Universal Basic Income vs Negative Income Tax

[wasupaloopa]

1. I don't understand the reasoning behind it.

Today universal basic income is zero.

Say cost of living is X. Base line is zero

Add a universal basic income of $5,000

New base line becomes $5,000

New cost of living becomes X+$5,000

Since everyone has $5,000 to spend demand increases and producers raise prices. In other words. Prices become inflated or inflation happens.

Basically things remain the same but at a higher level.


The basic income theory assumes prices will remain the same as before the basic income was paid. Or price controls

That goes against simple economic theory