UBI is implemented tomorrow. Every citizen gets $1000 per month.
Landlord now knows you have an extra $1000 that you never had before. Why wouldn’t the landlord raise prices?
Now you have an extra $1000 a month and instead of eating rice and beans for a few meals you go out to a restaurant. The restaurant owners know everyone is eating out more so why not raise prices and maximize shareholder profit as always. The restaurant/corporation is on TV saying, “well, demand increased and it is a simple Economic principle that prices had to increase. There’s nothing we can do about it”.
Your state/country has toll roads. The state needs money for its deficit. UBI is implemented and the state/country sees it as the perfect time to incrementally raise toll prices.
Next thing you know UBI is effectively gone because everything costs more and billionaires keep hitting higher and higher all time net worth records.
Many countries aren’t that far from UBI. When you add all the welfare programs, People alrcadx get money When not working or When notgettimg a fair wage (yeah wage are so low that in today’s economy minimal wages workers alrcadx need some welfare benefits tolive)
UBI is about generalizing it and making it a livable amont. This would be a taxable income, it would allow working class to work less (letting works for others) whiletaxes won’t let the rich get tricher zithouthaving to work
Some would but then immediately lose the competitive edge to those that don’t, and there’s enough of them that some will break ranks even if they tried to form a trust over it
This is a problem due to monopolies. Any industry that is a monopoly should be nationalized or very heavily regulated.
I find it is a systems-question, not a political-question,
and I think the correct answer is to have a publically-owned portion of any market, be public/not-for-profit, as a means of enforcing honesty/integrity into that market.
IOW, you don’t nationalize every damn thing, because institutional-mentality is every bit as evil as corporatism-psychopathy-machiavellianism, only different in style…
( anyone who isn’t understanding that … hasn’t tried living & working among it, either in Washington DC or in Canada’s Ottawa, or in whatever England’s equiv, the EU’s equiv, etc. )
you instead make certain that a portion of the oil industry is national, a portion of the (whatever) industry is national, etc, and if there is huge discrepancy between the nationalized-portion & the private-portion, then you go in with criminal-investigators, after the C-suites of the corporations used to gaming the country’s economy.
Putting 3 barracuda in the fish-farm-pen, in order to make all the survivors in the pen be fit is a related concept: same principle, different domain.
You put some not-for-profit operation into the functionally-cartel-domains, & you use those “barracuda” to force integrity into those specific domains.
Do it strategically, not just reactively ( comms, transport, energy, food, journalism, etc )
I mean, if demand for restaurants goes up, wouldn’t there just be more restaurants opening up?
I agree with the landlord thing though, cause landlords are generally dicks. Maybe if local governments imposed more rent caps.
Real estate isn’t that simple. Way too many layers of work and bureaucracy between wanting to build something and making it happen even when you have the cash to make it so. Many of these layers are essential, others like nimby idiots are not. We need more housing for people and it would take a huge increase in available housing to have any negligible effect on any one individuals house/property value.
As for restaurants. It’s also not that simple. Most restaurants fail in the first year or two. You have to figure out what type of food is in demand and then maybe be willing and able to shift to something else if the market gets oversaturated.
Are landlords holding off on increasing rent because people’s incomes are not going up?
No?
Maybe rent isn’t tied to average income!
Yeah at this point rent is just a made up number to keep a landlord happy.
That’s the first part, but you have to keep going deeper to see how that leads to inflation.
If you open more restaurants, the market has more jobs for staffing. If the market has more jobs for staffing, then some businesses will increase pay to lure the better talent to their business. If businesses increase pay, then that can often get passed down to the customer.
San Francisco’s tech market was a good example of this theory in action.
Who opens them up exactly? And that person who invests in a restaurant will leave some other job resulting in that much less product being built this something rises in price somewhere.
Rent caps just result in less people or corporations investing in rental properties. If you are alread have 90 houses and 100 people want to rent, how does caps encourage more houses?
At the end of the day the only thing that matters is how productive we are in total. Anything that is scarce will be high in price and if you mandate a lower price, then some people will simply not have shelter if you want to use that example.
They probably would. As the value of a dollar drops disproportionate to the value of goods/services, the cost in dollars for the same good/service goes up.
