Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

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

news.ycombinator.com

Post reply on HN
Print view View original

91–100 of 110 posts

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

#91

Post by throw0101a »

em500 wrote: post #57

PhD in econometrics speaking, here's my handy guide to macro-economics: - The main variables of interest are (aggregate) real production / income (GDP/GDI), unemployment and inflation (arguably in that order) - Nobody knows much wrt the causes, effects and future trajectories of any of these. Not professional Ivy League economists who publish in journals like AER, QJE, JPE or Econometrica, nor traders getting paid mi…

> - The root cause of this knowledge deficiency is the inability to run proper controlled experiments.

There have been a number of experiments over the last few years. For example, tax cuts don't pay for themselves (or, in the most positive interpretation: we're on the left-hand side of the Laffer curve):

* https://en.wikipedia.org/wiki/Kansas_experiment

* https://www.npr.org/2019/12/20/789540931/2-years-later-trump...

Expansionary austerity was also tried and found not to work (as predicted by Keynesians):

* https://en.wikipedia.org/wiki/Expansionary_fiscal_contractio...

* https://www.theguardian.com/business/ng-interactive/2015/apr...

Then there's the whole anti-QE thing:

> We believe the Federal Reserve's large-scale asset purchase plan (so-called "quantitative easing") should be reconsidered and discontinued. We do not believe such a plan is necessary or advisable under current circumstances. The planned asset purchases risk currency debasement and inflation, and we do not think they will achieve the Fed's objective of promoting employment.

* https://economics21.org/html/open-letter-ben-bernanke-287.ht...

Most economic ideas put forward by the political right seems to have been found not to work over the last decade.

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

#92

Post by globular-toast »

dagw wrote: post #66
globular-toast wrote: post #8

Inflation happens due to more money appearing in the economy. Universal basic income doesn't mean creating money. It just means redistributing existing money. So no, there is no connection between UBI and inflation.

It's more complex than that. Poor people spend very differently than rich people. So assuming you just taxed everybody who was 'rich' (define any way you want) to a level where you could fund UBI, then there would be no new money being introduced in the system. However what that money gets used for will change drastically. The 'rich' people would have used that extra money to either buy luxury goods or for saving/inv…

So there will be a one time correction of prices on essential goods and services. Inflation means a sustained increase in prices over time, though.

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

#93

Post by dragonwriter »

throw0101a wrote: post #91
em500 wrote: post #57

PhD in econometrics speaking, here's my handy guide to macro-economics: - The main variables of interest are (aggregate) real production / income (GDP/GDI), unemployment and inflation (arguably in that order) - Nobody knows much wrt the causes, effects and future trajectories of any of these. Not professional Ivy League economists who publish in journals like AER, QJE, JPE or Econometrica, nor traders getting paid mi…

> - The root cause of this knowledge deficiency is the inability to run proper controlled experiments. There have been a number of experiments over the last few years. For example, tax cuts don't pay for themselves (or, in the most positive interpretation: we're on the left-hand side of the Laffer curve): * https://en.wikipedia.org/wiki/Kansas_experiment * https://www.npr.org/2019/12/20/789540931/2-years-later-trump.…

> There have been a number of experiments over the last few years.

Neither laboratory experiments nor even ones with decent statistical controls for confounding factors, and rarely, on any large-scale policy, ones with more than single digit N (and quite often, that's true even in binary, much less decimal, notation.)

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

#94

Post by ItsMonkk »

dragonwriter wrote: post #82
ItsMonkk wrote: post #77

Earlier quoted context omitted.

This is exactly why a UBI funded through a Land Value Tax is such a good idea. A land value tax taxes the land such that the market cost of the home is equal to the cost to build the housing on top of the unit. The land tax will put the land to best use, and that will drive up the supply of housing units, which means the cost to rent will go down. All of this while the average person sees lower tax rates and the pers…

> A land value tax taxes the land such that the market cost of the home is equal to the cost to build the housing on top of the unit. 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…

> unimproved land to zero

Yep!

> dynamic supply and demand effects

Yep!

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

Agree. But they almost always are.

> Confiscatory

Housing can either be an investment or it can be affordable long-term, it can not be both. Therefore the Land Value Tax is the only correct rate. And a UBI for at least a decent portion of it nullifies any potential regressive nature of it.

> don't reduce tax rates for the average person

It does, over time, as housing supply improves and the entire economy gets out of the mud. The wealthy own the most expensive land.

> catastrophically drive down land value

The tax is based on the rental value of the land, that is, the flow. You could see it as the neutralization of the capture of the positive externalities of your neighbors.

As in your first example where an empty lot will settle at $0 market price, that would not mean it has a $0 tax. It would still have whatever tax it would have. You determine that tax based on market rates, and it is a set cost based on that particular property - it's not some percentage of the market rates as we do today.

I agree that in the short-term, with most people having most of their networth in their home, this would be a bad thing. We can transition to this process slowly, and only increase as the incentives improve the economy and allow us to improve. The best way to start is to have a net zero change where we remove taxes on improvements and instead to tax the land.

Making better use of the city land would in fact drive the overall land flow value up hugely in value. SF has much more room to improve than NYC, NYC makes pretty good use of it's land. But so can CT and NJ, and the rise in supply of non-NYC land outside of NYC will drive more value into NYC.

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

#95

Post by throwaway4aday »

myshpa wrote: post #79
throwaway4aday wrote: post #70

Earlier quoted context omitted.

