I'm attracted to the idea of the Universal Basic Income for all sorts of reasons that have been well hashed out elsewhere.
However I have a problem that I haven't seen dealt with very seriously anywhere. It seems so obvious that I feel it should be dealt with somewhere, but I haven't seen it. Please bear with me as I talk through it.
The general formulation of the problem is: won't a universal basic income just be hugely inflationary and therefore not that helpful? The general response is something like: it isn't inflationary because it really just a redistributive tax, and because as more people buy things, more supply comes online to keep the prices down rather than spark an inflationary spiral. But that is being too hyper-focused on narrow definitions of 'inflation'.
The problem is really something like:
A) There are areas in the economy where price increases often don't spark adequate supply responses. We can fight about WHY they don't (i.e. local housing restrictions, supply constraints on medical doctors, signaling restraints on colleges) but I think we can agree that for whatever reason, they often don't.
B) For those areas of the economy where adequate supply responses aren't available for various reasons, the price can go up (without collusion) to consume a large portion of the subsidy.
B1) So for housing in many job rich areas, the fact that UBI is available to all residents could translate to rent going up a very large portion of the UBI, turning the UBI into a subsidy for landlords, rather than an actually effective anti-poverty measure.
C) So while for most goods, the supply will rise to meet the demand and keep prices down, for a subset of important items (perhaps housing, education, medical care) the price will rise to consume all or nearly all of the UBI, leaving most people no better off, and the landlords and other holders of the choke points much better off.
Now for housing for example, the obvious answer is to remove many of the choke points and make building easier. But that has always been the obvious answer to the housing crisis brewing in the coastal cities and it rather noticeably has not been taken up.
I guess the question is of magnitude. If things like increased rent only end up sucking up a small portion of the UBI it won't matter overall. If they can suck up 60%-70% it might matter a lot. I've never seen good estimates on the issue.
Bonus points for thought both ways:
Can we investigate somewhere like the Alaska income and figure it out? Which way does that evidence point? My initial feeling would be that Alaska doesn't have many goods that are pertinent (property isn't very scarce, people go to college in other states, maybe medical care?).
Is the college loan/price spiral thing an illustration of a similar principle or not?