Hot take here and I would love discussion- but this is a small reason why I am against a full UBI in cash, but want UBI in voucher form with only a small portion in cash. Vouchers limit potential inflation spill over from sectors and you can now control how much people are getting depending on factors to better and more fairly suit their situations. This is also why I am a huge fan of “food stamps” or food welfare programs. This is essentialy what they are doing already, just make it universal. Then we look at things like housing vouchers, another great program that we can now just scale up and make universal as well. Then you only need to give a smaller cash handout for incidental spending. You know people are going to have to spend money on housing and food, so make those the priorities for funding vouchers and you can put rules in place to minimize inflation within those industries. Then if you have people who are well of enough to not need the full voucher, let them convert the voucher over to cash at a penalty rate, say 2 to 1 for cash, or some progressive scale for remaining money. They don’t need the money as much, but you also don’t want them to be completely left out unfairly and have them resentful of the system. This could even expand into other industries or normal costs. Transportation, cable/internet, cell service, even some insurance (like car, rental, umbrella- assuming that if you are at a level of providing UBI, you are already providing universal health care). Now for each voucher you can make it needs and situation based and evaluate a fair amount for each person through an automated system depending on some quick metrics of their life. Each voucher system is also industry specific with its own oversight and regulations and inflation reductions built into it. I think it would be a better system and am open to others thoughts.
In your hypothetical, the market just jumping in cost like that creates opportunity for competition in the market. Because everyone who could not establish a biz charging X can get into the game charging between X amd X+Y, undercutting the gougers and driving prices lower over time. Theoretically.
Which is why capitalism only works if it’s paired with strong anti-monopoly regulations.
In the current environment, damn near every good and service is cornered by a small number of companies, sometimes only one. So while all restaurant prices probably won’t go up, all vehicle prices will.
Hell, with this whole “inflation” bullshit we’ve seen that the entire economy is happy to influence public opinion to allow for an orgy of price hiking. Not necessarily in a coordinated way, but not not in a coordinated way.
You’d increase taxes along with UBI, so most middle class people would end up neutral (or slightly positive). You can’t just dump tons of money into the economy without turning other dials to keep it stable.
A wealth tax would essentially be redirecting money from the top 1% and guarantee a stable monetary floor for everyone.
Probably there’s a dozen other changes, along with bankruptcy protections, interest rates, and anti scam protection would also need to be implemented.
You identified an obvious problem, which has been considered by intelligent UBI advocates that have studied this for a long time.
Don’t forget price controls (including rent control), strong anti-collusion legislation and strong antitrust.
I think this is kind of the big problem with the messaging. I know plenty of economists say it would work, but it’s non-intuitive to most of us.
Do people understand that rent and other necessity prices are skyrocketing right now without income increasing? They are not intertwined in the way the myth of raising rent to match UBI is presented.
Rents are skyrocketing because demand is high and we literally do not have enough housing for the number of people we have in the places they live.
Suddenly dumping more money into the economy would just increase the price bar on that demand, and prices would go up more.
Prices can increase for a lot of reasons, and going up from one doesn’t stop them from going up from another.
This seems like it’s the only way it would work.
Everyone gets a certain amount a month.
You get taxed a certain amount back depending how much you make above some threshold. The average wage could be good.
So now the high earners are funding the system. But if they get sick and can’t work the tax goes away but they’re still getting that base payment automatically.
Low earners get help and high earners get a safety net.
I have found that economy experts say that things are counterintuitive more often that any other field. I think at this point I have just accepted that the economy is some black magic that I’ll never understand. So I’m gonna smile, nod, and let the experts do their thing.
Ah yes, economy experts. The ones who can’t solve any single economic problem and who can’t predict a single crisis. Very useful people.
Economics is just psychology masquerading as a hard science
Well, you could blame that on the fact that economy experts don’t have the power to do any of those things. Politicians do.
I’d like to see any income above 2k / month get redistributed globally.
Where do you live that 24k/yr is a livable wage?
Untaxed maybe?
Huh? Does that mean $2k/month is your cap for what anyone should ever need/want? It just seems incredibly low to me so I’m confused.
People are focusing too much on your number, and too little on your take.
I think that a strong progressive tax works better than just two brackets (no taxation vs. full taxation). Specially when coupled with universal basic income - the idea is to eat the rich, not the slightly less poorer, on those you just nibble.
There will be some changes in prices, but I don’t think it is going to even out to everyone ending up even.
You’ll probably see some inelastic demand goods increase in cost, but I don’t see that taking up the whole paycheck.
