[blurbleblurble]

This makes me think hard about universal basic income. If average incomes went up, how long would it take for those with monopolies on basic needs to raise the prices? Not long, I'm sure. Unless rentier capitalism is somehow cut out of the picture, if the government provided $10,000/yr, then $10,000/yr could very quickly become the new "poverty". If banks (via landlords' debts) are squeezing people now, whats stopping them from taking peoples' basic income too?

Don't get me wrong, I recognize the need for something like basic income, but rentier capitalism is suffocating peoples lives right now, and I have a hard time seeing how universal basic income is going to stop that.

[dragonwriter]

> If average incomes went up,

Average after-tax income doesn't go up under any sane UBI scheme; it's redistributing income (ideally, primarily capital income—gains, rents, and otherwise).

> how long would it take for those with monopolies on basic needs to raise the prices?

Unregulated monopolies on basic needs are a problem that needs addressed either through regulating the monopolies or breaking then up, independent of UBI.

That said, redistribution will result in relative inflation of prices of goods disproportionately demanded by lower income segments, even in a competitive economy. The increase in nominal prices should usually be less than proportional to the increase in income, barring hard supply constraints that aren't addressed by the reduced demand for higher-end goods.

[dllthomas]

> Average after-tax income doesn't go up under any sane UBI scheme

Median probably would. Mean probably breaks even, yeah, at least first-order.

[mindslight]

In fact, basic income is actually just a continuation of the same inflationary alchemy that's been eroding the middle class for decades. This is why a seemingly revolutionary idea is getting so much press - because it actually isn't revolutionary at all, but a doubling down on the status quo!

[gnaritas]

> basic income is actually just a continuation of the same inflationary alchemy

It's no such thing; not remotely. BI isn't new money, it's simply a redistribution of money from those with more to those with less. It won't increase the money supply and thus doesn't cause inflation.

[mindslight]

Even if not implemented through monetary inflation, BI will cause price inflation. Housing asset prices are primarily constrained by the affordability of rent - either to a landlord or directly to the bank. If everybody can spend twice as much on rent then rent just doubles, and if interest rates remain the same then paper appraisals double.

BI seems desirable because it addresses a glaring symptom of the inflationary treadmill. But if the treadmill remains the explicit national policy ("full employment"), BI will really just give us even more rope to hang ourselves. The sustainable answer is higher interest rates, so that frugal people can be rewarded for channeling discretionary spending towards paying off principle. But this would diminish our "service economy", which is all we have left after gutting domestic manufacturing.

I think what we're really witnessing is an erosion of money as a decentralized store of value, part of the general centralization of power enabled by digital communication networks.

[gnaritas]

> If everybody can spend twice as much on rent t

False presumption, BI will not enable everyone to spend twice as much on rent.

> BI will cause price inflation.

Unfounded.

> The sustainable answer is higher interest rates, so that frugal people can be rewarded for channeling discretionary spending towards paying off principle.

That doesn't remotely address the issue that BI attempts to solve, lack of available jobs for people due to the effects of automation.

[mindslight]

>> If everybody can spend twice as much on rent

> False presumption

It wasn't a presumption about BI, but a hypothetical framing of an example situation. Please give opposing viewpoints their due interpretation rather than looking for phrases to pick on out of context.

> Unfounded

Once again, this is what we're arguing about. You can't simply quote my conclusion without my supporting arguments and say it's unfounded.

> That doesn't remotely address the issue that BI attempts to solve, lack of available jobs for people due to the effects of automation.

I didn't expand on it, but my view actually does address this. If working people had been able to save money, then they would have had more economic bargaining power to demand higher wages and fewer working hours, gradually over the past few decades. As it stands, we could fix much of the employment issue by redefining "full time" to be 15 hours per week, getting rid of the exempt loophole, and changing overtime to double or triple pay. But this is such a drastic change (because the issue has been building so long), it seems quite ridiculous. But it's important to understand how we got to this point in order to know how to proceed, lest we choose another "quick fix" that actually just makes the situation even worse.

[gnaritas]

I don't think redefining full time to be so few hours would work in this country, nor actually solve the problem, it'd just make most people broke and forced to seek out multiple jobs to survive. Yes, money distribution can affect particular markets where the redistribution increases spending but that's not inflation, inflation is a general rise is all prices, not a rise in a particular sector and BI is a far better longer term solution to the real issue, that life doesn't need to be and long term cannot be dependent on the selling of labor in an age of automation. We need to move beyond the puritan work ethic to something more appropriate for the world that's coming.

