No real value is created since its not tied to any productive work. So supply of real good remains static, and in a local market, won't there be sudden increased demand for housing, for example?
What will happen to apartment prices?
I suspect that UBI is a very good idea, but also that its fans tend to ignore the second order effects and its critics tend to ignore its third-order effects, which are where I think the real benefits are.
QE vastly inflated equity and real estate values, benefiting the wealthiest (at least in the US).
QE is the creation of something new i.e money supply. A transfer of wealth is ex post facto(that wealth already exists somewhere.)
The reduction in value of cash transfers wealth from people who are cash-rich to people who are asset-rich or have large currency-denominated debt. And because things like salaries are sticky, it also devalues salaried work; this is only partly offset by stickiness in prices, because some goods are imported.
Or from savers to debtors, no?
The wealth existed in the dollars saved, and the loan asset that was devalued and transferred to the debtor
Why governments love doing it so much because they are the biggest borrowers, and corporations don't mind inflation because it's a cut to real wages.
I found this article which is an interesting read on QE as a means of wealth transfer if anyone else is interested:
https://dealbook.nytimes.com/2014/10/22/how-quantitative-eas...
Governments often borrow in astronomical numbers.
Anyone who does this (think of taking on massive debt to finance a real estate business, building apartment complexes for example) has incentives to prefer inflation, QE, devaluing the currency.
Over the course of lets say 30 years, they collect rents from tenants. They can increase the rents over time. Their payment on that debt will stay the same. So in "real" terms, the payments decrease over time, while the rent collected at least matches inflation.
Do you see now how those with ability to borrow large amounts to finance.. whatever.. have incentives to prefer inflation.
Think about the renter. Or the saver. Their dollars are going down in real value. The renter's monthly rent goes up.
Wages? They are sticky. They stay flat for long periods, which in real terms implies a wage cut.
"Inflation is taxation without legislation"
- Milton Friedman
“the arithmetic makes it plain that inflation is a far more devastating tax than anything that has been enacted by our legislature. The inflation tax has a fantastic ability to simply consume capital. It makes no difference to a widow with her saving in a 5 percent passbook account whether she pays 100 percent income tax on her interest income during a period of zero inflation, or pays no income taxes during years of 5 percent inflation. Either way, she is 'taxed' in a manner that leave her no real income whatsoever. Any money she spends comes right out of capital. She would find outrageous a 120 percent income tax, but doesn't seem to notice that 5 percent inflation is the economic equivalent.”
― Warren Buffett
I understand why they might prefer devaluation and QE but not why anyone would prefer inflation. Can you explain? Inflation means that I need to borrow that much more.
Because that money is eventually spent by the govt, whomsoever receives that wealth gets the redistribution of wealth from everyone to them.
Are there not now more dollars chasing the same goods?
For goods like food, the supply is pretty freaking elastic.
A "move towards cheaper housing" by others would be competing against basic income dependents within this market segment.
This is what I meant by within some defined boundary. Here, its the lower end housing market.
Though supply of real goods also wouldn't remain static. To the extent that some people can't afford basic necessities, capital would shift to making those.
The counter argument seems to be that people could stop working, move to economically unproductive areas (where rent doesn't rise to consume all surplus income), and effectively retire on UBI. To me, this sounds like the polar opposite of a distributed economy, further cementing the rich-poor divide. But centralizing puppetmasters don't consolidate power by advocating for fiscal responsibility.
For the most highly productive places, a UBI isn't going to result in fresh bidding wars that substantially impact prices. For one, it's simply way too small to have anything but a marginal effect. For two, any plausible funding mechanism for a UBI will substantially tax people and investments in those areas. You're more likely to see a drop in prices in SF and Manhattan than an increase. (Yes, that means a decline in the standard of living for most people commenting here.)
A UBI would have a centrifugal effect, in that it would encourage many people to leave the most costly areas for cheaper areas. But, there would also be centripetal forces too, because of the microstructure of how labor mobility happens: many people are stuck where they live now in Bumblefuck because they lack any liquid capital and are stuck in an economic and social rut. The places that would see the real influx of people, and substantial inflation in real estate prices, are regions that are not top performers but also still economically productive.
That has winners and losers, and it does mean that some of the UBI would be consumed by real estate inflation. But it's implausible that all of it, or even a majority of it, would be.
You could have said "Was it over when the Germans bombed Pearl Harbor?" and it would have had as much bearing on the discussion as undervaluing the growth of the PC market.
Whether one is hopeful or young, or not... doesn't allow them to escape basic economic forces. Do you have an economic argument to inform the conversation?
Sorry to offend.