In the India UBI experiment prices acrually went DOWN. Here is why. Because everyone got money, demand inceased. But that led to greater supply to meet that demand, which led to falling prices.
Think of it this way. Imagine eggs are $1 each. Now give people money. They buy chickens. Chickens lay eggs. Suddenly the market is full of eggs with suppliers wanting $1 per egg. But there are so many eggs, they fall to 20 cents per egg.
This goes in the face of how markets actually work. There could be some sort of short term gain from the injection of capital, but after that there should be some sort of equalization at some point, perhaps through niche markets, inability to sustain the market (without continued capital injection), etc.
What could be possible is that the extra cash allowed for some businesses to increase their scale, thereby reducing their costs through any efficiencies at the new scale, allowing them to lower the price of goods.
In your scenario, it's difficult to see farmers continuing to sell eggs at 20 cents an egg when they were once able to sell at $1, and they're businesses were designed around a $1 an egg income. Smaller farmers would be unable to maintain their business at 20% the revenue, so would go out of business, likely reducing the supply, or even more likely, a consolidation in the market, leading to monopoly. A market that all of a sudden explodes may be able to sustain such prices (due to a huge increase in sales volume), but it would have to be big enough to sustain many businesses who would be able to startup incredibly quickly to meet the demand.
Good article, btw! I'm not against UBI, but it's not appropriate use it as a poster-child of the fairy tale called socialism, market pressures still exist in the real world.
No mention of the inflationary aspect in the UNICEF report attached to this post. I don't believe it will be an issue unless the local traders were unable to meet the increased demand for their products in the short run.
In the India UBI experiment prices acrually went DOWN. Here is why. Because everyone got money, demand inceased. But that led to greater supply to meet that demand, which led to falling prices.
Think of it this way. Imagine eggs are $1 each. Now give people money. They buy chickens. Chickens lay eggs. Suddenly the market is full of eggs with suppliers wanting $1 per egg. But there are so many eggs, they fall to 20 cents per egg.
This goes in the face of how markets actually work. There could be some sort of short term gain from the injection of capital, but after that there should be some sort of equalization at some point, perhaps through niche markets, inability to sustain the market (without continued capital injection), etc.
What could be possible is that the extra cash allowed for some businesses to increase their scale, thereby reducing their costs through any efficiencies at the new scale, allowing them to lower the price of goods.
In your scenario, it's difficult to see farmers continuing to sell eggs at 20 cents an egg when they were once able to sell at $1, and they're businesses were designed around a $1 an egg income. Smaller farmers would be unable to maintain their business at 20% the revenue, so would go out of business, likely reducing the supply, or even more likely, a consolidation in the market, leading to monopoly. A market that all of a sudden explodes may be able to sustain such prices (due to a huge increase in sales volume), but it would have to be big enough to sustain many businesses who would be able to startup incredibly quickly to meet the demand.
Good article, btw! I'm not against UBI, but it's not appropriate use it as a poster-child of the fairy tale called socialism, market pressures still exist in the real world.
No mention of the inflationary aspect in the UNICEF report attached to this post. I don't believe it will be an issue unless the local traders were unable to meet the increased demand for their products in the short run.