It's the most lightweight, nonintrusive form of it. It doesn't require any but the most trivial exercise of judgement on the government's part to administrate.
That's only if you ignore the unseen, i.e. the broken window fallacy.
It becomes a tax on everyone else who is holding cash when we assume that the money supply will be inflated, which is the default scenario. Otherwise actual taxes will have to be levied to fund UBI.
If we accept that society has witnessed massive increases in productivity over the last hundred years, what happened to the 5 cent hamburgers? How does this price inflation help the impoverished?
When we create a monetary spigot and allocate resources via gov. intervention, those who specialize in currying favor with gov. will always benefit disproportionately. Ironically, proponents of further gov. intervention use this wealth inequality to rationalize further gov. allocation of resources.
> It becomes a tax on everyone else who is holding cash when we assume that the money supply will be inflated, which is the default scenario. Otherwise actual taxes will have to be levied to fund UBI.
Of course taxes would need to be levied to fund it, as with any other government expense. And setting the tax curve right is nontrivial. But a complex tax system and a simple disbursement system is still an improvement over a complex tax system and a complex disbursement system which is what we currently have. (Eliminating almost all tax deductions would also be a good programme to follow).
> If we accept that society has witnessed massive increases in productivity over the last hundred years, what happened to the 5 cent hamburgers? How does this price inflation help the impoverished?
So what you're saying is that in a non-UBI world, increases in productivity have not helped the poorest. How is that an argument against UBI?
> When we create a monetary spigot and allocate resources via gov. intervention, those who specialize in currying favor with gov. will always benefit disproportionately.
That's true in proportion to how complex the rules are. E.g. most TARP funding went to New York 1%ers, because those were the people who knew how to meet the TARP requirements. The whole point of UBI is to reverse that by having the simplest, most transparent rules possible for who gets what money.
What I am saying (sorry for not being explicit) is that increases in productivity have not helped the poorest because they have been robbed of said benefits by price inflation, which is a symptom of an inflation of the money supply.
>The whole point of UBI is to reverse that by having the simplest, most transparent rules possible for who gets what money
My expectation is that those who collect rent on low income housing will benefit more than those who pay the increased rent. At the end of the day low income people will have more money, but all of their expenses for basics like food and rent will increase.
>Of course taxes would need to be levied to fund it, as with any other government expense.
Recent history suggests that this is simply not the case. Budget deficits would be a more reasonable expectation. Either way, increased taxes will similarly create increased prices. Those with lesser incomes will suffer the most.
> increases in productivity have not helped the poorest because they have been robbed of said benefits by price inflation, which is a symptom of an inflation of the money supply.
Price inflation doesn't change how much real value exists is in the world. The problem the working poor have isn't inflation (if anything, inflation costs the rich more than the poor, since the rich are more likely to have savings), it's that they're taking home an ever smaller proportion of the value they produce.
> My expectation is that those who collect rent on low income housing will benefit more than those who pay the increased rent. At the end of the day low income people will have more money, but all of their expenses for basics like food and rent will increase.
Cheap food is a competitive, low-margin business, so it's unlikely that the cost would increase. (If you're thinking about labour costs going up, higher-end goods are generally much more labour-intensive than cheap goods). Housing markets are their own total mess, but if there's a lot less need for people to live near their job then that should make housing a lot more competitive and if anything lower prices.
> Recent history suggests that this is simply not the case. Budget deficits would be a more reasonable expectation.
It's not like governments don't already run the highest deficits they can get away with. The mechanisms that limit them (credit ratings etc.) will be the same mechanisms we currently have; introducing UBI doesn't change that one way or another.
> Either way, increased taxes will similarly create increased prices. Those with lesser incomes will suffer the most.
It's absurd to think that doubling the proportion of extant dollars in the hands of the working poor (at the expense of people on the high end) would make those people worse off. Price adjustments might blunt some of the effect, but wealth redistribution must ultimately work; why would the rich be so afraid of it otherwise?
>inflation costs the rich more than the poor, since the rich are more likely to have savings
The truly wealthy have a lower proportion of their savings in cash. They preserve their wealth in assets like stock or property which pays dividends and increases in value along with price inflation.
