[_heimdall]

UBI will almost certainly fail to cover the necessities unless we have Marx-style price controls.

When everyone in the economy has a minimum of say $3,000 per month the cost of necessities, and everything else, will go up roughly in line with that.

[dataflow]

I wasn't here to take a stance on UBI or argue over its practicalities, I was just explaining the intended outcome was not what the parent believed it to be.

But fine, I'll bite.

> will go up roughly in line with that

Could you at least explain the logic that you believe implies this would occur with such certainty? I've thought about this before and I couldn't see this as a necessary outcome, though (depending on various factors) I do see it as a possible one.

[rank0]

> Could you at least explain the logic that you believe implies this would occur with such certainty?

Because we haven’t actually created anything. Supply is the same, demand is WAY up.

[dataflow]

That doesn't follow. It's a reason to believe prices will increase, not that prices will increase roughly in line with the income increase. This distinction is not a minor detail, it's pretty crucial. If you give people $3k and the prices go up by $2k... that's a very different scenario from one where the prices go up by $3k.

[rank0]

It should all even out in the long run.

As long as we’re in a deficit, spending for this program would directly increase the money supply. Of course there are other factors like velocity of money and elasticity of good/services but at the end of the day we’re increasing the amount of money (aka cash + credit) with no change to supply AND we’re going into debt to do it.

[_heimdall]

Capitalism is based on, among other things, an expectation that free markets are pretty good at balancing out in the long run. If demand goes up only because access to money goes up, prices will rise.

Any increase in supply over time will eat up some of that price fluctuation, but for most products prices are more flexible than supply and a majority share of any capital increase will go towards prices rather than supply.

[dataflow]

> a majority share of any capital increase will go towards prices rather than supply

You actually made my point, I think: that the price increase need not necessarily be "roughly in line with that", but could be less.

This distinction is absolutely critical. Like I said in [1], if you put $3k in my pocket, and my expenses increase by $2k, that's a very different situation from if my expenses grow by $3k. It would mean there is a reachable equilibrium.

[1] https://news.ycombinator.com/item?id=43430867

[_heimdall]

When I said "in line" I didn't mean 1:1 or 100%. I may have picked a bad phrase there, I was intending to say that there would be a strong correlation between the two and that a majority of the extra Monet would go towards price increases.

I forget the general rule when it comes to companies, but there's a general percentage that is often how much a price increase on a company is passed on to consumers. If a company's tax rate goes up by 10% something like 8% of that is passed on to the consumer through price increases. I'd expect something similar with a UBI.

[dataflow]

> When I said "in line" I didn't mean 1:1 or 100%. I may have picked a bad phrase there, I was intending to say that there would be a strong correlation between the two and that a majority of the extra Monet would go towards price increases.

If so, then explain how you're making the jump from "prices increase some" to "you would need Marx style price controls" or "otherwise UBI will fail to cover the necessities"? If you give me $X and I spend $X * r of it due to price increases, and r < 1, then don't I have (1 - r) * $X left in my pocket, meaning it could be made large enough to cover the basic necessities? This isn't complicated math.

I don't get why "prices increase" is seen as such a mic-drop phrase that shows the system would fall apart. Prices already increase for all sorts of reasons, it's not like the economy falls apart every time or we somehow add Marx style price controls every time. Sure, prices increase some here too. And then what? The sky falls?

[_heimdall]

Price increases as a mic drop in my opinion and I don't mean to use it that way. As far as I can tell its just an inevitability with anything like a UBI.

With regards to my claim that we'd need strong price controls, a UBI needs prices to the basics to remain stable. I won't go down the road of trying to define what "the basics" are here, that's a huge rabbit hole so let's just leave it at the broad category in general.

If everyone can afford the basics, there is more demand for those items. Supply will likely increase eventually and eat up part of the demand increase, but the rest goes to prices. When those prices go up, the UBI would have to increase to match. The whole cycle would go on in a loop unless there's some lever for the government to control the prices of anything deemed a basic necessity.

[galaxyLogic]

Governments already provide "free income" in the form of free or subsidized services.

Say you have a fire-department even though you personally might not be paying anything for it because you are so poor that you don't pay any taxes. You have police protecting you and the army. You have free primary school at least.

So I think the question is, would it help for the government to provide more, or less, or the same amount of free services as it does currently?

Would it "increase prices" if healthcare was free? Not necessarily I think. At least not the price of healthcare. Government would be in a much better position to negotiate drug-prices with pharmaceutical companies, than individuals are.

[_heimdall]

If you have a government that runs a balanced budget, those services aren't free.

> Would it "increase prices" if healthcare was free?

That depends, who's ultimately footing the bill? If its paid for with taxes on businesses, yes most of that would be passed on to consumers in the form of price increases. If its paid for by consumer taxes, ultimately you will find consumers demanding higher wages and prices would again go up. If its paid for with tariffs, well we'll fins out soon but prices should go up there as well.

[galaxyLogic]

> those services aren't free.

They are free for poor people. For instance, basic education must be free, so we can have a productive work-force that can read and write and pay taxes in the future, which will make us even richer.

[LinXitoW]

In a UBI situation demand would shift, not just go up. If there's two hypothetical people paying the tax, a very rich person (>300.000 a year) and a poor person (<50.000 a yr), money effectively shifts from the rich person to the poor person (at least the majority). The poor person will have very different demands than the rich person.

Finally, we already do price controls and subsidies in many places, like food production. It's just that a big part of the advantage is soaked up by big companies.

[_heimdall]

Right, so prices for items the rich people want would fall and prices for items everyone else wants would go up.

[LinXitoW]

We already have "Marx-style" price control and regulations in many sectors, specifically food production. It's just that the advantages are arbitraged away by corporations using cheap corn to create highly addictive foods, and lobbying and marketing with the resultant profits.

But I also disagree with your assertion. Minimum wage increases are a great example. Opponents will constantly claim they will lead to massively increasing prices, but they never do. Moreover, a higher standard of employment rights and payment in first world countries like Norway doesn't seem to correlate well with higher Big Mac prices.

[_heimdall]

> We already have "Marx-style" price control and regulations in many sectors, specifically food production.

And our food quality in the US is garbage. We can't say if there is causation there since we can't compare against a baseline US food system without subsidies, but there is a correlation in timing between the increase in food subsidies and the decrease in quality.

> Opponents will constantly claim they will lead to massively increasing prices, but they never do.

The only times that really comes up is when an increase is proposed and the whole debate is over politicized. Claims on both sides at those times are going to be exaggerated.

Prices absolutely go up with minimum wage increases. How could they not? It'd be totally reasonable to argue the timeline that matters, prices aren't going to go up immediately. You could also argue the ratio, maybe wage is increased by 30% and prices are only expected to go up by 20%.

People earning a minimum wage almost certainly have pent up demand, they would buy more if they could afford it. Increasing their wages opens that door a bit, they will spend more which means demand, and prices, will go up in response.

[orangecat]

You could also argue the ratio, maybe wage is increased by 30% and prices are only expected to go up by 20%.

And the point is that the income percentage increase is higher for those with lower incomes. Even if prices go up by 20%, somebody making $20k/year who gets an additional $10k from UBI is going to be much better off.

[paulddraper]

Case study: COVID

[winkeltripel]

That isn't a test of anything, since we've not isolated a single policy change; many things changed everywhere all over the world all at once.

[almosthere]

Yes, I think there was a few things going on with covid, most of all the fact that shipping got halted for a year and we're still unwinding the damage from that (although, mostly smooth now).

[nmz]

And yet we have christmas, with its very own christmas bonus.