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this post was submitted on 04 Apr 2024
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I remember when the first wave of stimulus checks went out and a bunch of car dealerships suddenly raised the price on their cars by $1000. UBI would be great, but if we don't reign in the corporate-apologist economy first, every product will suddenly be more expensive so they can bleed people of that extra money.
Oh this is an awesome comment. I love talking about this part of UBI
I studied Economics in school and dived deep into UBI. Some interesting facts/research for you:
(Fun fact) The US already has UBI, just a super watered down version. It's called EITC (Earned Income Tax Credit). It's a Nixon brainchild and was thought they could use UBI to reduce the inefficiencies of such a big government. I.e. get one nice UBI check that covers healthcare, retirement, insurance, education, food, housing, etc. blah blah blah, and you can shut down a bunch of federal government agencies that are pretty inefficient.
The car dealership thing happened because of a variable that we often discount: information (or knowledge). The car dealership knew exactly how much money was coming out and who got it (mostly), and they knew it was a one-off not an ongoing thing. A lot of UBI macro research guesses that we'd see some small inflationary pressure at the beginning when it's new, but then return to normal as it becomes part of every day life. And even if it does, the benefits strongly outweigh the benefits and the Fed has other tools to reign in inflation to balance the affect out.
Caveat, this knowledge is 20+ years old. I may be way off base.
Just a heads-up, you accidentally wrote "the benefits strongly outweigh the benefits" instead of (presumably) "the benefits strongly outweigh the drawbacks."
That's just how strong the benefits are. It's cyclic!
benefits all the way down
trickle down benifinomics
Sweet! I sure hope the inflation wouldn't completely invalidate the extra income, but I still have very little faith in American capitalism allowing for there to be money not immediately being funneled into the bank accounts of the 1%.
IIRC, that was one of the ways Nixon sold it. If the plebes have more money, they spend it on more consumerism bullshit . . .which is money that ends up in the hands of the 1%.
Again, this is a 20 year old college course, so my memory could be way off (and aspirational b.c. I personally like UBI).
This second point is going to be impossible to avoid when everyone knows ubi is a thing.
In my mind I see a huge displacement coming for a large number of workers who get ousted by AI. There will still be jobs, but far fewer in each discipline. Think office workers and coders etc. Once ai matures and integrates, we are going to have millions of people without jobs as companies cut 80 to 90% in each department. UBI will be necessary and everyone who sells shit will know that it exists and we are back to square one because they increase prices. It seems hard to avoid.
To be clear, I'm all for UBI. It seems like its pretty much unavoidable as productivity per worker continues to sky rocket and wages remain the same.
There have been UBI trials before and they found that it didn't lead to price increases to any great degree.
Yes but not widespread UBI, I think it would be slightly different like the reference to the stimulus checks where nearly everyone obtained it and it was widely circulated information.
Exactly. If a small group of people are given UBI, then they just have more money, and stores want to profit from everyone, including the people who aren't getting more money. But if everyone gets UBI, then the stores are sure that their customers can afford higher prices, and our current government has shown that it doesn't care if prices are arbitrarily inflated. I'd love UBI, but it can't function alone without accompanying laws to prevent price hiking.
And the discussion about immigrants receiving UBI is going to be very problematic.
It will, yeah, but I think people will be a lot less worried about others succeeding when they themselves are succeeding as well. But maybe I'm underestimating the country's racism. I hope I'm not.
@SlopppyEngineer @Signtist
UBI will undoubtedly be tied to citizenship
But if everyone was getting it, wouldn't people at different income levels spend it on different things?
Even at the grocery store...middle class people might start buying nicer stuff and nice to haves that they didn't buy before. Lower class people might start buying more well-rounded batches, but still the "cheaper" brands and stuff.
If I was buying Ritz crackers for $4 before, maybe now they're $5. I'm making more money, and it's just $1, so I might not even be paying enough attention to notice, but if everything goes up by a similar amount, then I'm spending significantly more on the same items than I was before, and might end up dropping $100 of my new UBI money on groceries without even making a change in my shopping habits.
Now, a lower income person might be buying store brand crackers that only cost $2, but now they're $3, so the same situation occurs.
These are hypothetical numbers of course, but I wouldn't be surprised if a situation like that occurred, given that every company would know exactly how much more money is now in everyone's pockets. Every product goes up just a bit, just to take a bit of that UBI pie.
My point is that people with more money would have more "fun" money, and people with less money would have more room for essentials.
