this post was submitted on 02 Nov 2023
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Receiving some extra money benefits people who get it, all other things being equal. Water is wet.
The question is what happens when you implement such a program widely. All things will not be equal then. How would it affect inflation, the labor market, etc.?
One might expect that even if it was implemented in a way that didn't increase the money supply, which would be difficult, it would increase inflation for at least two reasons. First, because working class people are more likely to spend it, increasing consumer demand. Second, because people who were approaching retirement would be incentivized to retire earlier, decreasing labor supply and production output. All these effects are inflationary.
This is a complex subject and I wish people saw beyond the simplest first-order effects.
Eh, I don't think there's much of an argument for UBI to not be means-tested. If it's meant to be a basic support so that people can maintain dignity through their most difficult time, I doubt you're seeing people choosing early retirement. Besides, OAS and GIS are already means-tested basic income for seniors.
As for big inflationary force? Maybe? But the idea that lifting a limited portion of the population out of the worst of financial circumstances will cause problematic inflation is pretty laughable. Economists still don't know what actually causes inflation, apart from the expectation of inflation.
There are plenty of arguments for it not being means tested including not having the huge administrative burden and removing social stigma. I think people often donโt realize the time and finances required to administer means testing.