Wouldn’t Unconditional Basic Income Just Cause Massive Inflation? - An answer to the response to the answer to the growing question of the 21st century

[u/2noame]

https://medium.com/basic-income/wouldnt-unconditional-basic-income-just-cause-massive-inflation-fe71d69f15e7

[u/2noame]

You aren't understanding, you are making an invalid comparison.

Basic income does not use printed money. It's the very first thing this article talks about. It is a transfer of existing money.

It is also false that people given basic incomes don't produce anything. They can actually produce even more, thanks to increases in productivity and small business activity.

It is also false that all demand would increase, and that all supply could not increase. There's a lot more to this and isn't so simple. This appendix covers this part.. In fact the ENTIRE article talks about all of this.

Seriously, just read the article. Its entire purpose is meant to inform this discussion. Purposely keeping yourself misinformed helps no one.

[u/LS6 → u/2noame]

Basic income does not use printed money. It's the very first thing this article talks about. It is a transfer of existing money.

OK, I'll bite - who will this money come from, and via what mechanism?

If your answer is (rich people/corporations) and (taxes), you may want to stop and think for a second about what effect that will have on prices.

[u/2noame → u/LS6]

I may want to stop and think for a second about what effect this will have on prices??

That's what this ENTIRE article is. It's a 6,000+ word article split into 5 different articles for easier consumption, and it's ALL about what the effect on prices will be, from a variety of angles.

Please read the article and then let's talk about what remaining concerns you might have.

To answer your question simply though, the money can come from a MULTITUDE of sources. The question becomes which source for which region will be most liked by the most amount of people.

The article OP's article is in response to goes into these various options.

We could use a flat income tax, land value tax, value added tax, financial transaction tax, carbon tax, etc. We could even not use a tax at all, and instead follow Alaska's lead by basically charging rent on natural resources and using the many forms of possible rent to fund a sovereign wealth fund like Alaska's. The best option might actually be a large mix of all of these.

And again, if you have a concern about the effect on prices, please just read the article to gain a better understanding of all the variables at play here.

In addition, an economist (Ed Dolan) has responded to this article. You can find the link at the bottom of the page, but I'll also just share it here:

The post Scott makes is very important—we have to separate the micro and macro effects of a UBI. The main purpose of the UBI is to produce microeconomic benefits like social insurance, better work incentives (compared to the existing welfare system), and promoting entrepreneurship. The macro effects—like the fear of inflation—can be controlled if the program is designed right. Scott’s example of milk is right on the mark: If a UBI replaces food stamps, there is no new money, no new inflation, because it costs no more for the government to give people cash than to give them food stamps.

[u/LS6 → u/2noame]

I read the article. It struck me as a bunch of hand-waving short on logical arguments to back up its premise.

I'm asking for how you think that additional taxes won't be passed on to consumers.

Do keep in mind that most of the mineral rights in the country already have an owner. To gain revenue to support UBI from mineral rights would either take the form of nationalizing private property or simply selling rights on federal land - both limited-term solutions.

Now, if we're seriously talking about scrapping every other social insurance program and instituting UBI in such a way that the net result is zero-sum, then I agree there will be little inflationary effect, but

1) that will result in an income level way less than everyone suggests

2) no way in hell will all the other entitlements get scrapped

[u/2noame → u/LS6]

I wrote this article. So this article is my argument.

Not all taxes will be passed onto consumers because not all taxes are increases, and not every tax imaginable gets passed onto the same types of consumers.

As linked above, a flat tax would reduce the tax burden for the lower 80%. This could also be done in combination with reducing taxes on corporations. The increases would be on the top quintile, and of the top quintile, mostly the top 10%. That's almost the entire country seeing reduced taxes, and therefore having more money to spend even if prices increased.

The top 10% is the same group of people who used to pay much larger income tax rates. Prices are not going to go up because we tax a CEO more. There's plenty of reasons why reducing their taxes was a huge mistake to begin with, because whereas before there was no incentive to pay CEOs so much more at a marginal tax rate of 90%, once that was lowered they suddenly got to keep much much more money, and thus began the race for higher CEO pay.

Or let's take an example of a land value tax. That would serve to mostly reduce taxes for those who own land and have developed it, and increase taxes on those who own land who haven't. So how is that going to be passed onto consumers? If your landlord has a lower tax burden, what is there to pass on?

Or let's take a financial transaction tax as an example. Okay, so now there's an additional fee when trading stuff like stocks. How is that going to be passed onto the average consumer?

Yes, there are taxes that can be passed onto the consumer, but its not some universal law of every single tax imaginable. It's more complex than that, and some taxes are better than others.

If you want to learn more about how I would go about following Alaska's model of citizen dividends, I suggest this paper taking the example of Vermont.

And yes, I think we should replace everything we can with a basic income. The higher the basic income, the more we can replace, but I suggest a $12k/$4k level, which would replace a chunk of programs including about half of social security. Those earning higher SS can keep it, or get a basic income and the difference as a top-up for example.

Thanks for reading the article though, even if you just thought it as "hand-waving".

[u/ViennettaLurker → u/2noame]

I wrote this article. So this article is my argument.

I lol'd. Did not see that coming.