Some people are being given thousands of dollars with no strings attached in universal basic income trials. They mostly spend the cash wisely.
Some people are being given thousands of dollars with no strings attached in universal basic income trials. They mostly spend the cash wisely.
A common question about universal basic income, or UBI, is how people spend the money, but early trials are showing promising results.
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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.
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.
UBI will undoubtedly be tied to citizenship
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
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...
- Afford rent. Our rents are already very inflated, and many people are rent controlled where they are. And if UBI is only for citizens, we likely wouldn't see a huge skyrocket as a lot of new renters are newcomers to the country.
- Quit their second jobs. This would improve the job market by making more jobs available, and putting pressure on employers to make jobs better.
- Improve their employability and skills. We have caps on tuition that make it relatively easy for people to afford school, but even student loans don't make it possible for most people to attend unless they have income or savings. And not many people can go to school while working two jobs. This will also improve the job market, and our productivity/GDP as a whole.
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.
- Rent control protects current renters
- With UBI not applying to newcomers, then newcomers would be priced out of the market. But they are a big portion of the market, so their capacity would inevitably be considered when setting new rent prices.
- New rent is already about (or more than) $25,000/yr (CAD) where I live. Generally, that's enough to pay for a person's mortgage, taxes, maintenance, and to still profit (unless they're a new buyer). There'll always be someone willing to accept less profit to get the sale.
- Add taxes/fines for vacant units. (Some municipalities have this where I live)
- Add rent control between renters or market rent. Some countries do this, and this would probably be the best solution for rent specifically.
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...