> One aspect of UBI is that poor people would be less at the mercy of the rich.
That is a very strong statement that I don't think can be claimed at this point.
In my opinion, I feel things will simply shift under UBI. People will receive UBI, but then other things, like rent, food, etc. will all just magically get more expensive.
I cannot see any implementation of UBI working any better than things now unless the predatory nature of those in power is put in check.
How are you more at the mercy of the rich if you have more money?
Consider a very smart and very poor person. You walk up to him and say "Hey, want 1200 dollars?" Do you think he'll say "No, that would increase my dependence on the rich." I don't.
I just can't conceive of the mechanism. Slum lords try to separate the poor from their money now. Pretty much everyone does. The only difference is, the poor would have more money.
There's probably going to be predation on the mentally ill or incompetent. That could be solved by helping those people, limiting what they can buy, or harshly punishing the exploiters - some combination. But even if they were cheated out of their UBI I don't see how they'd be worse off (without assuming people wouldn't help the mentally incompetent if they had UBI which seems dubious to me).
It depends on how UBI would play out. For example, let's say UBI gives everyone $40,000 a year. In much of the non-coastal US, that's enough to live on. But, pricing might still be based on everyone having a job. So prices now reflect the assumption people have 40k + whatever their salary is. I could see the rent-seekers adjusting their charges accordingly. A slumlord could now price their rents on a poor person making $60k a year (40k + 20k from their job) instead of just on the $20k alone. Doubling or tripling the rent. Consumer goods would possibly follow the same pattern.
Maybe UBI would come with some sort of rent or price controls. Or maybe the fear of massive inflation would temper the greed of the rent-seekers. I don't know how it would play out. And I have to say I'm generally in favor of UBI. Just thinking out loud about how it might not be as helpful as it could be.
If everyone had $40k/year of guaranteed income, all of a sudden opportunities to go around slumlords opens up: they can buy land and new-build or redevelop housing with UBI-Backed mortgages (so the bank knows they’re getting the money back).
Renters almost by definition aren’t capable of amassing enough capital to build new housing, so are at the mercy of the existing supply. If it is guaranteed that everyone has a capital-amassing stream of income available to them, they gain an ability to turn that stream into something longer term. Sure, this still may not be possible in areas with strict housing regulations, but a guaranteed, portable stream of income also provides people the means to move.
And why would they sell you land for less if they know you have $40k more of income? Everyone can pay that extra money, if I am a seller I am raising my prices accordingly.
Is there a reason other than naked greed, why you (philosophical 'you', not you personally) would raise your prices accordingly? Keep in mind that even as a multi-millionaire slumlord you would also receive UBI (or else it ain't universal) which is enough to cover basic food and shelter.
Because you don't directly set real estate prices based on the buyer's income. You simply sell to the highest bidder. The bidders look at their own income and decide what to pay. If all the bidders have more money, the price will tend to rise.
Slumlords require a limited supply of local housing to gain leverage. If people on UBI are free to move then slumlords are competing with each other, so the same market forces that keeps prices low everywhere else are in effect.
Some people on UBI would happily trade worse living conditions for more spending cash. But that freedom of choice is what enables efficient resource allocation.
"Slumlords require a limited supply of local housing to gain leverage. " Indeed - if you want to get rid of slumloards then how about getting government out of the way of new housing being created? San Francisco is the poster child for how utterly draconian zoning laws screw everyone, but lower income people disproportionately.
It wasn't "getting government out of the way." It was literally government working in tandem with the trade-union interests of finance, insurance, and real-estate to preserve the value of the "asset," real estate. The problem is BOTH the government AND allied private industry working AGAINST the interests of their constituents and clients. The correction here will be MASSIVE.
Not sure if I'm convinced, assuming pricing is based on supply and demand. UBI might increase demand a little bit (as the homeless can now afford housing), but probably not by much.
The article talks about an overabundance of CONSUMER GOODS, but no amount of deflating TV prices can make up for the fact that Rent, Healthcare, and College is what's putting pressure on the lower and middle class right now. UBI will inflate rent the same way cheap student loans inflate tuition.
