Monday, July 24, 2017

UBI and Economics (Collection Post)

 GDP is ultimately people buying goods and services from other people. Somebody has to flip those burgers the basic income recipients are buying. 
Since low income people spend locally and buy from people they know (not robots) the income from outside the local economy stays in the local economy and all are better off.  The multiplier effect of the basic income dollar for a relatively closed local economy without box stores or Franchises to siphon off money is nearly 3 times.  The burger flipper in a local lunchroom who is paid somewhat more than the basic income or hesh wouldn't work, spends most of herm income including UBI on local goods and services employing other local workers, creating more local demand for those goods and services and more workers to produce and vend them.  
 Assuming UBI and Medicare for All, now dead urban and rural suburbs will become vibrant villages of local commerce and art most of which will generate excess funds for local amenities. UBI is an external source of resources for the community which will be subject to the economic multiplier by those providing services to the UBI recipients.  Dispersal would solve the "BMR" housing issue as only those needing to be close to cities would compete for high end suburbs and high density city housing.  Note that minimum wage jobs in high density areas would no longer be attractive to distant UBI recipients.  There are many things they could do with the costs in time and money of a multi-hour commute. 

 National box stores and franchises subsidize low prices with subsistence wages.  The only outside money to generate a multiplier is welfare which combined with subsistence wages makes artificially low prices necessary and the multiplier is close to negative. With UBI subsistence employees would be hard to find, and working conditions would have upgraded to attract employees.  Wages could still be low, but equal low wages at local businesses would allow them to compete on price and service effectively and low income people tend to buy from people they know.  With the geographic dispersal of low income UBI recipients box stores would be restricted to the mobile middle class and above. 

 Some basic income recipients will use their time to pursue a dream of artisan goods production; a local service like a band, restaurant, or performance venue; or a mercantile service.  Some will succeed and become tourist magnets generating outside dollars for the community. 

 Assuming an income tax the multiplier will be reduced a bit from a pure subsistence economy, but if the tax rate is progressive the reduction in the multiplier should be minimal for in community services as these services will be provided on narrow margins as the providers will be recipients of UBI as well.   

From Facebook:

FC It's all great until you examine the macroeconomic effects....
J'C PUOSU Throw out a macro effect other than fucking the oligarchy that will be a problem .

FC Hyperinflation?
 Particularly, hyperinflation of pricing on necessities that have a strict supply constraint.

Mind you, this is NOT a "don't" argument. This IS a "can't handwave at it" argument, or more like a "don't cut off your nose to spite your face" argument.
J'C How? UBI is spent on goods and services locally that generate taxable income. The only necessity that I can think of with supply constraints are medical care and drugs which come under the category of fuck the oligarchy. The rest of the world seems to do better with that constrained resource than we do. I am open to other suggestions.
FC Off the top of my head, it's partially a simple supply/demand dynamic, particularly aimed at something with a very limited supply (most notably, physical space).
I don't want to be too strong in my criticism because I AM a UBI crank, but I also don't want to blindly run into something likely to have a spiraling pattern.
J'C Limited space, for housing as an example, is a political not an economic problem. With UBI now dead suburbs and exurbs would be viable for artisans, self employed, and couch potatoes. All create taxable revenue for suppliers of goods and services who would follow them. There would be plenty of space in existing cities for corporate and government employee housing. Facebook is showing how to build a city in a suburb in spite of the political NIMBY flak.
Limited space, for housing as an example, is a political not an economic problem.

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