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Yang: Yes! If I gave you a thousand bucks a month, you might not even notice. But if you put a thousand dollars a month in the average American consumer’s hands, it’s going to get spent right in their main street businesses; it’s going to create two million new jobs, because that money is just going to go to tutoring, and car repairs, and the occasional night out, and it’s going to circulate over and over again.
Yang’s comments reflect a profound misunderstanding of how money works. Money is not a store of value, and printing more cash does not make us richer. If people spend a larger pot of dollar bills on the same goods and services that were available beforehand, we will simply pay higher prices. Unless Yang has a plan to boost the production of goods and services, his ABI would simply result in inflation.
Yang wasn't making a "print money" argument, he was making a velocity of money and demand stimulus argument: where strong consumer demand exists, businesses can exist and fulfill that demand, therefore employing people. It is an argument true wherever consumers feel they must limit themselves and substitute inferior goods.
The article has other questionable elements to it, but this blatant misrepresentation stuck out to me. The author's pedigree and references trace to the supply-sider elements of the economy, and if his best argument against demand stimulus is to pretend that's not on the table, well, then I think we're ready to consider UBI.
The author makes a reasonable argument against using an income tax to pay for UBI, but Andrew Yang’s platform was to establish a Value-Added Tax, not an income tax.
I don’t think that the same negative substitution incentive occurs with a VAT: purchases become more expensive, but individuals are taxed in proportion to how much they purchase rather than how much income they make, so saving/investing is incentivized.
I’m not an expert and I’m interested in seeing how I might be wrong, but that’s my initial thoughts on his argument.
Proportional to the income, poor people suffer more in this VAT, GST, etc regimes.
That’s true, but they also benefit more from UBI. If you are taxed less than $12k of VAT and are given $12k of basic income, then you still come out ahead.