>How are you more at the mercy of the rich if you have more money?
Because it's not about mere money, but about power. Getting double the money you get now doesn't make you more powerful than e.g. Jeff Bezos. In some instances it might make you less (e.g. if the cost of living increases because of the extra money circulating, if you start depending on the extra money, etc.)
That is and always was a popular remark but the trials showed people might work fewer hours but for the most part become more productive when the fear of losing everything is removed from the equation.
Sorry, but I don't understand exactly what you mean.
It sounds like you're saying most people wouldn't quit, which doesn't conflict with my statement, which is that "some people" would quit.
If you want to try to dispute that, you'll have a tough time with me, since I personally already have quit, even without the UBI, and from much more than $100k.
I thought it was just a variation of "everyone will stop working!". If a few people stop it's not a problem. We need enough productivity to keep things going but working a useless job is a problem. Working for no reason and no purpose. Work for the sake of working. Work consumes resources, we shouldn't spend finite resources on things we don't need. You can just sit there and think of something to contribute to society. That is, if we are worthy of such flattery in your experience.
Does that happen with any other product? Are other consumer products priced based on calculation of consumers' incomes, or are they priced based on demand and competition in the market? I think rent in high-COL cities is more determined by high demand there than landlords' personal assessment of the residents' average incomes. With UBI, people would be more free to move away from areas with high rent. There could be more free competition on housing/rent across the whole country, which might drive down rents.
>I think rent in high-COL cities is more determined by high demand there than landlords' personal assessment of the residents' average incomes.
A landlord doesn't have to personally assess the average income of the residents. The high demand will roughly do the assessment for them.
>With UBI, people would be more free to move away from areas with high rent.
This is something UBI allows, but I'm skeptical whether people will actually do that. Remote work also allows people to do that, but until the virus it hadn't really been considered as a serious option in the vast majority of workplaces.
>Remote work also allows people to do that, but until the virus it hadn't really been considered as a serious option in the vast majority of workplaces.
Yes but the cruical difference is that now, if I ask for remote work to move and the company says no I have to choose between having and income and moving. With UBI they say "no" I say "ok" and have income to fall back on.
The key thing UBI enables is the ability to meaningfully make a choice to leave your current job if you want to without destroying your ability to keep yourself alive.
I would wonder what limitations UBI would require. What if people get UBI in US and move to a low cost Asian or African country to live princely lives with their UBI while American taxpayers pay for that lifestyle.
My personal guess is that it won't happen on a large scale. After all, most people feel connected to the places where they live and to the people around them. Moving to another country can be difficult if the divide (language, religion, customs, political system and its stability, law, personal and property rights, safety) is wide. This seriously limits the choice of places people would be willing to move to long-term in the first place. Historically, large-scale permanent migrations happened only if living conditions in the place of origin became hostile.
Also, where would people move to? Many destinations are developing countries and thus the cost of living there will rise in the long term. Also, these expats would be heavily affected by foreign exchange rates.
People might indeed cluster up in certain places, buy property there and live a leisurely livestyle. These factors would make prices rise and in the long term it would become less attractive to move there. This happened in Spain where property prices in premium locations have skyrocketed because of well-off people from other EU countries buying homes there. Depending on how much the goverments of the target countries care about this, they might think about countermeasures, such as restricting property acquisition to locals.
If the outflux of money becomes significant, it will affect relations with the target country as the origin country will seek to reverse the flow. Trade deals will be affected, and developmental aids, if there are any, might be reduced. If it works, the target country might make it more difficult for expats to stay long-term. But the most straightforward approach might be to limit the UBI based on residency, or make the expat lose perks such as voting rights.
higher education in ALL colleges is priced in a similar way. They've all raised their prices in accordance with the amount of money the government is willing to guarantee kids will have access to.
For the most part I agree, however community colleges usually offer very cheap prices, even more so if you are a resident of the state or country which it resides in.
