Your argument proves too much—in medieval times, if more than 20% of people stopped working agriculture to buy food with their UBI, food prices would go up until they resumed, as an indicator of damage done to society from people stopping their work.
It seems like their problem is that they can’t pay for a UBI without crazy distortions (and likely can’t raise enough money for a large UBI regardless).
I’m not sure what exactly the reductio is for the medieval society. Giving low-income workers money will generally raise the price of goods produced by low-income workers but that doesn’t generally indicate any efficiency loss.
I do definitely agree that paying someone a $100 UBI causes a loss of $100 to the taxpayers who paid for it. But that happens regardless of whether the recipients stop working.
The crazy distortions are the damage. People fear low-income people stopping their work because they fear that goods produced by low-income workers will become more expensive.
I think you are misunderstanding what ‘crazy distortions’ paul is referring to (that’s on the tax end when you are taking money away, which mainly affects the rich; not the UBI end when you are giving it out, which mainly affects the poor.)
On the UBI end, you should expect to see that creating a UBI will, in equilibrium, cause the cost of living to rise by an amount less than the amount of the UBI. If the cost of producing the goods required to feed everbody requires nearly the entire productive output of society—as in the medieval scenario you are pointing at—I believe you should expect a small UBI to have almost no net effect in equilibrium, because (as you observe) it will be almost completely absorbed by rising prices.
It is a mistake to see rising prices as “an indicator of damage”. They are an indicator of damage that would be done if all that production ceased, sure. But you’re miscounting if you call them an indicator of damage that is done, because the whole value of the price mechanism is that it is not done, because prices rise until production is again adequate to meet demand.
The rise in prices means that the net effect of a UBI is reduced relative to the gross effect, but that’s not an “inefficiency”. It’s not causing any value to be destroyed, it’s just a change of accounting. You get some more money, you spend some more money (but less than you get). The real net redistributive effect of the UBI is in the excess you get beyond the increase in what you spend. (And as you observe, if there is not much spare productive capacity, that amount could be small.)
Your argument proves too much—in medieval times, if more than 20% of people stopped working agriculture to buy food with their UBI, food prices would go up until they resumed, as an indicator of damage done to society from people stopping their work.
It seems like their problem is that they can’t pay for a UBI without crazy distortions (and likely can’t raise enough money for a large UBI regardless).
I’m not sure what exactly the reductio is for the medieval society. Giving low-income workers money will generally raise the price of goods produced by low-income workers but that doesn’t generally indicate any efficiency loss.
I do definitely agree that paying someone a $100 UBI causes a loss of $100 to the taxpayers who paid for it. But that happens regardless of whether the recipients stop working.
The crazy distortions are the damage. People fear low-income people stopping their work because they fear that goods produced by low-income workers will become more expensive.
I think you are misunderstanding what ‘crazy distortions’ paul is referring to (that’s on the tax end when you are taking money away, which mainly affects the rich; not the UBI end when you are giving it out, which mainly affects the poor.)
On the UBI end, you should expect to see that creating a UBI will, in equilibrium, cause the cost of living to rise by an amount less than the amount of the UBI. If the cost of producing the goods required to feed everbody requires nearly the entire productive output of society—as in the medieval scenario you are pointing at—I believe you should expect a small UBI to have almost no net effect in equilibrium, because (as you observe) it will be almost completely absorbed by rising prices.
It is a mistake to see rising prices as “an indicator of damage”. They are an indicator of damage that would be done if all that production ceased, sure. But you’re miscounting if you call them an indicator of damage that is done, because the whole value of the price mechanism is that it is not done, because prices rise until production is again adequate to meet demand.
The rise in prices means that the net effect of a UBI is reduced relative to the gross effect, but that’s not an “inefficiency”. It’s not causing any value to be destroyed, it’s just a change of accounting. You get some more money, you spend some more money (but less than you get). The real net redistributive effect of the UBI is in the excess you get beyond the increase in what you spend. (And as you observe, if there is not much spare productive capacity, that amount could be small.)