You'd think the bigger market would be to pull at the people with "fun" money, rather than the people who can now afford a well-rounded diet.
Yeah, things will go up in price. It's like when minimum wage goes up. But in all the studies I've seen on minimum wage going up, the minimum wage earners generally win out over rising prices (being better off after the increase).
I'm sure some store has done the math that it's better to sell 2 boxes of cookies to the poor guy than to raise the price to get the maximum profit off of an individual box. And then there are places with competition...and some staples are already generally competitive (such as bread) to the point of being loss leaders in grocery stores.
I certainly hope you're right. All I picture is the dollar stores suddenly becoming $2 stores as everything just shifts to be more expensive with very few people improving their financial situation at all.
The funny part is that you're describing things that are happening in my country and we don't even have UBI.
Our Dollar stores are already $2+ dollar stores. Anything that's $1 is smaller than it was a decade ago, or is fewer units than it used to be.
The price of all kinds of stuff is increasing in price, and rent is already completely unaffordable, including places that are multi-hour commutes away from the places with jobs.
Someone working full time at minimum wage will not make enough money to rent a studio apartment, let alone also be able to afford groceries and other essentials. They'd need to rent a room, get a second job, or be born 10 years earlier and be in a rent-controlled place.
So yeah, with UBI, more people are going to be able to do things like...
Things will get more expensive. But we live in an open market. Stores and brands will compete with each other for some of that extra money. Some people will be spending it on "fun stuff", and I think that's where we'd see prices increase the most. And I'm okay with new video games being $120 (like they used to be sometimes!) if it means we get UBI.
Doesn't that just further validate my concerns? Prices are going up to gouge people even when a lot of people don't have the cash to pay for it. I see no reason why a landlord charging $15,000 a year won't just up it to $25,000 a year when everyone gets a $10k UBI. The government seems to care very little about preventing things like that.
I understand that there are solutions that could fix this, I just don't think the US government as it is now would be willing to enact or enforce them even if it went ahead with UBI. That's why my initial post said we need to figure out these things before UBI, or else we'll enact it without things like taxes for vacant units or rent control between renters, and it'll fail, killing any enthusiasm for another attempt following potential law changes to fix the issues.
Can landlords just change rent whenever they feel like it in the US?
Essentially. They can't freely change rent for current tenants since they need to stay within the confines of whatever lease was agreed upon, but they can make rent whatever they want for new tenants, so it's not an uncommon occurrence for them to simply stop fixing things in a timely manner so that current tenants feel compelled to leave, and then they can fill the space, charging whatever they feel someone will pay for rent after that. It's scummy, and it's technically illegal, but everyone knows they won't really get in trouble for it.
Same thing happens where I live, but there is recourse. If it were me, I'd probably try to fix things on my own if I were getting a great deal on rent. Not that I'd have to, but to save myself from having to move. Of course, that's not an option for everyone.
Still, with a lot of the rental market (again, where I live) being newcomers, I don't think it'd make sense to immediately jack up the rates... they'd be turning away too much of the market.
Well, once the lease is over people have to sign a new one anyway, so even existing tenants can only lock in rates for so long. And when one landlord ups rent, it's usually because all the other landlords are doing it too - it seems like they do it in unison, I imagine because they don't want to have to worry about people leaving for somewhere cheaper. I'm not sure if it's illegal like price fixing or not, but it doesn't seem to make a difference in the end.
That is not how a competitive market works, at all. If there is enough competition, someone will always undercut the scalpers.
You're right, it's not... Too bad most places have realized they can just raise prices together and share in the extra profits, rather than compete with one another. There's a reason why price fixing is illegal, and there's a reason why the government rarely enforces it.
Sure buddy, if you say so.
The issue being we've never seen an actual trial of UBI. It's always some sample of the population for a known limited time. UBI as a concept doesn't lend itself to "trials", we won't really know until at least a number of entire cities are indefinitely implementing UBI, and probably would be 3 or 4 years before people start actually acting like it is indefinite.
Same thing happened to college financial aid. The more aid given the more colleges raised the prices.
This is a big problem with getting rid of taxes on the working class, or citizens, which as someone trying to NOT exist in society as much as possible. I'm all for, you're telling me i dont have to think about property tax anymore? sign me the fuck up!
But, unless you fix that shit, it literally will not give you more spending money. Corpos will pay you less, things will cost more, entertainment will cost more. etc...