Re:12-year study will look at effects of universal basic income
by Retric on Monday May 07, 2018 @03:44PM
(#17015840)
UBI does not necessarily increase the total income of the lowest quarter of the economy. What programs are removed, how much more or less they work, etc are all somewhat open questions.
Depending on implementation universal healthcare might lower the US governments spending on Healthcare. In that context UBI is about implementation not necessarily total wealth transfer. Presumably eliminating subsidized housing for example would result in more efficient resource allocation.
If UBI is set at X, then a social security payment larger than X becomes suspect etc.
Since demand profile and propensity to consume are not consistent across all sectors, transfers of income from one sector to another can reasonably be expected to have effects on general and particular price levels.
Generally, a downward transfer should have some positive first-order effect on inflation. There's good reason to expect this to be modest compared to the size of the transfer so that the recipients have increased buying power just slightly smaller than the pre-transfer prices would suggest.
(OTOH, given the existence of actively managed monetary policy that targets inflation, that first-order effect should itself largely just change the landscape for fiscal policy, translating into less net effect on inflation than without monetary policy and higher interest rates.)