Why inflation is a terrible tax
- Thread starter El_Machinae
- Start date
Again, I understand your theory. It's that you don't have the numbers to insist that it's true
Thank you for pointing out that UBI shifts total consumption, then. It's not entirely true that it doesn't increase consumption, since there is a lot of idle stock.
There are tons of test case scenarios in order to test the numbers though. You need a list of people that have a guaranteed income, and then analyze whether their production exceeds their consumption
There are tons of test case scenarios in order to test the numbers though. You need a list of people that have a guaranteed income, and then analyze whether their production exceeds their consumption
No. It wouldn't increase total consumption, for it has to be paid for out of taxes. So the consumption of the UBI recipient comes out of the consumption of the net taxpayer. It's a closed loop. You'll get improved diets, clothes, medical care, at the expense of smaller yachts and Learjets.
And a lot of UBI simply replaces existing transfer payments, so isn't that much of a thing to begin with.
There's a lot wrong with the UBI theory. Inflation isn't one of them.
And a lot of UBI simply replaces existing transfer payments, so isn't that much of a thing to begin with.
There's a lot wrong with the UBI theory. Inflation isn't one of them.
Lexicus
Deity
Except, that just isn't how that works at all. And in any case even spending "paid for" by taxes can increase consumption by redistributing from people with a high propensity to save to people with a high propensity to consume.
Hygro
soundcloud.com/hygro/
Yeah who knows how many people will stop working and how valuable will non workers with UBI are with their choices.
You can use taxes, but whether you get inflation or not will depend on the level of taxation and the level of the UBI payment. It's not like a dollar of tax = a dollar of low-income consumption at that scale.
Sure. There's always some deadweight loss. The whole concept of UBI is to reduce the amount of deadweight loss, and so have a more efficient and effective transfers system.
But nowhere does this have an inflationary pressure. There just is not one to point to.
Inflation is a diversion from actually talking about UBI. It is not a piece of actually talking about UBI. Because if you are actually talking about UBI, then the subject of inflation isn't going to come up.
It usually doesn't come up until someone suggests the UBI should be at levels where recipients can choose to not work.
And that's why the UBI discussion is so FUBAR. If it is not high enough so that people can choose to not work, then there needs to be additional welfare programs on top of it, which eliminates the positive reason for going to it in the first place! UBI is not a replacement for welfare unless it is set high enough to live on without any additional transfer payments. But even there, there just is not a reason that inflation would be part of the discussion. Not a reason. There just isn't one. Bringing up inflation is regards to the UBI is like bringing up Margret Sanger in regards to abortion, or bringing up sunset in regards to solar power. It sounds like an objection, until you actually think through what is being said. And once you do think it through, you realize it's a strawman, intended for no other purpose than to throw a roadblock in the way of the discussion.
Lexicus
Deity
Well, only if you think that "get rid of all welfare programs" is the only positive argument in favor of UBI, which I certainly don't. Since I want UBI in addition to existing welfare programs.
This is a diversion from the main thread, but that's fine. I want to restate that I am rather worried about Automation-Induced Unemployment (AIU) running away on us, and I see a scaled UBI as part of the solution (along with targeted employment for positive externalities).
You will always need additional welfare. For a large number of poor people, the main thing they need is just more money. They have all the life skills required to make a better life for themselves with a larger paycheque. And there's a smaller segment of poorer people that both need much larger amounts of money and actually targeted assistance. There's just no way to balance that spending with the amount of money everyone else receives. The major problem with much of Western welfare isn't that welfare is given, it's the perverse incentives due to their clawback mechanisms.
The positive reason for UBI isn't solely its ability to create efficiencies in our welfare systems (though it very much would, by large margins), but also to counteract the systemic imbalance we have in our societies with too much wealth having gone to the top. If it wasn't for AIU, an extended period of (high enough) UBI would claw back our societies on track. You don't need to eliminate welfare programs for a UBI system to be of use.
You haven't provided any numbers, you realize. There's only so much insistance that you're correct that's really useful to provide in a discussion. Also, I know it was an interruption of the thread, but what's under discussion is whether we can afford a UBI where people can choose to not work. Inflation isn't really part of that story, except insofar you need some mechanism to make sure everyone has the same (minimum) purchasing power today as next year. But that's easily modeled, even if not implemented.