> This is something UBI allows, but I'm skeptical whether people will actually do that
I am a supporter of the UBI theory but I have to say I am skeptical of the implementation. People are usually incentivized to move towards the places that provide opportunity - jobs, education, etc. UBI might dampen that incentive.
Given that most leadership systems are strongly influenced by the rich I have to wonder whether a system like UBI will be implemented in such a way that people are less dependent on the rich rather than actually becoming even more dependent.
demand for housing is somewhat inelastic though. It will only increase to the point where homeless people can now afford to rent a room somewhere. UBI would only significantly increase demand if it was so much money that a lot of people would be looking to buy second or third homes.
The problem, in the end, is the other side of that inelastic demand.
Everyone needs to live somewhere. Landlords only profit if their properties are occupied, but they can simply decide to all increase their rent by $1000 a month, knowing that eventually, the only choice for some people will be to pay it or be homeless.
I have no idea if it would actually work this way in practice.
Education is priced based on what rich international students can pay, then most domestic students get massive subsidies. I don't think it's a reasonable comparison.
Rent is based on demand and competition in the market, which is why it reflects consumers' incomes. That's the entire problem with UBI: it will just result in widespread inflation, in housing and every other market. The only way to keep rents from rising so rapidly is for people to be able to own the properties where they live.
(This does, indeed, fall under "some form of socialism" that the author deems magically "unworkable." Simply a tax code of affordable taxes for personal property - i.e. a home you own and live in - and high taxes for private rental property used to make a profit, with the intent that it should make financial sense to sell to an owner who will live in it.)
==That's the entire problem with UBI: it will just result in widespread inflation, in housing and every other market.==
Do you have any evidence to support this type of absolute claim? People have been screaming about inflation since the Fed massively expanded their balance sheet in 2007. The only things we’ve really seen inflate are assets (buying housing, stocks, etc.) we haven’t seen much inflation in non-assets (renting, commodities, consumer staples).
I think it's mostly location-based. NYC, Seattle, San Fran, Austin, Denver, Boise and more cities have seen significant rent increases. On the other hand, we have Rust Belt cities like Milwaukee, Chicago, Cleveland, Indianapolis, St. Louis, Detroit, Cincinnati, and more where rents haven't risen at the same rate.
Edit to add some specificity, although it's not "rent". Here [1] is a 3 bed/2 bath house in a very safe Chicago neighborhood for $325k. The local public elementary school is an 8/10 and the high school a 7/10.
If a significant number of readers here on HN click that link, driving traffic to that specific listing, I wonder if it would cause the agent to think there's more interest in the home than there really is, giving them the suggestion that they should increase the price.
It does have a "HOT HOME" banner on the first picture. Could that be from HN readers?
Let's implement income caps for all Bay Area tech company employees at $75k. Then landlords will lower rent and the housing price issue will be solved. /s
Max incomes and max wealth seem like excellent ideas. It should be gradual tho. I would like to see a basic income start at 50 or 100 bucks. That way we can see some of the effect and deal with it. It would at least reveal how hard it is to implement.
Sounds like a problem that you could also solve via things like universal rent control. Lock the rent of all units. If you're not happy with the rental income of a unit, you're free to sell it to someone who wants to buy a primary residence.
Nothing, because UBI+salary = previous salary. So everyone's part of income available for paying rent is the same.
Only difference is that the guy who earns $2500 right now might be able to get a better job because he can quit without immediately losing his apartment.
I can't see inflation not catching up with whatever UBI provides within couple of years. In the example above, rent will go obviously up, as will prices of products and services. When everybody has more money, I for sure can ask for more for my services/products.
As for dependency, the money won't magically spawn on the table, they will be earned by state on taxes and then paid to citizens/residents. So you depend on who is in power anyway since there will be many rules, exceptions etc. It brings another new universe for corruption, leftist politicians to promise (and deliver) higher payments that next generations will have to pay back and so on...
