More people buying stuff increases demand - econ 101. If more people aren't buying stuff, why bother giving them the money? Of course prices will rise.

The only way this isn't equivalent to the government printing money is the money comes out some rich people/company's savings accounts where it wasn't being spent anyway.

It seems like you read neither my post nor the article itself. The article was proposing redistribution of income, so it's definitely NOT equivalent to the government printing money. And in my post, I listed several cases of stuff people will buy less of and other stuff people will not buy more of in a basic income society.

I'm not sure if you're purposefully ignoring the main issues with UBI, but in case you're not: the most important stuff (things like food, rent, clothing, energy, medicine, basic services) will have more demand (from all the people who can't afford these right now), and less supply (because a lot of these are done with low-paid labour - definitely clothing, food and basic services, along with things like garbage collection and construction). This will completely change how the society works.

So if the supply of low paid labor drops, and the demand rises, the value of low paid labor increases. The reason those jobs have been filled with low paid labor is the workers had no other choice.

In this situation they'd end up well rewarded for their work, and those workers with more spending power has traditionally been great for the economy.

Lot's of things have completely changed how society works, why shouldn't society change?

> "people who can't afford these right now"

... but are still getting those things through means-tested programs, for the most part. The UBI doesn't mean more people get fed; it means fewer strings attached to where they choose to live and what food they choose to eat and whether they can get a side job to supplement (google "welfare cliff".)

Supply for food would increase. Because resources are being taken away from rich people and given to poor people.

Less Yachts, more food factories.

Increased demand CAUSES increased supply.

Yes, the price of yachts won't increase, but who cares?

Do a simple thought experiment. Imagine there are 1 million poor. They, and everyone else, receive $12K per year. The poor (and those just above them on the economic ladder) will spend all of that on basic needs: food, housing, clothing, transportation. That's $12 Billion more now competing for a fixed amount of goods. What would any company/retailer/landlord do if they immediately sold out of everything they had? They'd raise prices until supply and demand were in equilibrium again. And thus the very things the poor need are the things the prices will increase the most, by virtue of them competing to purchase those items.

I'm not saying it's fair or right. But it is reality.

Very little of what you said is reality.

> They, and everyone else, receive $12k per year.

You didn't read the article. The only people who receive net $12k per year are those who have zero income. Everyone else receives net <$12k per year, because some of their income is taxed in order to finance basic income.

> The poor (and those just above them on the economic ladder) will spend all of that on basic needs: food, housing, clothing, transportation.

Incorrect. Who are you to dictate to people how to spend that money? "All" is not the amount they will spend, and "basic needs" is not the only thing they will spend it on. They will save some of it. And they will spend some (maybe close to all) of that money on paying off debt. There is $747 billion in credit card debt, $1.14 trillion in auto loans, and $1.28 trillion in student loads. And some of it will go to everything else: alcohol, video games, travel, etc.

And by the way, how many Big Macs do you think people want to buy? How many houses do you think they want to buy? How many trips do you think they want to take?

> That's $12 Billion more now competing for a fixed amount of goods.

Definitely not $12 Billion, as I have demonstrated above. And there is no such thing as a "fixed amount of goods" in economics.

Of course prices will change. But they will change in healthy ways. The idea that there's some sort of feedback loop present here that causes basic income to cancel out its own effects is completely unfounded.

I'm starting to think you're trolling. You're zeroing in on phrases and ignoring the principles they explain.

And what is a 'healthy way' for prices to change for basic needs? They aren't going to drop. Any other change hurts the poor.

Ok, let's spell it out with a basic example

You said we are going to give $12 billion to the poor

There is $747 billion of credit card debt in the United States. Much of that comes from lending in the past to the poor to finance their basic needs.

$747 billion > $12 billion

It is possible that all of 1 year's basic income entirely goes toward paying off credit card debt. In this scenario:

1) The poor receive a much needed benefit from basic income: they get to pay off their credit card bills.

2) There is no change in demand on basic goods whatsoever.

3) This significant paying down of debt leads to consumer interest rates going down, which further helps the poor.

So here is one scenario that is a counterexample to your claim that this can "any other change hurts the poor". This is an example which helps the poor.

You are forgetting that people have the freedom to do what they want with their money. When prices go up for one thing, they spend their money in other ways.

Healthy ways for prices to change:

1) The price change is stable, rather than runaway. It happens once, and that's it, but we continue to pay basic income year after year. This is expected, if we keep the money supply fixed.

2) The price change eventually leads to an increase in wages for the poor, which have been stagnant for decades.

Paying off debt is good. Once it's paid off, that money will probably go to goods and services (if you say the poor will save it instead, they weren't that poor to begin with).

So your scenario of paying off debt for one year just pushes the inevitable out one year.

And that one time price change will cancel out the benefit of the UBI. It has to, otherwise companies are not getting the most profit they can (they won't do that), or we magically have unending goods and services. Supply and demand can't be overcome in a market economy of scare resources.

Raising the minimum wage eventually has a similar effect. Ask yourself why a loaf of bread isn't $0.05 any more (it surely was sometime in the past 200 years). The obvious answer is inflation. But why? Why did prices increase over time? What economic pressure caused that?

