Ask HN: Would a universal basic income lead to inflation?

To do that, an LVT would have to be calibrated so that it was enough to bring the market price of unimproved land to zero, plus (or minus, in certain market conditions) an additional amount needed compensate for dynamic supply and demand effects (lots of people wanting to move in plus building lag driving prices up above expected long-term equilibrium, lots of people moving out doing the opposite.)

> The land tax will put the land to best use,

Perhaps, but if so...

> and that will drive up the supply of housing units

...then not if housing units aren't the most profitable use of land in the local area it won't.

> All of this while the average person sees lower tax rates

Confiscatory (and the level of LVT you suggest is exactly that) taxes on land don't reduce tax rates for the average person in a country with a nearly 65% pre-policy homeownership rate.

> The money available to collect from NYC and SF land taxes alone could fund a nation-wide UBI.

No, even if that were true pre-policy it couldn't after you enacted it, because you are ignoring dynamic effects. Confiscatory taxation on land will catastrophically drive down land value.

No matter what you do here you're increasing the demand for goods. Without an increase in the total money supply that would stabilize but there would still be some inflation because of it.

Demand steadily increases over time, a UBI would cause a spike in that demand so there would be inflation at a higher rate while the market stabilizes. Without an increase in the rate the money is devalued this inflation should stabilize. The problems come when we devalue our money at the same time we're increasing demand causing changes at a rate faster than the markets can compensate.

UBI is a shotgun approach and a political tactic rather than a real plan for helping those who need it. A negative income tax and other options that target this help where it's needed would be better options. either way though the trick is to get money where its needed without increasing debt or the money supply while doing so at a rate that doesn't shock the system.

Immediately adopting a non-trivial UBI, alongside any reasonable deficit-neutral funding stream, with no other accompanying policy changes, would be a transfer of net income from those currently reviewing more to those currently receiving less; it would lead to some inflation in things with greater proportional demand among the net beneficiaries and some deflation among things in greater demand among those seeing lower income after taxes and transfers as a direct result of the policy before considering any effect the change in spending patterns had on domestic velocity of money. As it would probably also slightly increase domestic velocity (increasing after taxes and transfers income across the board), one would probably expect some additional overall inflation on top of the inflation/deflation from demand shifts.

The question of whether it would lead to levels of inflation, overall or in any subsector, large enough to make it a net undesirable policy is hard to answer because:

(1) it involves subjective questions of priorities,

(2) except under the most extreme sets of priorities, it involves complex factual questions whose actual answers are very different for different formulations of the exact UBI and funding policy, and where the actual answers even given the precise policy inputs, even assuming we could isolate all other future situation changes that confound the issue, are very uncertain given the very large degree of uncertainty in predictive economic models (modern economics has some fair ideas of the direction of first order effects of some changes, and seems to in some areas provide generally useful quantitative guidance on small variations well within the historical range of experience, but beyond that... there are very good reasons to gently phase in new policies, continuously assess, and be prepared to alter course.)

> "Forecasting inflation is a staple of macroeconomic modeling, yet virtually all economists’ predictions for the United States in 2021 were way off the mark."

I recall reading this headline and laughing, because virtually everyone in the circles I associate with was warning very vocally about what would happen when it was announced in early 2020 that governments and central banks would be greatly increasing the money supply to pay for people to stay at home (and pay for "other" things), with no obvious sign of how productivity would be increasing. All signs were that productivity would also decrease (and it did), due to draconian lockdowns which prevented people from producing.

So why was the Austrian school exactly right about the inflation, and the Keynesians wrong again?

The reason is quite simple. Those who are the beneficiaries of new money have a motive to continue gaslighting you about the causes of price inflation.