All these mental games, me, you, everybody... we can't get the full picture of everything mixing up with everything else - economy, mentality of individual and groups, greediness, black swan events, selfishness etc. and come up with a nice simulation how it will end up all joined together. That's just wishful thinking and people pick up side which they prefer, nothing more.
I'm not sure how this works in the US, but in other countries there are laws against such increases in rent - especially 'social' rent for those with low income.
In most of the US, I believe there are no laws. California recently passed some legislation limiting rental increases per year, but it's still something like 7-8%, which is ludicrous.
The first world country I'm from has, effectively, nation-wide rent control (varies by region) and rent increases are limited to something around 1%, set each year (tracking inflation somewhat).
In the US, this will work very poorly: a landlord can just bump your rent by exactly the UBI amount and get away with it. Otherwise, they would have to wait for a vacancy to set the rent. But eventually, I agree that the rent would just absorb the UBI in many cases.
In the country I live, rent is indexed and adjusted to inflation on an yearly basis. When the contract expires, parties have the chance to negotiate rent value at contract renewal to either increase it or decrease it.
Many big cities in the US have forms of rent control. Usually this is tied to a particular tenant, if the old tenant moves out the landlord can charge a market rate.
Perhaps nothing, his tenants will likely move to apartments in better neighborhoods, or, buy their own homes. He'll need to keep rents the same to continue to attract replacement tenants.
So demand for cheap apartments fall and prices stagnate. But you can't just think about one step, you have to consider the implications of that step.
For example, if people are moving out of their bad apartments into nicer apartments and homes, demand for nice apartments and homes will increase, driving prices higher. Which makes sense--suddenly there is much more money available for housing. But that's not the end of the story, either.
What is the incentive for the owners of small apartment complexes? It seems clear. They need to renovate their apartments so that they can capture the new up-market demand. Successful, mid-tier apartments could buy up cheaper complexes to renovate them and charge higher prices (this happens even now).
The low-demand, low-price alternatives will fade away, because the land owners can make more money with slightly nicer, more expensive units.
Why would the low-price apartments see lower demand? There’s going to be a huge number of folks who are now making a low income looking for housing. Many of these people are currently either totally unhoused or living with family/friends because they can’t afford even low-price places. If there’s a huge new demand won’t apply in fact increase?
They'll buy their own homes? Through cheap government sponsored mortgages? Add that to the list of government spending that will expand under UBI.
They'll move to better neighborhoods? What's going to happen to the people living in those neighborhoods? It's not like there are houses sitting vacant...
Sure, no government incentives required. The median home price in the US is $226,000.
A typical mortgage payment on that mortgage is $1,100.
Adding $1,000/month will put many renters above the minimum income they'd need. Keep in mind, a married couple will be getting $2,000/month.
There will be vacancies for the same reasons. People moving up-market.
Highest end homes will also increase in value. Everybody moves up, and homeless folks who are homeless due to loss of income will have a place to live.
The majority of our mortgage market is govt guaranteed at artificially low interest rates (i.e. the US govt is taking losses on the time value of that money)- that was my point.
Everybody moves up- meaning more homes being built- so you'd expect this to increase house production in the US, correct?
So, despite a disincentive for low payed laborers (like those who do construction) to go to work, the housing market will not just continue, but actually become more productive?
That $1100 a month- doesn't include home insurance, doesn't include property taxes, and assumes a $60k down payment, correct? Seems like a charitable number to pick.
Artificially low interest is not a guarantee. It's an opportunity for the time being.
They are already paying rent, and if married, they get $2,000.
If their rent is $600, they would have $2,000/month to save a down payment and then have $2,600 to buy a median priced home. That's enough to cover insurance and property taxes.
The standard down payment is 20%, so a $226k home would be $45,200.
What if every landlord but one raised the price by 1000 a month, and that one realized he could get more business by raising only 900 a month, so in response to that one landlord others lowered to only +800 so the one countered with +700... Etc. Etc.
This argument would be much more persuasive if each landlord could supply an effectively unlimited supply of housing. As things currently stand, a landlord reducing his rent would clear his limited inventory first, but the broader effects of the actions of a single agent would be fairly muted.