If anything, I think the largest impact will be the unskilled labor market, as the threat of starvation will no longer be as real.
Any UBI system worth it’s salt wouldn’t be providing a flat amount, it should be based on regional cost of living. So if prices all went up, UBI would have to go up as well.
Or deliver the UBI as a basket of subsidized services and goods.
If, for example, we chose socialized medicine instead of a $5000/year UBI, a landlord can’t very well say “Your rent is going up 30 tablets of lisinopril this month.”
Quite the opposite. A UBI will flatten differences in cost of living across different regions.
I don’t know how this answers the question, though.
I’m a landlord in city 1, UBI there is 100/mo. I jack my rental prices by 50.
I’m a landlord in city 2, UBI there is 200/mo. I jack my rental prices by 100.
City 1 responds by raising UBI to 200. Landlords follow suit. City 2 to 300. Landlords to 250.
OP is suggesting that capitalist class just says “uwu, for me?~~~ 👉😍👈”, regardless of the amount or location. OP is suggesting that in practice this is just another slice of pie to be extracted by the capital holders.
I don’t have a fucking clue if it’s true, but I don’t think this response addresses the question asked.
That would be a state of rampant inflation, so the fed would hike interest rates to slow it down.
That would discourage people from spending money (harder to borrow and the interest encourages people to leave their money in savings), which decreases demand and thus prices (loosely speaking).
I feel like that is neither universal or basic.
If rent everywhere suddenly jumps then the DOJ has a slam dunk case of price collusion.
If there was no external stimulus, they would have a slam dunk case. When every gas station jacks the price up 20 cents because the price of oil goes up, it’s just the market.
Put 1000 dollars in everyone’s pocket, every (smart) landlord will react and change their prices accordingly. That’s not “Collusion”, and the DoJ will never be able to make a case. That’s just landlords paying attention to what happened in the world.
I won’t spend my money at those asshole places. If they’re the type of place to pull this shit, I probably already don’t shop there.
You can’t go to a competitor if everybody does the same thing.
The first time one of them breaks ranks and lowered their prices it would come crashing down.
Perhaps.
One can only hope, but longtime & continuing consolidation of companies in various US industries have left me with little of that.
And if an industry as a whole feels their bottom line is seriously threatened, many of said companies will often join together and raise prices at the same time to protect their own interests. It’s happened before, so what can I say? ¯\(o_o)/¯
They only have a finite supply of units, all the others need to do is hold out, not gonna be able to afford more if you’re trying to undercut everyone else either.
Oligopolies handle this by just buying “turds in the punchbowl” companies and dismantling them.
I guess the idea of UBI needs to be massaged a bit. For example, maybe it doesn’t go to all citizens, just to the households making <60k per year. Demand for services increases, but not in a way that services can indiscriminately increase pricing across the board. Not a full solution but solves one element of the proposed problem
The US already has that, in the form of various welfare programs (section 8 housing, SNAP food assistance, Medicaid, etc), although the earnings cap on those tend to be well below 60k.
Admittedly the number was arbitrary - I was just trying to address the major issue I saw in OP’s comment, not even as applied to any country in particular (I’m Canadian).
If you give everybody money, demand will not increase across the board. Demand of necessary products will go up while demand for luxury goods will go down, as those in more need will be doing a higher proportion of the spending than before. This will allocate more resources to necessary services instead of luxury goods. This won’t increase pricing indiscriminately across the board–it probably won’t even increase prices at all if the financing comes from taxes or some other “real” source.
Maybe. I think by the time we progressed enough for UBI, we’d have already put safeguards in place to prevent these from happening though.
Wouldn’t ubi make more sense if it were more like stamps for necessary things to live: food, clothing, materials, etc?
One of the big benefits of UBI is its simplicity, that would remove that.
We have those, and the administration and oversight to nitpick every penny sucks a ton of money out of the funding pool to make sure it goes to the ‘right people’ for the ‘right things’. UBI reduces the overhead to just making sure everyone gets it until they die.
People will spend money on necessary things because they are necessary. We can easily assume that their UBI is being spent appropriately, because doing so is necessary before taking into account any other income they might have.
Every single study that compared the benefits of directed support vs cash has found that cash is far more effective at helping people escape poverty, even when you account for fraud and substance abuse. Most poor people are poor because of circumstances, not bad decisions.
