this post was submitted on 04 Jun 2023
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[–] Tretiak@lemmy.ml 4 points 1 year ago (9 children)

UBI isn't likely going to work out in the long-term.

UBI would 'inflate' the economy, it wouldn't grow it. Growth (i.e. 'productivity') is more stuff being made. There’s no reasonable argument that the physical quantity of goods/services would increase. In every reasonable scenario, UBI gets inflated away through the supply-side of the production curve.

If your landlord knows you’re getting an extra, say, $5,000 per year in UBI, do you really think your rent isn’t going up? Do you really think AT&T isn’t going to increase the cost of your cell phone bill? Do you really think food is going to magically stay the same price? Gasoline? Clothes? Restaurant prices? And you can continue all the way down the line.

UBI is essentially a transfer mechanism from [insert how it’s funded] to the sector of the economy that produces goods and services to lower income people. In the case of UBI being funded through a VAT, it’s just a closed loop. The people that 'don't' benefit are the lower income people. If you remember Yang's Presidential bid, even he couldn’t address this. When he was asked directly about it, he just handwaved it away, despite the fact that was a glaring hole in the dead center of his keystone policy piece.

Remember your supply and demand curves from Econ 101? Giving everyone $1,000 a month increases demand for just about everything, with a weight towards the people who spend most all of that $1,000. Whether or not prices go up is a function of the ability of supply to respond. Imagine a world where there are only 2 items: potato chips and your apartment. There are a 'ton' of varieties of potato chips, and you can always choose to just not buy potato chips. Your apartment on the other hand, is mandatory and you have to incur a significant cost to move (e.g. it costs money to get a truck, plus you will have to move further from work, and you might have to move to a different apartment, you get the gist).

The potato chip company probably can't really raise prices you'll just switch brands costlessly. or you'll just not buy chips. Your apartment on the other hand is different. I'm not saying your landlord would raise your rent $1,000 instantly, that's not how that works. Instead, he'd bleed you out. Your rent would go up $250, which you'd be pissed about but you'd pay because you still have $750 from UBI. Next year it's going up $300, which you'd be pissed about but you'd pay because you still have $400 from UBI and so on until you get pissed enough to actually move. Now you are going to move to a cheaper apartment, but you have to remember that someone else, before UBI started, was paying a lot less than your 'new' rent post UBI. In other words, the landlord's captured it. Notably, this is exactly what we saw with real estate prices as women entered the workforce. It takes about ~10 years or so, but a huge chunk of the extra income went into real estate. Its hard to imagine how UBI would be any different.

[–] howrar@lemmy.ml 1 points 1 year ago (1 children)

I would expect this to happen if you just give everyone UBI with no changes anywhere else, but that wouldn't make any sense. Why do we not consider a setup where we set UBI to X, then reduce everyone's wages by X?

[–] redtea@lemmygrad.ml 2 points 1 year ago

Would reducing wages by X be as effective as reducing 'passive' income from assets (by a proportion of X) or by imposing a wealth cap?

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