Sure, in theory you can eminent domain a neighborhood of low density housing and replace it with higher density housing. In practice though, its politically impossible most places.
Raising rent ... and building more houses. Raising rent skews incentive significantly towards renting. Eventually the market becomes efficient as supply outstrips demand and rent sinks again.
With an ability to command higher rent, renting becomes profitable on properties that were previously not profitable to build on. In the long run, I expect rent to fall relative to the current state of affairs as housing is overprovisioned (using the added income from more rent) and moves more towards a buyer's market. Furthermore, with UBI workers are in a stronger negotiating position so we'll see more work from home which also lowers rent by reducing competition in the cities.
As a former landlord I’d do the same thing I did then - keep my price low if I like my tenant or increase / not renew the lease to kick them out essentially. There’s a lot of variables to pricing for different kinds of landlords.
It’s also illegal / breach of contract to increase rent based upon a person’s increased income as well unless it’s outside a lease period. I was told this as a landlord and I was mostly interested in getting a good tenant rather than trying to get the most dollars anyway. A bad tenant costs you far, far more than whatever you’d have increased your rent by.
It's mentioned in the article indirectly: when you enable consumers to demand more, you increase competitive pressures amongst producers as well. Your landlord raises your rent by $1000? That's fine: you move to another town that's cheaper. Landlords are no longer competing within a town or city; now, they're competing with landlords every where else.
> That's fine: you move to another town that's cheaper
This is a pretty privileged perspective to have and shows that you may not fully grasp what it's like to be poor.
Do you understand the costs of moving (both monetary and time spent)? Do you understand the cost of most likely having to quit and find a new job (if they are available)? do you understand the costs (socially and mentally) of having to leave your community/family of support?
The opportunity cost of what you are suggesting makes it much less feasible than you make it seem
One of the benefit of UBI—indeed, for some people, one of the explicit purposes of UBI—is that it drastically reduces the need to fear that moving will be too expensive for you.
It is, of course, possible to implement a UBI that is too low to make it practical to move, but I would argue that in that case, it is missing the "Basic" part, because it does not provide enough to meet real people's Basic needs.
I think the concern many people have (and rightfully so) is that the economy is not a static system. Any artificial offsets (UBI) will just get priced into every agent's value calculation.
The thing that gives "Capital" power is that you have it, no one else does, and you're trying to transform it into some arrangement that over time creates more value than it consumes.
The transformation applied can absolutely be done incorrectly, making subsequent capital value transformations more difficult to accomplish profitably given greater constraints on the means the capital allocator can bring to bear.
Nothing about UBI substantially changes the nature of that system, therefore, the real problem to be solved, (the asymmetry of means between capital allocators) given a system that optimizes toward capital control centralization (more capital fewer hands) without also being paired with wealth ceilings via tax extraction at the top and reinjection at the bottom.
> is that it drastically reduces the need to fear that moving will be too expensive for you
Sure, that would definitely be one area where UBI would assist with but as I mentioned in another comment - it would kind of defeat the purpose of the UBI if people had to spend it on mitigating the consequences of people taking advantage of them receiving UBI
The empowerment of poor people to move may be enough to just discourage landlords from raising rents in the first place. It's like when workers join unions and increase their bargaining power: even those not in the union benefit.
The pro UBI arguments completely miss the 2nd level effects - the predators will come out in droves and the less intelligent will be conned into long term contracts that consume their entire UBI. UBI is a gift to the wealthy - it gives them a huge pool to steal from.
Possibly, but that sounds like a problem which could be solved separately, perhaps with stricter laws about what constitutes an onerous contract; we need not discount UBI entirely because it causes some problems, since the problems UBI causes might be better than the problems we have without UBI, and the problems with UBI might be easier to solve.
If the issue of predator treatment of consumers were addressed first, a large amount of the pressure for UBI will evaporate. The poor are poor due to predator capitalism, not due to any lack of skills on their behalf.
