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by karmacondon
3745 days ago
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The obvious answer here is that basic income won't be evenly distributed to all citizens. A household earning the average national income will get $1,000/month from the government, and see their taxes go up by about $1,000/month. So it's difficult to raise rent on everyone when only a fraction of your customers have true extra income. Imagine you're a landlord who runs a property for those of normal income. How much do you raise rent because people who currently earn below the poverty line suddenly have $1,000 extra per month? You can raise rent on everyone, but then most of your middle class tenants will move out to seek better prices. The same is true for the price of groceries and other staples. A smart business will maintain their prices and benefit from a larger customer base. Since everyone doesn't experience an increase in income, raising rents of all forms will only open those businesses up to price competition. |
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In any mutually-agreed upon transaction, both parties to the transaction will gain some amount of value ("utility" in economics jargon) relative to the amount they're giving up. Because $X is now worth (slightly) less (say, by $Y) to each BI recipient, the seller (or landlord in this case) can demand $X+$Y in exchange for his product. That is, he's demanding that the buyer continue to sacrifice the same amount of value, because the value of his own asset hasn't decreased. So you'll see prices increase.
There are other forces in play, too. One of them is price elasticity of demand. This tells us that things that people are less willing to go without (housing, fuel...) put more bargaining power in the hands of the seller than those that we're more willing to flex on (say, going out to movies). In this context, goods like housing and fuel will have a larger degree of price rise than will those where the consumer has greater bargaining power.