Few things wrong in your post:

> So your scenario of paying off debt for one year just pushes the inevitable out one year.

There is enough debt out there that the poor can spend many years paying it off.

> Raising the minimum wage eventually has a similar effect. Ask yourself why a loaf of bread isn't $0.05 any more (it surely was sometime in the past 200 years). The obvious answer is inflation. But why? Why did prices increase over time? What economic pressure caused that?

Milton Friedman and Anna Schwartz wrote A Monetary History of the United States, 1867-1960, where they made the claim "inflation is always and everywhere a monetary phenomenon" [1] Thus, the reason why a loaf of bread isn't $0.05 anymore is because of the expansion of money supply, not because of raising minimum wage. The article suggests financing basic income through tax revenues -- and even doing so without raising the deficit. It is not suggesting expanding money supply. Milton Friedman himself even supported the kind of basic income described in the article, which he called a "negative income tax" [2]

[1] https://en.wikipedia.org/wiki/Monetarism

[2] https://en.wikipedia.org/wiki/Milton_Friedman#Social_securit...

What is the likelihood that all $12BB given to people carrying credit card debt gets spent entirely and solely on reducing that credit card debt?

I think it's about 1 / googol.

Yes but that's irrelevant. What will really happen is, as I said earlier, a combination of saving/investing, spending, and paying off debt. (Obviously, what else can you do with money?) Spending on basic needs is not the only option. They are not forced to do so. And don't underestimate just how much debt the American poor have, and how much they can benefit from relieving their debt.

Sorry. I must have mis-understood your argument about why prices would change. I thought you were positing that the recipients might spend all the UBI on retiring credit card debt, causing prices to not change. I thought that to be exceptionally unlikely.

Upon re-reading, I still read your words that way.

I was just giving one scenario, though unlikely, in which consumer spending does not increase whatsoever. It is likely that a large fraction, maybe even a majority, of basic income would go to paying off debt rather than consumer spending.

Given that there is such a huge amount of personal debt out there, the poor have the freedom to allocate their basic income between spending and paying off debt for many years. And when prices go up for certain things, they might reallocate their income to other things.

Here's another simple example.

Let's assume that basic income will cause net income to go up for the poor (otherwise, what's the point?) But let's also assume that prices on certain goods will go up (a totally reasonable assumption).

Then let's measure wealth in terms of "Big Macs". As in, how many Big Macs can you buy in one year? If basic income causes this number to go up for you... then you've benefitted from basic income, regardless of how much the price of a Big Mac increased.

If your income goes from zero to non-zero... you definitely benefit. Because with zero income, you can buy zero Big Macs. But with non-zero income, you can buy non-zero Big Macs... no matter how much the price of a Big Mac goes up. And the number of Big Macs you can buy will be greater than one... Big Macs won't cost $12,000 in this scenario. That would be ridiculous.

So we can use this as a framework to analyze how basic income impacts society. Then it is obvious that basic income benefits the poorest in society. But you are right, it may harm some people. However, it requires a much more rigorous analysis than you are providing.

With that thinking, the government should just turn on the printing presses and hand money out. People who had zero now have non-zero. Surely Big Macs can't go to $12,000, right?

You haven't read the article. Printing presses are not in consideration here. The whole point was that basic income is redistributive: basic income is financed by income tax.

I wasn't saying the article said printing presses would be used. But taking money that wasn't being spent (all that money corporations and the rich have stowed away) and giving it to people that will spend it is equivalent - lots of money that's not in circulation entering circulation. You end up with more money in circulation either way, with the ramifications that come with it (inflation).

No, you don't turn on the printing presses. You take the money away from someone else.

I too think your economic arguments are pretty far off from a likely scenario, so I'll try to say a little bit in counter.

In your example, $12bn goes to people who are 'poor'. You imagine all of this will be spent on scarce consumer resources and housing, creating increasing cost for those items.

You make a number of assumptions that have to be teased out before we can know how likely that scenario is:

1. Poor people will just spend any additional income.

2. Poor people will not have housing mobility and therefore be subject to rising prices for housing.

3. Consumer goods are scarce and supply will not increase based on increased demand.

1. has shown to be (surprisingly?) untrue in basic income trials so far. Read about India's Basic Income experiments at resources like this: http://www.salon.com/2015/01/25/sponsored_by_my_husband_why_... It turns out poor people use income security to accrue useful economic assets that have sustained financial benefits. Food security also improves. In addition, research into economic security shows that money worries vastly lower IQ (google for Sendhil Mullainathan and Eldar Shafir to learn more). So the data we have so far is pretty uniformly the opposite of your narrative here.

2. This to me seems pretty obviously false, or at least likely to at most be a small impact net of the money. Poorer families must choose between job proximity, communities, schools, all kinds of things, often with less than one month of safety money. Mobility is extraordinarily low in these circumstances. Guaranteed payments will vastly increase mobility for this community, allowing them to purchase property in economically appealing areas while expanding the number of jobs they take. This will at most redistribute people. Perhaps slumlords will raise rents immediately, but they will find two things: tenants who stay can pay, lowering their own costs, and tenants who don't like prices will move much more quickly. Liquidity in markets is good for efficiency. I don't think you can tell a compelling story about harm to poor renters with UBI here, it's just not sound reasoning.