It might be that UBI is politically potentially possible, while the other issues are not politically viable to solve in the present situation. Politics is the art of the possible.
Being poor isn't a lack of intelligence, it's a lack of money. No doubt a few people will get conned out of their money, but for the majority it would be a net positive to have more money at their disposal.
That will absolutely happen sometimes the question is how common it will be vs how many other people will be able to use those resources to get themselves into a better situation.
Even if the cost of moving/visiting family were offset by the rent savings - which very possibly would not be - it would kind of defeat the purpose of the UBI if people had to spend it on mitigating the consequences of people taking advantage of them receiving UBI
oof. Ignoring the uncomfortable and unsympathetic assumptions you are making, I will again reiterate what I have in other comments:
it would kind of defeat the purpose of the UBI if people had to spend it on mitigating the consequences of people taking advantage of them receiving UBI
Your argument makes no sense. We can just replace "UBI" with "job".
It would kind of defeat the purpose of making money with a job if people had to spend their earned money on mitigating the consequences of people taking advantage of them receiving money.
So... the takeaway is strive to earn less so you get preyed on less?
I don't agree. Jobs are much more than just income. They provide purpose, skills (possibly for life and future work), experience (in general and for acquiring future work), possible medical or investment benefits, connections (social and for future work) etc. All these things mean that there are many situations where earning less or having to move would be outweighed by the benefits.
This is not the case in my example - UBI is JUST income. If the providing of UBI creates more problems and negates the income, then it loses its benefit and purpose (not saying this would be a guaranteed problem inherent to UBI, but that was the premise of the OP)
I would suggest that, whether or not you identify with/have been part of a group, you consider that your perspective/experience very possibly is not the experience of everyone else in that group.
Wouldn't that only work if the other town didn't also have UBI? I think the conjecture is that if everyone, everywhere is suddenly guaranteed to have a certain minimum amount of money per month then landlords everywhere are going to raise rents. Who are the landlords that are just going to leave money sitting on the table at a cost to themselves? The only thing that could counter this reliably would be an increase in housing supply.
I actually think that would be a better solution than UBI, figure out what American public housing has done wrong (namely the idiotic towers in a park idea) and fix it, say by producing lower density functional neighbourhoods that have proper streets, places for business, community services, etc. and just build masses of them. Housing is the biggest cost after all and it's a large public works project that could be carried out everywhere. You'd have to fix the problem of corruption in projects of that nature though and that's unfortunately a much bigger challenge.
> figure out what American public housing has done wrong (namely the idiotic towers in a park idea) and fix it
I think an issue with this approach is that it's top down, as as mentioned in the article, "those at the top can’t manage all the information about the economy".
A counter-argument may be to just let towns and cities decide what to develop then, since local people have the best information about their neighborhoods. However, 1. this is already the default method and has resulted in housing crises where NIMBYism is rampant. 2. UBI would also help in this case as you're increasing the demand for housing while increasing competition between people living there and not (assuming people want to move to the area in the first place).
Job is one part of life. A human is not like a variable in program that can be refactored into another class as needed.
What you are saying would work perfectly for a young college graduate, without much family or friends, who has no dependency or no one dependent on them.
Now imagine a young single mother or father that depends on their family for babysitting or caring for the child while they try to become functioning member of society.
Imagine someone with some health condition that needs access to certain medical facilities.
People live in cities and migrate to cities because they can access schools, colleges, entertainment, public transport, medical facilities, better opportunities, parks etc etc. They can't just pick and move and uproot themselves.
I think people who work in technology do not have enough exposure to the poor and struggling members of the society. I grew up in a really really poor family and when I talk to my coworkers it is very apparent that they don't understand poor people.
Even moving somewhere else within the same city is a lot less hassle if you are less concerned with immediately having the work part of the equation figured out.
I am not a young graduate, uprooting now would be a big deal for various reasons. Neither are my friends in their 30's raising families - some of which are living with their parents for the kind of reasons you describe.
