UBI is implemented tomorrow. Every citizen gets $1000 per month.
Landlord now knows you have an extra $1000 that you never had before. Why wouldn’t the landlord raise prices?
Now you have an extra $1000 a month and instead of eating rice and beans for a few meals you go out to a restaurant. The restaurant owners know everyone is eating out more so why not raise prices and maximize shareholder profit as always. The restaurant/corporation is on TV saying, “well, demand increased and it is a simple Economic principle that prices had to increase. There’s nothing we can do about it”.
Your state/country has toll roads. The state needs money for its deficit. UBI is implemented and the state/country sees it as the perfect time to incrementally raise toll prices.
Next thing you know UBI is effectively gone because everything costs more and billionaires keep hitting higher and higher all time net worth records.
You’d increase taxes along with UBI, so most middle class people would end up neutral (or slightly positive). You can’t just dump tons of money into the economy without turning other dials to keep it stable.
A wealth tax would essentially be redirecting money from the top 1% and guarantee a stable monetary floor for everyone.
Probably there’s a dozen other changes, along with bankruptcy protections, interest rates, and anti scam protection would also need to be implemented.
You identified an obvious problem, which has been considered by intelligent UBI advocates that have studied this for a long time.
I think this is kind of the big problem with the messaging. I know plenty of economists say it would work, but it’s non-intuitive to most of us.
Do people understand that rent and other necessity prices are skyrocketing right now without income increasing? They are not intertwined in the way the myth of raising rent to match UBI is presented.
Rents are skyrocketing because demand is high and we literally do not have enough housing for the number of people we have in the places they live.
Suddenly dumping more money into the economy would just increase the price bar on that demand, and prices would go up more.
Prices can increase for a lot of reasons, and going up from one doesn’t stop them from going up from another.
This seems like it’s the only way it would work.
Everyone gets a certain amount a month.
You get taxed a certain amount back depending how much you make above some threshold. The average wage could be good.
So now the high earners are funding the system. But if they get sick and can’t work the tax goes away but they’re still getting that base payment automatically.
Low earners get help and high earners get a safety net.
This is the “Negative Income Tax”, popularized by famously conservative Federal Reserve chair Milton Friedman as the approach to community support that best meshed with supply/demand.
That sounds really good for the low-earners, but what incentive is there to become a high-earner in such a system?
What incentivizes growth and development in such an environment?
A negative income tax system has the same incentive as our current bracketed tax system to earn more money: for every dollar you earn, even if a higher percentage gets taken out on that next dollar, you still have more money now.
It just shifts our brackets down so that you get “negatively taxed” - given money - for the lowest brackets of income. But a person making $100k would still be given say $15k for the first $10k of their income, $5k for next $10k, taxed at 9% for the next $10k, 20% the following $10k, so on and so forth - so that every dollar they make still means more money in their pocket, it’s just a percentage less for the additional dollars as they move brackets. Considering that’s already how it works, it seems no incentive changes would arise for high earners.
Firstly the safety net it provides.
Then it all comes down to how much you are taxed back and the threshold. Most high earners wouldn’t notice it. And they would have had the payment until they started earning high.
You or your partner could stay at home with the children, your kids would get money, you can get sick without worrying about money, it helps everyone.
High earners already pay higher taxes. So it’s no different then now.
If your argument against it is “what about selfish rich people” then I would say fuck em.
There’s also a large saving made in managing social benefits, which could result in lower tax overall.
Most people want more than the bare minimum so most people would still work. But everyone being able to afford food and shelter is a good place to start.
I have found that economy experts say that things are counterintuitive more often that any other field. I think at this point I have just accepted that the economy is some black magic that I’ll never understand. So I’m gonna smile, nod, and let the experts do their thing.
Ah yes, economy experts. The ones who can’t solve any single economic problem and who can’t predict a single crisis. Very useful people.
Well, you could blame that on the fact that economy experts don’t have the power to do any of those things. Politicians do.
Economics is just psychology masquerading as a hard science
Public messaging is difficult for economics because of its complex nature. Even when you simplify it, the interconnected nature of seemingly unrelated things and unforseen consequences often escape people. Then there’s the human element which sometimes produces baffling outcomes.
But all that most people think is “Why do I have to pay so much for petrol? That’s bad.”
Yeah, but it’s important to drum up political support.
Unfortunately, yes
Don’t forget price controls (including rent control), strong anti-collusion legislation and strong antitrust.
Like taxes on luxury goods?
This doesn’t answer ops question at all, aside from “I’m sure ubi advocates have thought about this”.
I’d like to see any income above 2k / month get redistributed globally.
Edit: the idea is that this would fund the UBI and get everyone at least something. And for the avg person you’d likely see more than you get now silly.
Where do you live that 24k/yr is a livable wage?
Untaxed maybe?
Huh? Does that mean $2k/month is your cap for what anyone should ever need/want? It just seems incredibly low to me so I’m confused.
People are focusing too much on your number, and too little on your take.
I think that a strong progressive tax works better than just two brackets (no taxation vs. full taxation). Specially when coupled with universal basic income - the idea is to eat the rich, not the slightly less poorer, on those you just nibble.
Radical. I like it. Maybe $4000/month to keep it above the poverty line (so it’s not a such a shock to the system). Lol