[coroxout]

In addition to the contradictions already highlighted by many posters, I don't like the way the only economist they've quoted is Patrick Minford.

Not because he says UBI won't work (I'm on the fence about this, because I'd love it to work, but I don't see how you can stop it triggering inflation to the point that the UBI sum becomes useless to live on - but I'm no economist), but because he's really quite far out of the mainstream of economists and it's as if they've picked him solely because he's the only big name pro-Brexit economist - and I'm sick of the BBC dragging pro-Brexit commentators on to speak unopposed regardless of whether they know anything about the subject or how out-there their views are.

Some prior references on Minford: http://www.huffingtonpost.co.uk/entry/brexit-minford-economi... https://www.economist.com/news/britain/21727078-patrick-minf...

[crdoconnor]

>I don't see how you can stop it triggering inflation to the point that the UBI sum becomes useless to live on

It will trigger inflation not only because there will be more money chasing the same goods, but also because wages will rise (if UBI is enough people now have fuck you money) which will have knock on effects on the price of goods up the value chain.

However, the idea that it necessarily has to trigger inflation to the point that the UBI sum is not enough to live on is wrongheaded.

First of all, it might never be set at a level that is enough to live on. E.g., typically when a Silicon Valley billionaire talks about UBI they almost always mean "take all welfare and redistribute it to everybody in the country". That will do jack shit - it will neither raise inflation nor give anybody enough to live on. If it were set at a level that was enough to live on it would hurt - for them. They'll fight that (I dont think people realize that this means that the political support for "real" BI is really very low).

Secondly, rich countries with rich economies would be very likely capable of absorbing the economic shock of everybody having fuck you money - economically I'd do more or less the same thing I do now (write software) if I had fuck you money and I'll bet most other people would too. People aren't going to sit on the couch and vegetate. They will largely still want to build, to be useful and to contribute to society - but hey, iPhones might cost $1,400. Meh.

[imtringued]

The "inflation" also primarily happens at the bottom of the market which decreases inequality.

A a poor person earning 10k a year gets 10k. total: 20k A rich person earning 100k a year gets 10k. total: 110k

Inequality has shrunk from 10x to 5.5x. That's a massive improvement.

[crdoconnor]

I don't doubt that inequality would go down and that that would be a good thing.

It would be difficult to ascertain exactly where the inflationary impact would hit though - there are way too many variables to account for - aggregate housebuilding, inflows of foreign capital, desirability of UK as a place to park capital and live, availability of arable land, potential future availability of oil, etc.

All you could really say is that it would be inflationary. Not how much, not where.

If it were to be brought in it should be brought in at a low level with automatic increases until it's enough to live on. If the inflationary impact is too much for the electorate to bear they ought to be able to vote it down.

[frgtpsswrdlame]

About inflation - cash transfers are going to trigger inflation, the question is does a UBI raise inflation enough to erode the UBI itself? There's basically no evidence that a cash transfer program like that is going to raise inflation enough to erode it. Here's a study I found this study, it talks about price effects of cash give-away, they're existent but marginal.

https://www.povertyactionlab.org/sites/default/files/publica...

[coroxout]

Thank you for the study.

That's exactly my worry: not that it causes inflation, but that if everyone is given a sum to cover the cost of accommodation then accommodation prices will just get pushed up to beyond the reach of UBI. As I say, I like the idea of UBI a lot, so will be very glad if that doesn't happen, and interested to read (later on) this and any other studies on this topic!

[frgtpsswrdlame]

Think about it this way: from the perspective of inflation increases it doesn't matter whether people are getting money from the private sector or public. If inflation always worked to offset increases in income then society would never become better off. Obviously this isn't the case so inflation must be less than perfectly offsetting, how much less can still be disputed though.

[pjc50]

Note that the UK already has a system of housing benefit which covers (most of) the cost of accomodation for people on low incomes. That may be a separate issue.

[MagnumOpus]

Housing benefits would have to be eliminated to make UBI viable cost-wise -- and indeed that is one of the biggest reasons why UBI or negative income tax as a replacement to benefits is politically unpopular.

While UBI would be more efficient (everybody gets a minimum amount of money that they can use towards housing or whatever else), that would mean HUGE losses among the welfare recipients in expensive places -- in London, housing benefit (LHA) can amount to $18k a year for a small family or $30k a year for a big one, and UBI will not fully replace that. The laments about social cleansing will be loud.

[bitL]

> triggering inflation

That's something I don't get either. But maybe thinking is that it would induce some needed inflation in deflationary times?

[dTal]

It only triggers inflation if the money supply goes up. If you pay for UBI with taxes, it has no effect on inflation.

In theory.

