Universal Basic Income - Ep.3 Does It Cause Inflation?

Welcome back to the channel. I hope you're having a great day. So we want to continue on with our series, Universal Basic Income. The, um, the next, um, conversation goes into, does Universal Basic Income cause inflation? Um, And so this has been, um, one of the most, uh, uh, common ideas that, you know, of course it would seem that universal basic income, just giving everybody free money, would make the value of the money less valuable, and thus you would, you know, have a higher cost of things and so on and so forth. So we're on the fox.com here, and we're taking a look at an article because of course we don't— we want to deal with some of the, this, the, uh, the hard science here. Um, many, uh, conversations about universal basic income have either been over-politicized, inaccurate, or they've been, um, you know, just, uh, kind of on the surface level of thinking that, um, well, this ought to be, this should feel like, this should occur. But when we look at the research and data, we sometimes get a variety of different results, right? So from the vox.com, a new study debunks one of the biggest arguments against basic income. And this was written by Dylan Matthews back in September of 2017. But I'll just read, um, some of the article, um, to tell you a little bit about some of that data and some real-life cases, what they found. So the, so the most common criticism I hear, and this is taken from the article here rather, is that basic income would cause massive inflation. This idea has some intuitive plausibility to it. Imagine the government printed and handed out $1 billion for each person in the country. It seems obvious that this wouldn't actually make everyone billionaires. That is, it wouldn't let everyone live in Four Seasons suites and fly Gulfstream jets everywhere. A lot of the people would just stop working because of their newfound riches. Corporations would have to jack up wages dramatically to keep their labor force. Those higher wages would lead to higher prices and the resulting inflation would wipe out most of all of the gains. Handing out $12,000 to every American adult every year as basic income advocates like the former Service Employees International Union President Andy Stern have suggested is a much smaller change than that. But it seems like the same principle should apply. If everyone's going to a given Trader Joe's, suddenly has $1,000 more per month to spend, shouldn't Trader Joe's jack up prices in response? Luckily, new research on a program in Mexico gives us a real-world test case for this idea, and it strongly suggests that giving out cash doesn't cause inflation, or if it does, the effects are very, very mild, right? And so I'm not going to read this entire article because it's, it's kind of lengthy, but, um, basically what it comes down to is on scale, there is a dissimilar experiment that goes on in Mexico, in Mexico, and, uh, when they're done with the study, the rising costs of, um, items in the, in the town, uh, haven't went up dramatically. Um, I think in some cases they've even went down, right? Well, it says here they find no statistically significant change in prices in villages getting the cash transfer. The estimate is that the price rose only by 0.2%, a tiny change, but they can't rule out the possibility of no effect at all. But by contrast, um, villages getting the food saw prices fall by 3.9%. Think about that, fall by 3.9%. This makes sense. People are less inclined to buy something if they're being given some of it for free anyway. So vendors have to cut prices to get more buyers. Think about that for a second. So that's very, very interesting. To date, I have, I haven't been able to find one economist that's confirmed that universal basic income causes inflation, right? So why is it that we continue to not only support that narrative, but to push the narrative? And unfortunately, I've seen this happen time and time again in America. Sometimes the people who need universal basic income the most are some of the, are some of the people who, uh, are, um, putting out this information that, uh, data-wise isn't backing it up. Let's also consider a few other factors here. Uh, well In our last video in this series, we talked about universal basic income not always being what people thought, and that people would erroneously label social programs and welfare programs as universal basic income, right? And we covered a bit about what the differences were. Another issue with universal basic income that happens a lot is there is an assumption that there needs to be more money printed to pay for it. In other words, people are looking at like the government is going to go out there and print more money, right? But the reality of the situation is, uh, there are many universal basic income programs that, uh, use certain snippets of the winners of an economy, uh, ideas like in the Andrew Yang universal basic income where the biggest corporate winners in certain industries where a lot of the universal basic income money will circulate right back through the economy and be used, go right back to them. In a case, something like Amazon, you think of something like Amazon that's caused many of the mom and pop stores and brick and mortar stores to close up because everybody's doing online shopping. So Amazon almost feels in itself like some giant monopoly in this industry, and it's caused these other small businesses in your local towns not to be able to compete. Because I'm just going to go online and I'm going to order from Amazon, I'm going to get it cheaper, I'm not going to even have to go out and get it, I'm going to get it fast because the Amazon network of delivery is so much great now. So they don't have a chance, right? So a lot of people say, oh well, you know, that's socialism and that doesn't work, and You can't do that and this and that and the other, but Amazon still ends up getting a lot of that money back anyway. My point is this, that in universal basic income, they found ways to target through VAT taxes and a variety of other measures to take snippets and move that value back to the people that's either losing it through job displacement, robot taxes, VAT taxes, And then some people would say, oh well, if you tax everybody, it's going to cause inflation. But again, uh, that data we found through research to be incorrect as well, because raising taxes to any degree is said by many economists, or most economists, to be the opposite of causing inflation, right? When, when there's more money collected, there's generally going to be less money going out. So that's another mistake people make with it, right? But the bottom line being that universal basic income does not need to work on printing money. It can work on the existing money that's already circulating through the economy, right? And many studies find the same thing, not just this one in Mexico, but there are many studies who find that if universal basic income, if it even caused any type of, uh, inflation, some kind of price spike or something like that, they were always very minimal, very minuscule, very, uh, not making much of a difference, like 0.0 something, 0.2, you know, a fraction of a percent, stuff like that, raises and And in some cases, like in this study, it actually causes prices to go down. Uh, in some cases it causes a great market stimulus and more buying power. So why have we latched on to these ideas that we don't have a lot of data to back it up, but just because it sounds good? Well, again, a lot of it has to do with political party, right? A lot of it has to do with who's the voice of those political parties, right? And what message they're trying to get out. Um, you know, in those cases, uh, they will, uh, basically want to keep ideas like this going, right? Ideas like raising taxes will cause economies to stop, grind, or fail. Um, we have data where that isn't necessarily true. Actually, raising taxes again and cutting spending is the best way to have a healthy economy, right? Not spending less, not collecting less, right? So many of those things get overlooked. Another thing too, you have to be mindful and aware that just because prices rise in economies doesn't mean it's the cause of inflation, right? There are businesses that do this, some immorally, unethically, and illegally, and generally are caught when they do it. We have competitive pricing in place that prevents a lot of that. But there is a big difference between price gouging or just price increases and inflation, right? These are two different things, right? One doesn't even involve printing of money, right? It could just be something in relation to they are aware that more money circulating and they're making efforts to do that. But generally a business comes along and will dethrone them, will just say, well, hey, We could do this cheaper. We have more than enough profit, and that will control those prices in many regards. We don't want to get a lot into price rises and price spikes because that's going to be covered in our next episode a little bit with, you know, the housing market. We're going to get a little bit into that. But I think that, I hope that kind of adds some clarity to y'all who believed that story about UBI causing inflation. That you'll never catch an economist saying that. And there is no real evidence, you know, that's solid that suggests that, right? And that's why you don't find many economists even going in that direction with it. If they do talk about some kind of price rise, it's generally due to the offset of 6 degrees of separation to universal basic income, right? Before we get out of here, let's take you over to the BitcoinMYK.com site. 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Um, we believe that this is going to grow to a very large network and we're going to be able to transmit a lot of value to you all just for being a human being and being deserving of the dignity and respect of receiving a basic income globally. But that's all I want to say in this video. If you like content like this, don't forget to like, subscribe, and as always, take care.