I'd rather live in a house that fits my needs and wants and personal style than I would in a mass produced apartment. I'd rather eat the type of food I enjoy rather than some standard rations cooked up by a factory. I want a certain amount of stuff in my life to satisfy my interests rather than living in a bare room and only enjoying communal property. I prefer to live in a world where silly things like mobile phones…

You know, the way I see it, we can have either star-trek like future, or blade-runner like. I would very much prefer the first one. And it does not mean we would have to have mass produced apartments (see cob buildings, hemp crete - the legislature/corporations is/are the problem). There is enough place to give everybody a house & a garden, ideally sustainably built (no plastics in the walls etc.), and with UBI live…

I don't see how you could have a back to nature lifestyle + UBI + anti-work + organic gardening and still have any form of progress. You'd need some kind of magical McGuffin like AGI robots that do all of the work and thinking for us. Even if you did, not everyone wants to live that way. For every barefoot hippy there's going to be a gearhead that wants to race loud cars and a thousand other lifestyles and interests that are mutually exclusive.

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

#96

Post by gruez »

incomingpain wrote: post #43

In Canada during covid we deployed non-universal basic income. It was basic income but not everyone got it. This was not that unlike what the democrats did in the USA. During a pandemic I would hope the government would help people through it. Was it the right call? I have the benefit of hindsight. https://tradingeconomics.com/canada/central-bank-balance-she... We must now deal with the consequences. https://tradinge…

>So where's that inflation at? 5.7% and still climbing. It rose by over 10% in march.

No, it rose "by over 10%" year over year in march. It didn't rise 10% "in march", which suggest a 10% growth in the span of a month.

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

#97

Post by raincom »

It will increase the cost of labor (that is, hourly wages, salaries). In other words, UBI sets a floor to wages. As one transitions from non-UBI regime to that of UBI, in this transitory period cost-push inflation occurs due to the increase in the cost of wages; and this is the first order effect.

Second order effects: upper class (not super wealthy) owns rental properties, and jack up the rents in order to suck out whatever wage increases due to the UBI floor. This vicious cycle will continue.

UBI is good, if healthcare and housing don't steal whatever wage increase one sees. UBI can be implemented in the developed countries, whose currencies (nominal assets) are swapped with real goods (raw materials, commodities). A country like US, UK, EU, Japan can run UBI; however, India, South Africa, etc can't run such schemes due to the balance of payments constraints, despite whatever MMT folks sell.

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

#98

Post by jjav »

ItsMonkk wrote: post #94
dragonwriter wrote: post #82

Earlier quoted context omitted.

> A land value tax taxes the land such that the market cost of the home is equal to the cost to build the housing on top of the unit. 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…

> unimproved land to zero Yep! > dynamic supply and demand effects Yep! > ...then not if housing units aren't the most profitable use of land in the local area it won't. Agree. But they almost always are. > Confiscatory Housing can either be an investment or it can be affordable long-term, it can not be both. Therefore the Land Value Tax is the only correct rate. And a UBI for at least a decent portion of it nullifie…

> Housing can either be an investment or it can be affordable long-term, it can not be both.

While this is one of the most often cut&pasted comments on HN, I haven't seen a thorough discussion of what it actually means in practice.

Any references with substantial analysis of proposals to achieve this and what the unintended consequences could be?

You seem to advocating for an immense increase in property taxes. This line from the previous comment:

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

suggests that the increase in taxes would be quite enourmous indeed.

That would certainly make housing a bad investment. Nobody would want to own any if the recurring property taxes are that high.

But of course it doesn't make property affordable either, if the tax rates are sky high.

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

#99

Post by littlestymaar »

incomingpain wrote: post #63
littlestymaar wrote: post #47

Earlier quoted context omitted.

There's inflation everywhere in the western world, so pointing at a specific Canadian policy for the inflation there is logically flawed.

>There's inflation everywhere in the western world, so pointing at a specific Canadian policy for the inflation there is logically flawed. There is inflation everywhere there was basic income. The USA: https://www.investopedia.com/government-stimulus-efforts-to-... Switzerland is constitutionally obligated to balance their budget. Where 77% of voters rejected basic income: https://www.bbc.com/news/world-europe-364540…

Cherry picking a few countries is a good way to confirm your bias, but not a good one to make a good argument with.

Many places in Europe didn't have a “basic income” equivalent as part of their pandemic response (for instance, France's response has been exclusively targeted at companies, to avoid layoffs and bankruptcy), and it didn't prevent inflation ramping up here too.

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

#100

Post by ItsMonkk »

jjav wrote: post #98
ItsMonkk wrote: post #94

Earlier quoted context omitted.

> unimproved land to zero Yep! > dynamic supply and demand effects Yep! > ...then not if housing units aren't the most profitable use of land in the local area it won't. Agree. But they almost always are. > Confiscatory Housing can either be an investment or it can be affordable long-term, it can not be both. Therefore the Land Value Tax is the only correct rate. And a UBI for at least a decent portion of it nullifie…

> Housing can either be an investment or it can be affordable long-term, it can not be both. While this is one of the most often cut&pasted comments on HN, I haven't seen a thorough discussion of what it actually means in practice. Any references with substantial analysis of proposals to achieve this and what the unintended consequences could be? You seem to advocating for an immense increase in property taxes. This…

Pennsylvania has a few cities that have implemented a partial LVT. Here's[0] a Strong Towns article on the topic. They show exactly what I mentioned earlier - overall taxes are up, most peoples taxes are down. Business is booming. It's not Silicon Valley, but they are doing better than the cities around them that do not have the LVT.

The best introductions are Lars excellent book and blog articles[1] over on Scott Alexander's blog.

> Nobody would want to own any if the recurring property taxes are that high. But of course it doesn't make property affordable either, if the tax rates are sky high.

The tax rates are set by the market, so they are by definition affordable. You are taxed on the land alone, what capital you put on top of it is entirely yours to earn.

[0]: https://www.strongtowns.org/journal/2019/3/6/non-glamorous-g...

[1]: https://astralcodexten.substack.com/p/does-georgism-work-is-...

Post reply on HN