You will always need additional welfare. For a large number of poor people, the main thing they need is just more money. They have all the life skills required to make a better life for themselves with a larger paycheque. And there's a smaller segment of poorer people that both need much larger amounts of money and actually targeted assistance. There's just no way to balance that spending with the amount of money everyone else receives. The major problem with much of Western welfare isn't that welfare is given, it's the perverse incentives due to their clawback mechanisms.
The positive reason for UBI isn't solely its ability to create efficiencies in our welfare systems (though it very much would, by large margins), but also to counteract the systemic imbalance we have in our societies with too much wealth having gone to the top. If it wasn't for AIU, an extended period of (high enough) UBI would claw back our societies on track. You don't need to eliminate welfare programs for a UBI system to be of use.
You haven't provided any numbers, you realize. There's only so much insistance that you're correct that's really useful to provide in a discussion. Also, I know it was an interruption of the thread, but what's under discussion is whether we can afford a UBI where people can choose to not work. Inflation isn't really part of that story, except insofar you need some mechanism to make sure everyone has the same (minimum) purchasing power today as next year. But that's easily modeled, even if not implemented.
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Lexicus
Deity
A "scaled" UBI, depending on exactly what you mean by "scaled", is not a UBI. A UBI is a payment to every person, unconditionally. Attaching conditions or paying more to some people than others means it is not a UBI.
As Hygro said in the post I liked, I don't believe we can really know the effects ahead of time and am willing to find out by experiment.
As Hygro said in the post I liked, I don't believe we can really know the effects ahead of time and am willing to find out by experiment.
Lexicus
Deity
It's tangentially related, but here is yet another example of our economic stewards using their increased profits from the tax cut to fund investment in the public interest:
http://www.latimes.com/business/hiltzik/la-fi-hiltzik-pfizer-20180108-story.html
http://www.latimes.com/business/hiltzik/la-fi-hiltzik-pfizer-20180108-story.html
That's part of a larger trend. I'll create a thread on it maybe tonight. It's close to my heart.
I mean scaled to society's growth. Objectively more in real terms every turn of the economic wheel. End goal is holodecks and replicators for all.
Assuming you started small enough to get consensus, and then ratcheted up over time (faster than the growth rate, a true clawing down of wealth) to test its utility, what would be your key indicators to stop the ratchet?
What's your idealized mechanism of phasing it in?
I mean scaled to society's growth. Objectively more in real terms every turn of the economic wheel. End goal is holodecks and replicators for all.
Assuming you started small enough to get consensus, and then ratcheted up over time (faster than the growth rate, a true clawing down of wealth) to test its utility, what would be your key indicators to stop the ratchet?
What's your idealized mechanism of phasing it in?
Lexicus
Deity
The revolutionary government announces it will be providing a universal basic income to the citizens. Reactionaries flip out. The largest corporations band together to attempt a capital strike which is quickly crushed via expropriation. The ringleaders are imprisoned. The basic income payments start going out on schedule.
I ... see ....
Well, that's unhelpful to discussion. You're one of those people, with your willingness to experiment on others.
No wonder you won't actually answer my questions.
Well, that's unhelpful to discussion. You're one of those people, with your willingness to experiment on others.
No wonder you won't actually answer my questions.
Lexicus
Deity
Every political system in history has consisted of "experimenting on others." I am a firm believer that government ought to be accountable to the people, so I'm not advocating carrying out any experiment that, at least, a majority of voters didn't want carried out on them. And I'm perfectly fine with the UBI party getting voted out if they screw up or if it turns out UBI doesn't work.
I won't answer your questions because I don't know how to answer them. I explicitly would like to use UBI to drive transformation of the social and economic system, so figuring out how to have a UBI with as little impact as possible is just not something I'm very interested in.
Your answer to my question was "it can easily be done if you don't care about downstream consequences or sustainability". Then, sure. Whatever. Kinda ends my curiosity as to whether you have any actual insights.
