Cost of living adjustments will just make things worse. Annual increases in the basic income adjusted to inflation will cause an inflationary spiral and eventually hyperinflation. This is not a minor concern.
If this is the wrong direction, should we make opposite changes - concentrate wealth in fewer hands?
Anyway, in general it is not the case that prices would rise to consume all citizens' disposable income, foreastallyng all improvement in living standards. Your comment seems to conflate localized price changes with total real change stopping inflation, without justification.
UBI is particularly susceptible because it is a one-time universal increase in income. The increaes is very predictable by landlords and housing sellers.
> If this is the wrong direction, should we make opposite changes - concentrate wealth in fewer hands?
Means-tested welfare, minincome, negative tax, minimum wage increases - all these are better than UBI. UBI needs to die as a meme.
> in general it is not the case that prices would rise to consume all citizens' disposable income
I believe that this is the case under UBI. Based just on housing alone! Even minimum wage increases are subverted by price rises. UBI would be costly and have minimal positive impact with the possibility of massive negative impact. It is the worst of all worlds.
People need to understand that there are two UBIs - - Right wing UBI where welfare is liquidated and the proceeds distributed (to the tune of $8k/yr) -> increased income inequality, medieval levels of poverty - Democratic UBI where $24k is given to all and sundry funded by taxes on high income individuals and corporations + printing money -> hyperinflation, economic collapse
Neither of these are futures that we want. Please consider alternatives.
I also disagree with your premise, because elasticity of demand for housing isn’t zero, even if you assume zero regional mobility.
UBI does open up possibilities for rural communities, but the cultural trend has been the opposite for a long time. I don't see it reversing quickly.
> I also disagree with your premise, because elasticity of demand for housing isn’t zero, even if you assume zero regional mobility.
It isn't zero, but it is very low. Existing house owners fight tooth and nail to prevent higher density zoning. And new construction is slow to respond even to very strong pricing signals.
It does, in the sense that money circulates faster. This is known as the velocity of money, and increasing the velocity of money does cause inflation.
There can be a second order effect of having well off people kick out some money to taxes that would be otherwise going to investments. It might cause a temporary inflation bump in consumer prices and a corresponding deflation in investments/assets. But that's a much smaller effect than what the amount of income transfers is. And causing this kind of increase in rate of economic activity is normally not considered negative, indeed politicians normally try to make them happen. And anyway central banks regulate this with monetary policy.
There is no feedback loop of inflation.
This is completely wrong.
The principle I'm referring to is a standard component of basic macroeconomics and is completely uncontroversial among economists. There's lots of literature about this effect if you'd like to learn more.
Do you think that UBI is qualitatively different from normal tax financed income transfers, from inflation POV, or do you think that just bigger income transfers cause runaway inflation?
You claimed, “It does not increase the amount of money in circulation”, and that was all chimeracoder was arguing with.
You’re responding as if chimeracoder was arguing increasing the velocity of money will automatically cause runaway price inflation. That’s not what chimeracoder was arguing, though.
As it happens, I think you’re both right, the relevant value for economic activity is the money supply times velocity of money, UBI would likely modestly increase velocity of money but not money supply, the increase in their product would likely cause a modest inflationary shock.
That shock would probably be somewhat offset by dramatic increases in geographic mobility and changes in the distribution and supply of low wage labor for unpleasant jobs.
Sensitivity to housing costs would change in unknown ways, with landlords reaping somewhere between modest and huge windfalls in low housing supply areas, and likely smaller windfalls in areas closer to supply/demand balance, which would tend to make areas with good housing supply more appealing.