[tmnvix]

> Housing asset prices are primarily constrained by the affordability of rent

In a low interest rate environment this is not really true. Speculative booms can and do occur (see Australia). During such booms the ratio of house prices to rents diverges significantly. It is rents that are constrained by wages - not house prices (people don't take out loans to pay rent like they do to buy houses).

[mindslight]

Sure, there are transient booms and busts. But as you imply, those are exceptions. Long term, apartment rents are constrained by wages and likewise monthly payments on mortgages are constrained by wages. Those monthly payments are directly related to interest rate and total asset price.

[AnimalMuppet]

Yes and no. Say I'm a billionaire (I wish). I've got all this money. It's not going into food and rent. (OK, a tiny amount is going into food, but I can only eat three meals a day. And "rent" is more likely buying multi-million-dollar homes.) My money's in investments, maybe some luxuries.

Now we go to BI. Now millions of what used to be my money are going to low-income people. They're spending it on food and rent. No, it's not new money, but it's new to the rent market in whatever city. Will that tend to drive rents up? I think so, yes.

[flukus]

The free market is a tool, a really good one, but just a tool. If it stops producing desirable outcomes then we can use other tools.

Most nations have government housing which serves not just to house the poorest but to put a cap on how much people in the next rung up of society are willing to pay for housing.

[sokoloff]

Absolutely. If I can find some inside track that UBI is coming, I'll be buying a lot of low-end rental property, hopefully before it runs up.

[blurbleblurble]

It's like a game of Monopoly where everyone gets more money, including the people who already have Board Walk and Park Place, etc. #WWJD? Flip the board over. Jubilee.

[sokoloff]

UBI doesn't have that property at all. UBI consciously, intentionally, and overtly transfers money from the net taxpayers to the net benefit receivers. (I support it, but it's absolutely an income transfer mechanism from the higher income to the lower income populations.)

The fact that the "rich" also receive $650/mo in UBI is completely swamped by the fact that they'll pay $30K/month or more in income tax to fund the program.

[gnaritas]

> It's like a game of Monopoly where everyone gets more money,

No it isn't, not even remotely.

[colefichter]

> basic income is actually just a continuation of the same inflationary alchemy

This comes up in every BI thread, and I can't wrap my head around it. All the sensible proposals seem geared so that if you have income from a job, most of the BI amount will be recouped from your taxes. So, for most people their purchasing power would go up only slightly or not at all.

Think about the extremes: if you make a comfortable income (say, at least 2x the median) your taxes should increase to recoup most or all of the BI subsidy, so your purchasing power doesn't change. If you choose to leave your job and live off the BI, your purchasing power goes down (drastically!) and you won't be in a position to inflate prices on much of anything.

At the other end, if your income is zero and you receive BI, your purchasing power goes up, but you still won't have a huge amount of money to throw around. And in the developed economies, at any rate, we suffer from over-production of basic needs stuff, so I don't think demand would exceed supply for basic things like flour, rice, toiletries, etc.

Analyzing the middle few percentiles of the income distribution is tougher, but for any scheme that increases taxes along with BI it's hard to see how it could possibly cause inflation to increase by more than a point or two.

[gnaritas]

BI won't increase average income, it'll simply redistribute income from the top down to the bottom so the average will stay the same. BI will reduce income for those at the top as their taxes will go up much more than they'll get back in BI. BI will increase income for those on the margin, not across the board, so the market rates simply can't go up across the board, BI isn't creating new money and thus won't cause general across the board inflation.

[blurbleblurble]

Ideally BI doesn't come from an inflated money supply, but if the money-holders refuse to pay taxes, where's it gonna come from? I have a feeling that unless the architects of BI can tack that point to the legislation, it's gonna be a glossed over in the dysfunctional halls of government. "The left" will take on more government debt out of necessity to keep society functioning, while dysfunctional elements of "the right" take on government debt seemingly out of contempt for big government...

[gnaritas]

BI can't just come from inflating the money supply, it wouldn't function if it were implemented that way. BI has to be funded by taxes, and money-holders can't refuse to pay, taxes don't work that way.

[blurbleblurble]

I agree ethically and in principle, but unfortunately that's not always how things actually go down.