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Why Basic Income Would Not Cause Inflation (and Might Slow Inflation)
Poverty is expensive because the poor can’t shop competitively. They pay high prices in the neighborhoods they can afford because the big box stores are far away. They accept bad apartments because they can’t afford better ones. Business owners who exploit the poor know they have a captive audience.
But Basic Income is walkaway money. It’s the money to tell landlords and shop owners that they must compete or their customers will go elsewhere.
The potential for bringing down costs is greatest in housing. Today, neighborhoods come with a safety penalty. If you want to live in an area where crimes of desperation are rare, you pay a premium. With the end of crimes of desperation, people will move into formerly dangerous places. The landlords in those areas will want to improve their properties to attract those renters and keep their current ones. Landlords in more expensive neighborhoods will have to lower their prices to keep their renters from going to cheaper places that are just as safe.
Basic Income will not make all neighborhoods equal, of course. The rich will still pay a premium to live with their peers. Location will continue to be the greatest factor in pricing. But if you believe in the power of competition, you know Basic Income gives that power to those who do not have it now.
