Why wouldn’t a Basic Income be consumed by inflation?

Interest in the Basic Income is definitely picking up. This recent piece from Andrew Flowers, like most, doesn’t at all mention the possibility that the BI amount could be somewhat or completely eaten away via increased prices.

The BI will give rent collectors—landlords, near-monopolies like AT&T/Comcast, state/local governments, on and on—large incentives to increase rents, prices, and fees. Of course it will have some level of inflation.

If the inflation effect turns out to be large, BI would be a waste of time and scary to roll back, but there’s also a danger it could be regressively redistributive. I think it’s likely Congress would pass the BI only if it also reduced more direct help to the poor. If Congress took away that help, inflation—if occurred—would effectively force the poor to turn over what’s left to the rent collectors higher up the wealth distribution.

BI is still an interesting thought experiment to me, and it’s cool that studies are underway, but those studies need to be large and long enough to detect for inflationary effects, and articles discussing BI should mention that risk.

There are plenty more feasible ways to help the poor: increase wage subsidies like the EITC, target wage subsidies toward those having particular trouble finding work, or even some WPA jobs.

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