Right now, everyone is already consuming these necessities
Uhm, no? I mean, those poor enough who cannot get those necessities are not partecipating in that market. If they suddeng gain the power to do so, you would have an increase in demand.
That leaves 3, inflation. I am not an economist, but as far as I understand this shouldn’t be a significant factor.
I guess it depends on where the money for UBI comes. If you just redistribute the money that is already spent elsewhere, then yes, inflation is not an issue. Instead if you just print bonds to keep up with the extra expenses, then it might become a problem...
Some people do die from poverty, so there we might expect an increase in purchases following UBI.… but this isn’t a big number,and therefore not a big increase, iff we are assuming that ‘necessity’ means food, water, enough shelter that you don’t die.
In fact, UBI might decrease some costs, for example, medicine is often a necessity, and if people choose to get health insurance (or better health insurance) with their new funds, this may have the effect of reducing overall costs (Obamacare is banking on this effect, on a larger scale).
However, UBI might be expected to raise some prices, for example, for apartments, used cars, and other inflexible markets. But remember, most markets like having lots of customers, so if new cars go up in price, the car manufacturers will be happy to make more cars next year to meet demand at the original price—in fact, unless all the car manufacturers collude, they will have to increase production / reduce price in order to stay competitive. Otherwise, one smart company will lower prices while the others don’t and corner the market.
You can see why the most popular goods are likely to be of the mass-market, easy-to-produce-more type. Truffles are not popular, not because they are not delicious (or so I’ve heard), but because they can’t be too popular—there aren’t enough of them. iPhones, McDonald’s, and puppies are popular because they can be enjoyed by anyone with a moderate amount of money. And if those things went up in price, Android, Wendy’s, or Leroy down at the puppy mill would be happy to fill the void.
I would see apartments as being the big worry; if millions of people move out of their parent’s basement, decide they don’t want roommates, or stop living in their cars, then apartments go up in price. But that only means that many of those people will not, after all, be able to move out of their parent’s basement, etc. (and that the rest of us have higher rents).
I agree with everything you say, indeed the increase in demand is only the first movement of market in search for a new equilibrium. Surely at higher prices markets become more attractive, and those which has a lower cost of entry will attract new supplier, and price goes down, and so on. It is difficult to predict a new equilibrium, although I share your view that the main problem is going to be houses.
Uhm, no? I mean, those poor enough who cannot get those necessities are not partecipating in that market. If they suddeng gain the power to do so, you would have an increase in demand.
I guess it depends on where the money for UBI comes. If you just redistribute the money that is already spent elsewhere, then yes, inflation is not an issue.
Instead if you just print bonds to keep up with the extra expenses, then it might become a problem...
Some people do die from poverty, so there we might expect an increase in purchases following UBI.… but this isn’t a big number,and therefore not a big increase, iff we are assuming that ‘necessity’ means food, water, enough shelter that you don’t die.
In fact, UBI might decrease some costs, for example, medicine is often a necessity, and if people choose to get health insurance (or better health insurance) with their new funds, this may have the effect of reducing overall costs (Obamacare is banking on this effect, on a larger scale).
However, UBI might be expected to raise some prices, for example, for apartments, used cars, and other inflexible markets. But remember, most markets like having lots of customers, so if new cars go up in price, the car manufacturers will be happy to make more cars next year to meet demand at the original price—in fact, unless all the car manufacturers collude, they will have to increase production / reduce price in order to stay competitive. Otherwise, one smart company will lower prices while the others don’t and corner the market.
You can see why the most popular goods are likely to be of the mass-market, easy-to-produce-more type. Truffles are not popular, not because they are not delicious (or so I’ve heard), but because they can’t be too popular—there aren’t enough of them. iPhones, McDonald’s, and puppies are popular because they can be enjoyed by anyone with a moderate amount of money. And if those things went up in price, Android, Wendy’s, or Leroy down at the puppy mill would be happy to fill the void.
I would see apartments as being the big worry; if millions of people move out of their parent’s basement, decide they don’t want roommates, or stop living in their cars, then apartments go up in price. But that only means that many of those people will not, after all, be able to move out of their parent’s basement, etc. (and that the rest of us have higher rents).
I agree with everything you say, indeed the increase in demand is only the first movement of market in search for a new equilibrium. Surely at higher prices markets become more attractive, and those which has a lower cost of entry will attract new supplier, and price goes down, and so on. It is difficult to predict a new equilibrium, although I share your view that the main problem is going to be houses.