>Cheap food is a competitive, low-margin business, so it's unlikely that the cost would increase
The Federal Reserve cannot print more supply for consumers. When they increase the supply of money to chase the same supply of assets, the outcome is price inflation. Food and rent is a disproportionately larger expense for low income individuals.
>The mechanisms that limit them (credit ratings etc.)
These mechanisms are not limiting them from monetizing debts. Additionally, credit ratings organizations are subject to retaliation by sufficiently powerful governments.
>but wealth redistribution must ultimately work; why would the rich be so afraid of it otherwise?
I'm not sure it is fair to assume that 'the rich' want 'the poor' to be worse off. Producers create products which consumers want to consume, because they perceive it to benefit themselves. Finally, I'm not sure that the truly rich elites are opposed to UBI. Bloomberg has published the article and continues to push this narrative. If anything greater centralization favors elites. When asset prices increase those who have their savings in assets benefit the most. Again, the elites are not keeping their savings in cash.
> The truly wealthy have a lower proportion of their savings in cash. They preserve their wealth in assets like stock or property which pays dividends and increases in value along with price inflation.
I don't think that's really true. The middle class often have a negative proportion of their savings in dollar-denominated assets (their mortgage), and the poor usually have no relevant savings at all (compared to their expected future income).
> The Federal Reserve cannot print more supply for consumers. When they increase the supply of money to chase the same supply of assets, the outcome is price inflation. Food and rent is a disproportionately larger expense for low income individuals.
The food supply is far from fixed (and the government does have a number of levers with which to affect it). Food and rent are a disproportionately large expense for the poor because they are poor; if we redistribute wealth towards the poor we should expect it to become a proportionately smaller expense for them. Demand for food will only actually increase if people are currently not getting as much food as they want, and in that case we should want prices to increase so that more food supply comes online.
> These mechanisms are not limiting them from monetizing debts. Additionally, credit ratings organizations are subject to retaliation by sufficiently powerful governments.
Be that as it may, all of that is happening anyway. UBI doesn't change the deficit because the deficit will always be as high as politically possible.
This assumes that the prices for all of the inputs for food production remain static in the face of either increasing taxes or as we both seem to agree upon, an increased monetary base. Land and energy will go up in price as more money is available to chase the same scarce resources. Similarly taxes would increase production costs.
>UBI doesn't change the deficit because the deficit will always be as high as politically possible.
More spending won't increase deficits because they're going to spend anyways? I'm not sure I follow your logic here.
It is true that price inflation helps debtors. Those who have homes have their debts minimized while their asset increases in price. Lately it seems that we have been incentivizing this behavior, rewarding those who borrow and punishing those who save in cash. I'm not sure how this helps low income individuals. Especially those who are trying to build savings for their first home.
>Food and rent are a disproportionately large expense for the poor because they are poor; if we redistribute wealth towards the poor we should expect it to become a proportionately smaller expense for them
And they will still be poor relative to everyone else. What is needed is not a money printer to merely print more paper and distribute it into the economy, but a similarly effortless method to print supply into the economy like a Star-Trek replicator.
> This assumes that the prices for all of the inputs for food production remain static in the face of either increasing taxes or as we both seem to agree upon, an increased monetary base. Land and energy will go up in price as more money is available to chase the same scarce resources.
You're conflating different kinds of thing here. I don't believe there would be any increased monetary base, because I expect UBI would be implemented in a budget-neutral way (covered by tax). But if you do think there would be monetary inflation, just ignore the cash numbers and denominate everything in 2020 (fixed-value) dollars. There are no more fixed-value dollars chasing resources (just the same number of fixed-value dollars distributed differently), so there's no increased demand at first order. At second order maybe those same fixed-value dollars circulate more quickly, so there's more demand and more consumption, a more active economy generally and higher GDP (in fixed-value dollars). That would generally be seen as a good thing.
> More spending won't increase deficits because they're going to spend anyways? I'm not sure I follow your logic here.
The political reality of passing UBI would be finding some way to balance (or retain the same unbalance in) the budget, either by cutting other expenditures or raising additional revenue.
> And they will still be poor relative to everyone else.
