Comment by jimnotgym
2 days ago
I'm interested in this as a faster intervention than QE. $10 given to a low income family will likely be spent that week. $10 of QE will just sit on somebodies balance sheet.
Understanding BI as a tool of monetary policy seems to remove the ideologically charged view we see when it is considered as part of the welfare state
> I'm interested in this as a faster intervention than QE.
But BI / UBI's usual argument is that because it would be long term and reliable, it would allow the recipients to make long term choices. Such as taking on an occupation they like rather than one that pays better.
If you make this an intervention medium, you loose this predictability.
The intervention style you discuss has been used during the Covid crisis: just mail checks to people based on last known year income. That's always available. It's not a question of basic income.
Another angle: We tell people to "vote with their wallet" to let the better producers rise to the top. That works a lot better if more people actually have something in their wallet to vote with.
This doesn't really work because the big firms that consumers boycott have political leverage and magically become too big to fail.
It also presupposes that unregulated capitalism is the best kind of market. But "unregulated market" only means unregulated in ways that benefit people.
BI and UBI are better ways to ensure that the people that governments actually represent are supported when they need it. They are more direct and have quicker market benefits.
What really gets me is that UBI would be great for everyone, even the rich and the big business. It allows more consumers to buy more, ensures only productive, motivated and properly rewarded workers are in the workforce, lets artists create fine art rather than doing meaningless busy work so that they can eat, and even lowers the cost and inefficiencies of social safety nets.
Conservatives can't see how anything can be anything other than a zero sum game. They are always trying to maximise their wealth, they assume that everyone else is too, but really, most of us are just trying to find enough to eat, have a home and stay alive.
They are scared of losing what they have because they want to take what anyone else has. They hide that by saying it's unearned or whatever, but they mostly haven't earned what they have. They have at best grown what they were given. They don't know what it's actually like to have nothing.
Unfortunately, the paper does nothing that I can see to address the criticisms of UBI in general, such as the pivotal 1930-1950 works of Mises on Socialism.
In such an environment, those with the majority marketshare will simply cooperate and adjust their prices upwards through artificial constraint of supply, inevitably creating imbalances which result in chaotic shortfall that will need to damped, and these people do so with a plausible fallback, "we live in chaotic times". The people will need to be bailed out for the shortfall.
Cooperation prevents economic calculation, leading to the chaotic whipsaws described by Mises as the Socialist Calculation Problem.
The only way to dampen the whipsaw is through money printing, and there is a hard upward limit to money printing after which the currency collapses.
That point is what is generally considered stage 3 of a ponzi scheme, after diminishing returns, where outflows exceed inflows. With regards to debt-based money printing (non-reserve/basel3 [based in objective value]), that transforms when GDP < debt growth.
The limit is silently enforced by legitimate market participant producers who exit the market once profit can no longer be made (as the stable store of value is debased and as a monetary property is lost). Since most companies use financial engineering, the time when this is noticed will be long after the critical period since that type of engineering decouples decision-making from short term constraints.
This can lead to catastrophic failure, as the dynamics cascade in similar ways to an avalanche, or a dam break where the trigger is not noticed, and the consequences of mass and motion following a conservation of energy cannot be stopped.
While we are talking about the dynamics of human action, which are not nearly as well defined as physics, the dynamics are no less powerful.