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by bo1024 1552 days ago
The theory is just supply and demand, which is how prices are determined in a competitive market. If you give everyone $20k, would you expect grocery stores to raise the price of bananas to $20/lb? Probably not, since people can just go to the grocery store down the street. Now if everyone suddenly wanted to buy more bananas with their new cash that would have an effect, but that’s how markets are supposed to work.

In practice it probably depends on a lot of factors and would need empirical studies.
2 comments
listenallyall 1552 days ago
Who would supply these bananas? After receiving $20,000, do you think the farmer's laborers will go to work the next day for the same wage as before? The trucker? The grocery store cashier? Will the "grocery store down the street" be immune to the higher labor costs?
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account42 1552 days ago
The gocery worker and trucker will have a better bargaining position, yes. On the other hand, they can also affort to take a lower pay because their basic needs are already covered and any additional income can be spent on luxory. So yeah they will demand better working conditions and goods will increase somewhat in price - but there is no reason to expect that this will be proportionally to the UBI amount.
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webstrand 1552 days ago
Why wouldn't rent just increase to capture this new income for most people? If UBI is high enough to afford mortgage payments on an owned house, housing prices will skyrocket (even more than now) until those receiving the UBI are priced out of the market once again. Because once the mortgage is paid off, the value of the property is expected to grow, and that's a bet lots of people are taking, even now in this crazy market.
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listenallyall 1552 days ago
> Why wouldn't rent just increase to capture this new income for most people?

Of course it would. It's happening right now.

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seanmcdirmid 1552 days ago
We could do what they do in Japan and deprecate housing as it ages. Very few people buy second hand properties, so a house is a liability that needs to be demolished vs land without one. It also helps if no one believes in property speculation because of a huge property bubble that burst in the 80s.
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ethanbond 1552 days ago
You could institute a high LVT and get all the same mechanics without any of the enforcement overhead.
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