They will be less poor relatively, that's the whole point. If A has 100 dollars and B has 10 dollars, and you give 10 dollars to B, it's almost irrelevant whether those are dollars you taxed from A or printed afresh; either way you leave B proportionately much better off.
>The political reality of passing UBI would be finding some way to balance (or retain the same unbalance in) the budget, either by cutting other expenditures or raising additional revenue.
Yet somehow, the deficits keep increasing year by year. Even so, increased taxes on producers would result in increased prices for consumers. There's no free lunch.
>If A has 100 dollars and B has 10 dollars, and you give 10 dollars to B...
When B, who has a history of mismanaging his finances continues to do so, A will end up with this money. Even UBI proponents make the case that this is 'trickle up' economics. Additionally B may be buying things like gasoline with this money whereas A would have just parked it on the stock market, which wouldn't have the same impact on consumer prices.
> Yet somehow, the deficits keep increasing year by year.
The deficits follow a pretty steady trajectory regardless of which policies pass in any given year; a year in which UBI passed would be no exception.
> Even so, increased taxes on producers would result in increased prices for consumers. There's no free lunch.
Redistributive taxation is possible. The shape of the income tax curve doesn't affect production or prices (at least at first order): what changes is whose pockets the production goes into.
> Additionally B may be buying things like gasoline with this money whereas A would have just parked it on the stock market, which wouldn't have the same impact on consumer prices.
Parking it on the stock market has the same kind of impact, just on the cost of investment returns rather than on the cost of gasoline. (Hence why investment returns are so low). Buying future goods and services (by investing) isn't fundamentally different from buying other kinds of stuff.
Let's look at how consumption affects prices. There are two scenarios:
a) B wants gasoline to do something useful with. In which case, the value produced by using that gasoline is (generally) higher than the cost of the gasoline, gas prices go up because the economy as a whole goes up, more gas is produced because the higher prices justify more difficult kinds of oil drilling and so on. This is a positive case for everyone, even if higher gas prices might sound bad in isolation.
b) B wants gasoline to play around with; prices go up but the rest of the economy doesn't. This is the negative case.
Basic necessities like food and housing are, almost by definition, things that people buy for productive purposes rather than for unproductive consumption. Food prices don't go up if we redistribute food consumption; food prices only go up if overall food consumption increases. But food consumption is only going to increase if there are people who want more food but are holding back because they can't afford it - and in that case we should definitely want those people to be able to buy more food, even if that means increased food prices (and food prices should go up, to stimulate more food production, because clearly we weren't producing enough food to start with).
We can imagine a shift between different kinds of productive use. For example, maybe in a UBI world there is less demand for luxury cars and more demand for basic cars. But in that case prices should only shift a little: the car market is efficient and competitive (i.e. cars are a commodity), luxury carmakers can retool towards producing more basic cars.
Equally, we can imagine a shift between different kinds of unproductive consumption. Maybe fewer people want to watch opera and more people want to watch pop concerts. But again those are more or less commodity industries; as long as the cost is stable-ish, changing demand is going to mean slightly higher/lower prices and production will change to match, but the nature of a commodity business is that every company in every one is making more or less the same (low) level of profit.
What really matters is when and how the use of real value shifts between productive use and unproductive consumption. I'd expect that the rich use a much greater proportion of their income unproductively (looking at the big picture: e.g. maybe they put it in an investment that becomes their child's trust fund, but is ultimately spent on partying) than the poor. Certainly it's hard to imagine that rich people are often being held back from doing things that would be more productive for the overall economy because they can't afford to, whereas it's easy to think of cases where that happens for poor people: can't afford to take a better job because they can't afford to move, losing their job because they can't afford gas, performing poorly at work because they couldn't afford to eat enough, etc. Investment is currently a pretty unproductive use of value (as seen by how low investment returns are), because the economy already has more than enough investment in to pursue all the actually productive projects it can think of. And surely rich people spend more on consumption in the most direct common-sense form - decorations, entertainment and the like - but hit diminishing returns; wouldn't poor people get much more (aggregate) joy out of the same (overall) expenditure?
I guess if you think rich people are living frugally and putting all of their money into productive investments, then you could think that poor people spend a greater proportion of their income on wasteful consumption. But I find it very hard to imagine that that would be true in terms of the overall averages.
