UBI financed by taxes wouldn’t cause the supply of goods to increase (as I suggest, secondary effects could well result in a decrease in supply of goods). But it causes the consumption of goods by higher-income people to decrease (they have to pay more money in taxes that they would otherwise have spent on themselves). So there are more goods available for the lower-income people.
You seem to be assuming that there are two completely separate economies, one for the poor and one for the rich, so any more money for the poor will just result in “poor goods” being bid up in price. But the rich and poor actually consume many of the same goods, and those goods that are mainly consumed by the poor are usually produced using resources that could also be used to produce goods for the rich, so any effects of the sort you seem to be thinking about are likely to be quite small.
I don’t think higher income people are spending as much %% of their money on goods and services, so everyday goods and services may not be protected as much from the “printing money” effect. Much of the shift in those prices comes from the increased spending power on the bottom margin, as the rich already have all the food and such they want anyway.
If you’re already using that money to invest in stocks, then UBI probably inflates basic good prices (as it gives the lower income brackets more money and additionally reduces the labor supply to make them, as we saw in 2020 it might not take much to shake that out of balance). So it’s inflationary on labor. It seems inflationary on markets as the mid-end will buy stocks (again, see 2020), so we get higher interest rates, which again prices the lower end consumers out of the market for houses, cars, and such. My guess is this further destroys anyone in the middle.
The poor in countries where UBI is being considered are not currently starving. So increased spending on food would take the form of buying higher-quality food. The resources for making higher-quality food can also be used for many other goods and services, bought by rich and poor alike. That includes investment goods, bought indirectly by the rich through stock purchases.
UBI could lead to a shift of resources from investment to current consumption, as resources are shifted from the well-off to the poor. This has economic effects, but is not clearly either good or bad. Other things being equal, this would increase interest rates, which is again neither good nor bad of itself.
However, you seem to be assuming the opposite—that UBI would lead to higher investment in stocks (presumably by the middle class?). That would reduce interest rates, not increase them. (I’m referring here to real interest rates, after accounting for inflation. Nominal interest rates could go anywhere, depending on what the central bank decides to do.)
Whether UBI harms the middle class would depend on whether they benefit on net, after accounting for the higher taxes, which could of course be levied in various ways on various groups.
Of course, a sufficiently large UBI would destroy the entire economy, as the incentive to work is destroyed, and any productive activity is heavily taxed to oblivion. But the argument in this post applies to even a small UBI, purporting to show that it would actually make the poor worse off. It wouldn’t, unless you hypothesize long-term speculative effects like “changing the culture of poor people to value hard work less”, which could exist, but apply to numerous other government programs as much or more.
UBI financed by taxes wouldn’t cause the supply of goods to increase (as I suggest, secondary effects could well result in a decrease in supply of goods). But it causes the consumption of goods by higher-income people to decrease (they have to pay more money in taxes that they would otherwise have spent on themselves). So there are more goods available for the lower-income people.
You seem to be assuming that there are two completely separate economies, one for the poor and one for the rich, so any more money for the poor will just result in “poor goods” being bid up in price. But the rich and poor actually consume many of the same goods, and those goods that are mainly consumed by the poor are usually produced using resources that could also be used to produce goods for the rich, so any effects of the sort you seem to be thinking about are likely to be quite small.
I don’t think higher income people are spending as much %% of their money on goods and services, so everyday goods and services may not be protected as much from the “printing money” effect. Much of the shift in those prices comes from the increased spending power on the bottom margin, as the rich already have all the food and such they want anyway.
If you’re already using that money to invest in stocks, then UBI probably inflates basic good prices (as it gives the lower income brackets more money and additionally reduces the labor supply to make them, as we saw in 2020 it might not take much to shake that out of balance). So it’s inflationary on labor. It seems inflationary on markets as the mid-end will buy stocks (again, see 2020), so we get higher interest rates, which again prices the lower end consumers out of the market for houses, cars, and such. My guess is this further destroys anyone in the middle.
The poor in countries where UBI is being considered are not currently starving. So increased spending on food would take the form of buying higher-quality food. The resources for making higher-quality food can also be used for many other goods and services, bought by rich and poor alike. That includes investment goods, bought indirectly by the rich through stock purchases.
UBI could lead to a shift of resources from investment to current consumption, as resources are shifted from the well-off to the poor. This has economic effects, but is not clearly either good or bad. Other things being equal, this would increase interest rates, which is again neither good nor bad of itself.
However, you seem to be assuming the opposite—that UBI would lead to higher investment in stocks (presumably by the middle class?). That would reduce interest rates, not increase them. (I’m referring here to real interest rates, after accounting for inflation. Nominal interest rates could go anywhere, depending on what the central bank decides to do.)
Whether UBI harms the middle class would depend on whether they benefit on net, after accounting for the higher taxes, which could of course be levied in various ways on various groups.
Of course, a sufficiently large UBI would destroy the entire economy, as the incentive to work is destroyed, and any productive activity is heavily taxed to oblivion. But the argument in this post applies to even a small UBI, purporting to show that it would actually make the poor worse off. It wouldn’t, unless you hypothesize long-term speculative effects like “changing the culture of poor people to value hard work less”, which could exist, but apply to numerous other government programs as much or more.