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Here's a few words on UBI and inflation. Not every kind of universal income scheme has to be inflationary, but there is one king that almost by its very definition will cause inflation. That would be a "living wage" UBI. (1/)
Proponents of this level of BI believe that everybody should have the right to choose not to work, so BI should allow that. Ok. Presumably, this means that they wouldn't view the policy as a success unless some decent fraction of people actually DID choose to not work. (2/)
Fewer workers means an economy that can't produce as much stuff. This would be at the same time as people are taking their new basic incomes and spending them, ie. trying to buy more stuff. More buyers for less stuff -> price increases. (3/)
Your average proposal to increase gov deficits for social programs doesn't have that combination. If we spend on infrastructure, or even just cut taxes, the idea is that the economy is operating below capacity, so more buyers -> more stuff = no inflation. (4/)
This kind of UBI is different because it really hasn't met its goal unless real output in the "paid work" sector is reduced, whereas those other policies are trying to raise it (by putting under- and un-employed people to work). (5/)
The question then becomes: who is going to produce the goods that those who aren't working will consume? Either other people would need to work more or other people would need to consume less. If the former, then the policy failed. If the latter, then who? (6/)
Either the market or the government would have to sort out the answer to that problem. If the market did it, it would be through inflation, with prices adjusting until the option to not work was severely diminished. (7/)
If the gov did it, it would be through large tax increases on some groups (remember, the wealthy have a lower propensity to consume than the poor, so trying to actually reduce their consumption requires reducing their income substantially) though this defeats the U part. (8/)
Basic incomes schemes are interesting proposals, and perhaps their advocates are right that its time has come. But they do have some potentially serious issues, like inflation, that we should discuss seriously. (Fine)
