The inflationary cycle only exists if you don't do the math.
If we take a universe where there are 3 people, one guy makes $100, another makes $300 a year, another makes $1000 a year. We'll assume that everyone spends all their money every year.
Suddenly the gov't decides to give everyone basic income, a stipend of about $100 a year.
Suddenly the bottom guy gets enough money to live and quits his job at Walmart. Walmart finds out that people are willing to work for double the old salary though($200). So they multiply the price of goods by 2. The guy from before starts working again.
Guy 1 now has $300 a year, Guy 2 $400, Guy 3 $1100
but prices have doubled right? so in PPP the totals are:
Guy 1 has $150, Guy 2 $200 , Guy 3 $550
Guy 1 still ends up richer in the end.
This universe had 0% unemployment and Walmart made no profits. Basic income doesn't destroy wealth, it transfers wealth just like pretty much any gov't scheme. And richer people will end up paying for it (oh no!).
But on the bright side, people at the bottom will end up richer (because the higher wages end up going to someone), and will be able to live in respectable conditions (Which leads to all sorts of good things like being able to keep themselves and their children healthy, lowering the incentive for crime, etc). And it doesn't have the moral judgements attached to a lot of welfare.
I haven't formalised the calculation, but I'm fairly certain that by the continuity of the universe of economics, and the fact that someone with $0 revenue now will always be richer with basic income, there are winners in the system, and so it doesn't turn into some inflationary spiral.
If only economics were so simple[1]. Nobody disputes that some people will end up richer, and that people who have no income of any sort (generally those who are not employed, not disabled and not looking for work) will indisputably benefit. The rest of the winners and losers depend very heavily on the amount in question, who pays most of the increased burden, what happens to people who were previously entitled to more than the Basic Income; you can nevertheless guarantee that some of the losers will be relatively poor workers, some rich people will end up richer (including some pretty unproductive rich people, like slum landlords) and some rich people will end up broke (especially people providing jobs to relatively-unskilled US workers in competitive international markets).
That said, you can make one pretty uncontroversial prediction: if you try to set the Basic Income high enough to ensure people can actually indefinitely live "in respectable conditions" with it as their main source of income, then there will be a lot less wealth being produced in the US.
And I can't see why only people actually applying for work should be subjected to moral judgements and restrictions on their lifestyle?
[1]I'm not sure who's paying for the stipend in your example. Or why Guy 2 wouldn't push for a pay rise when faced with a 50% reduction in his real wage (presumably he has some bargaining power if he's worth 3x a Walmart worker)
> Suddenly the bottom guy gets enough money to live and quits his job at Walmart. Walmart finds out that people are willing to work for double the old salary though($200). So they multiply the price of goods by 2.
That is an extremely naive conclusion. Re-think your argument.
I'm assuming a magical world where the price of goods depends only on salary (if you actually look at a series where every aspect of the production chain gets hit by the same salary increase, then the price goes up the same amount anyways, irregardless of material costs).
If we take a universe where there are 3 people, one guy makes $100, another makes $300 a year, another makes $1000 a year. We'll assume that everyone spends all their money every year.
Suddenly the gov't decides to give everyone basic income, a stipend of about $100 a year.
Suddenly the bottom guy gets enough money to live and quits his job at Walmart. Walmart finds out that people are willing to work for double the old salary though($200). So they multiply the price of goods by 2. The guy from before starts working again.
Guy 1 now has $300 a year, Guy 2 $400, Guy 3 $1100
but prices have doubled right? so in PPP the totals are: Guy 1 has $150, Guy 2 $200 , Guy 3 $550
Guy 1 still ends up richer in the end.
This universe had 0% unemployment and Walmart made no profits. Basic income doesn't destroy wealth, it transfers wealth just like pretty much any gov't scheme. And richer people will end up paying for it (oh no!).
But on the bright side, people at the bottom will end up richer (because the higher wages end up going to someone), and will be able to live in respectable conditions (Which leads to all sorts of good things like being able to keep themselves and their children healthy, lowering the incentive for crime, etc). And it doesn't have the moral judgements attached to a lot of welfare.
I haven't formalised the calculation, but I'm fairly certain that by the continuity of the universe of economics, and the fact that someone with $0 revenue now will always be richer with basic income, there are winners in the system, and so it doesn't turn into some inflationary spiral.