The problem is that this amounts to taxing the super-rich to a much greater extent than we do now. The super-rich tend to hoard their money (that's part of the problem!) so even if you manage to do that successfully, you do end probably end up increasing the effective money supply. But not to the extent that the income becomes worthless.

[collyw]

How about just creating money and giving the same amount to everyone?

It would have the effect that the value of each individual dollar would go down to a small extent, but everyone would have say 10,000 dollars extra. The effect would be negative for the rich, but positive for the poor.

Quantitative easing seemed similar, but the money was given to the banks who just kept asset prices high - not great for the poor but good for the rich.

Anyone want to "explain it like I am 5" to to why thats such a bad idea?

[OscarCunningham]

During QE they didn't just give the money to the banks, they bought stuff from the banks. This introduced new money into the system without being unduly unfair (although by the nature of buying a lot of things at once the price was lower than it would otherwise have been).

This means that when the BoE wants to contract the money suply (as it's doing now) it has assets to sell off.

If it printed money and then gave it away then it would be in a sticky situation if it wanted to shrink the money supply again.

Also producing that much extra cash every year would produce a high rate of inflation. This would have very weird effects and would probably be highly unpleasant for everyone.

[collyw]

I don't really see it as especially fair. I had done my calculations and worked out that a house price correction was well overdue. Instead my taxpayer money was used to keep the prices artificially high, while the bankers kept their huge bonuses and I got next to no interest on the money II had saved for a deposit. How exactly was that fair?

I agree that it would probably cause innflation, but why not just repeat every ten years? As I say it would devalue money for everyone. It would also give a lump some to everyone. That is going to be positive for the people who need it the most and worst for the people that need it the least.

[rayiner]

You don’t need to tax the rich more. The US could pay for UBI by raising taxes to the level of Germany. It could do that by simply adopting German tax rates, which don’t really tax the rich more but tax the middle class a lot more.

[playworker]

It's an illogical argument though - the concept of true UBI, not the thing cited in the article, is that everyone receives the living wage and can afford basics like food and housing. If everyone being able to afford food and housing changes the rate of inflation, then that's an acceptable side-effect of ending poverty, it's certainly not something to be feared or cited as an argument against UBI :)

[mseebach]

There's a special case on housing expenses. There aren't enough housing units in many areas for everybody who wants to live in those areas. So, the price goes up, and this acts a as a crude filter for how bad you want to live in an area. There is no rate of UBI that will cover housing expenses in such an area -- the rent will always be what everybody can afford + n, where n is large enough that only enough people who can fit can afford it. This dynamic is basically inflation. Increasing supply or redirecting demand is the only way to lower n. n can also manifest itself as a waiting list.

(This is not, by the way, a normative statement, it's merely descriptive)

This inflationary pressure probably won't apply to food, because the supply of food is a lot more elastic than the supply of housing. That more people can afford better probably means that more good food gets sold, and perhaps some scarcer foods might come under pressure, but the supply, and thus price, of things like rice and carrots is unlikely to go up.

[crdoconnor]

>There's a special case on housing expenses. There aren't enough housing units in many areas for everybody who wants to live in those areas. So, the price goes up, and this acts a as a crude filter for how bad you want to live in an area. There is no rate of UBI that will cover housing expenses in such an area

No, but UBI would enable people to move out of that area to areas with cheaper housing and fewer jobs.

I can imagine quite a number of economic migrants from the North of England who currently live in London would decide to return home and live closer to family in cheaper locales if their overall economic situation was a bit more secure.

That would, in turn, put relieve pressure on the housing market in London and provide some economic stimulus for more deprived areas.

>This inflationary pressure probably won't apply to food, because the supply of food is a lot more elastic than the supply of housing. That more people can afford better probably means that more good food gets sold, and perhaps some scarcer foods might come under pressure, but the supply, and thus price, of things like rice and carrots is unlikely to go up.

I think the price of organic carrots and rice would probably go up a lot. Their supply isn't particularly elastic (and is constrained by access to cheap labor... whose price would go up under UBI). If you give poor people more money one of the first things they will do is try and buy better quality food.

McDonalds would probably take a hit and would likely have to shake their image up to attract clientele in much the same way they did in Australia (where, thanks to a high minimum wage, people at the lower end of the economic spectrum have a higher disposable income): https://www.businessinsider.com.au/mcdonalds-in-australia-vs...

[nothrabannosir]

The argument (which I don’t necessarily subscribe to, but I too, am no economist) would be that the inflation leapt by such bounds that it directly cancelled out the entire UBI grant.

If that happens, then UBI is pointless.

[richardwhiuk]

I think describing what happens to inflation is very, very difficult, because it's difficult to predict what happens to wages.

At a guess, low/medium skilled labour becomes more expensive, because it's no longer required for subsistence, so the labour becomes more about luxury goods, than basic living costs