3. This seems like a very silly assertion to make. Automated factories and low-labor-cost factories around the world would cheerfully sell 5x the consumer goods they manufacture now, and prices will decrease as demand increases. Perhaps the increased demand for factory workers would drive some additional jobs. But, a) I'm not sure what scarce resource you imagine will drive inflationary costs, and b) the India research shows spending goes into a pretty diverse basket of things, education, food security, investment and housing among others.

Try this experiment: imagine we gave everyone a UBI of $1 Billion per year. Sure, it's rediculous, but think of the ramifications (changes in prices in particular). If you could chart how much you give everyone (from 0 to $1 billion) vs the amount prices would change, you'd have some continuous upward movement. Maybe linear, maybe not. The point is giving everyone $1 billion obviously will increase prices. But there isn't some point along that line where it suddenly jumps. It's not like giving everyone $35K per year has no impact, but $35,100 does. It all has an impact, scaled by the amount given.

Again, I think you're assuming that at the far left of that 'linear' chart people spend solely on scarce goods. Research shows that isn't so. I think the actual chart would look like a tiny price bump which went mostly flat until some critical amount, well over $12k a year, was reached, at which point we'd see something like what you're describing.

It is NOT a fixed amount of goods.

All this money going into food, means that businesses would enter the market.

That is called supply and demand.

Increased demand CAUSES increased supply. Read an econ 101 textbook.

True. So where do all of these new businesses get their employees? They'll have to compete for them by raising wages (which would be good). Except people have somewhat less incentive to work now that they're getting some free money, so the wages have to be raised even more to get them to work. That translates directly into higher prices.

Each individual piece of UBI sounds good. But when the whole system gets put together, it doesn't balance out. It can't.

Sure - if you assume these goods have a fixed quantity. For example, I'm willing to bet McDonald's is capable of making many, many, many more big macs than they currently do.

They've simply pegged their supply chain to the amount of demand they currently see while minimizing costs and trying to optimize profit.

Almost all industries get significant savings the larger they scale. There's very real reason to think many industries would get cheaper if they were suddenly trying to produce a multiple of the same product.

We are taking about "basic" needs here. All your argument then must imply that UBI or NOT UBI, "basic needs" must be denied to part of the population or else they get too expensive.

And as almost all will agree, that's not only logically wrong, it's also morally wrong.

Everybody understands that UBI is a solution to meeting "basic" needs, the contentious part is the "universal".

I don't need basic income. If I received free money that I don't need, I might decide to double my cheese consumption. If many people like me do this, then the price of cheese will go up, hurting poor people.

What is the difference between money "you don't need" and money you do need? If, instead of receiving basic income, you received a pay raise, is that money you do or don't need?

Money "you don't need" is an economic absurdity.

The only people who double their cheese consumption are people who really like cheese. And if basic income helps you and others truly express their passion for cheese, more power to you. Poor people will eat something else.

Simply put: I _want_ a new car but I _need_ to eat.

What's the difference, from an economic standpoint? The original poster is saying that some people want cheese and other people need cheese, therefore the people who need cheese will not get what they don't need?

There's something absurd in this argument. No one's going to double their cheese consumption, just because they got money "they don't need", and no one is going to starve because the price of cheese went up.

But also, whatever problem we think we are debating here, it exists with or without basic income.

To clarify my point (although from what you wrote I think you got it right):

The argument that "basic needs" prices will rise (which was what my OP gave) because of UBI must be false, since being "basic needs", they already must be provided to anyone anyway.

In any case, even if a big part of the population didn't had access to "basic needs" the argument would be that: "we can't allow them to have those basic needs or else their price will increase to the rest of us". Than that, is morally wrong.

I hope now it is totally clear what I meant above.

If I had a magic wand and could give everyone everything, I'd do it.

But my wishes don't overcome basic supply and demand. Unless there's a lot more goods suddenly being produced, prices will rise if more people want them and can pay for them, which will tend to cancel the benefits of UBI.

But you have a magic wand that can give everyone at the very minimum the "basic needs", it's called better wealth distribution.

> Demand for luxury goods won't change at all: yachts, private jets.

Are you sure about that? Who will be bearing the tax burden to pay for UBI? Are not those the people who are currently buying yachts and private jets?

Business jet usage may decline as well as a substantial part of that usage is to generate income and growth for their businesses. With higher taxes, there is less incentive to risk money to grow your business further, putting negative pressure on business aviation.

It is unlikely that the kind of income tax increase suggested in the article will have a material impact on the extremely wealthy.

But that's beside the point. I was trying to answer the claim that "demand for goods will only go up" with examples of goods where demand stays the same or goes down. So whether demand for luxury goods stays the same or goes down, you are only reinforcing my point.

Ug, you don't get it.

The resources that are being spent on luxury goods will be converted to resources spent on food.

That's called economics 101. Supply and demand. If you take money away from rich people, they will have less money to spend on rich people things, and the world will produce less of those things.