, UBI would replace a lot of existing benefits

    Main argument for UBI is simplicity and security. It doesn't necessarily inject that much money in the economy.

    1 vote
    1. Amarok
      Link Parent
      The break-even point is when you spend $120,000 a year on goods with the 10% VAT applied. You'll pay out the $12,000 you got from UBI in taxes to fund the UBI. That kind of spending is well out of...

      The break-even point is when you spend $120,000 a year on goods with the 10% VAT applied. You'll pay out the $12,000 you got from UBI in taxes to fund the UBI. That kind of spending is well out of reach for an overwhelming majority of Americans.

      2 votes