My point is that without being so close to the financial edge all the time, even less well off families can take a step back and make decisions that work best for the future. The stress associated with risk (like quitting a job) results in a scary amount of lock in for many people I know.
It's not a feasible solution for _everybody_. However on the net, by giving that option to _all_ renters, you will discourage the population of landlords from increasing rent in general.
On the anecdotal other hand, I've moved eighteen times in my life. Some of us not only don't mind, but given the opportunity, enjoy new places and new situations.
Did each of those moves include raiding the dumpsters for boxes? Enlisting others to help pack and move? And taking a year of savings to cover a deposit?
But you're making a straight-up Maoist argument here. You are arguing that the rent-seeker class (quite literally) are so uncontrollably avaricious that there is no way to moderate them: logically, they must be destroyed and we must go with communism because there is NO possible balance to be struck between rent-seekers and proletariat.
I'm pretty lefty but I sure wouldn't go so far as that. Tell them not to bleed the tenants totally dry. Try making rules. Try enforcing rules. If that doesn't work, THEN we can talk along 'kill all the landlords' lines, but I am just not convinced it's that simple.
I think there is room in a liberal market capitalist system with social supports (such as UBI, which is nothing more than a lower overhead social welfare system) to allow people to have property and stuff without it automatically going to Mao's worst nightmares. Yes, people are greedy, but that's not the only thing in the system.
Exactly what will not happen, and a major reason why UBI will be a colossal failure if implemented. In our current political climate there is no way in hell UBI is implemented fairly and with rational checks and balances. The effort to implement UBI will be riddled with "pork" and what end up with in reality will be a sad, sad joke.
> The UBI must be indexed on the cost of life and updated every year.
That makes no sense at all. UBI is just an income redistribution scheme, thus it can only work if it's linked to productivity. Otherwise you create a system that's bound to fail and collapse in the times it's needed the most: an economic crisis.
Invest in building luxury housing in areas with high quality of living in order to lure people who can now afford better apartments and are no longer tied to a particular area?
Raise it to 2000. But the parent was talking about how now with UBI, people don't need to work to pay that.
With food stamps, and other welfare programs that already exist to cover your other costs you don't have to work to be able to afford living anymore. Sure you can't go anywhere or have a fancy new phone or car but your income from work could pay for those things instead of just barely being able to stay alive.
Yeah, that is a fair point. Nonetheless, at this point we are not providing them a general income and instead society will just be subsidizing rent.
I don’t like this solution because it is a pretend-solution. What are the causes of poverty? Prevent them. What are the barriers to mobility in the job market? Alleviate them.
UBI helps but in my opinion it is just sweeping the problem under the rug.
Value capture by capitalists. Perverse incentives of means-tested welfare programs. Making choices that are suboptimal from an expected value perspective because they are better from a risk perspective when you can't afford to take risks.
> Prevent them.
UBI prevents or reduces all of those causes.
> What are the barriers to mobility in the job market?
People not having the resources to take time off their current job to retrain, either via formal training program or taking temporary lower-paid work in a different field, among others.
Why wouldn't the landlord raise rent to $3000 if it's clear that most of their tenants could manage to find a job on the side to cover the difference? That's what they already have to do now, right?
Because like any other price gouging circumstances, attorneys general can get involved, city councils, county, state... if landlords in particular want to start charging more than the market can bear that can be stopped.
I don't get why this one fear "omg rents will skyrocket!" gets trotted out as The Reason UBI will fail.
Because that would require all landlords in every place anyone would want to live to coordinate with each other, and to also coordinate with builders to not build more housing in places people want to live to not build new housing. $1,000 per month, at a 3% interest rate, would support around a $400,000 mortgage. That's getting into the territory where you can custom-build a house, and is several times the cost of a pre-fab house. Two people on $1,000 / month each could cover cost of living somewhere cheap, and if rents get high enough in places where jobs exist, some people will just entirely opt out of working and go buy a house where stuff is cheap, which reduces demand in impacted areas.
Prices will go up by some percentage of the basic income amount, but that percentage will be less than 100% of the difference. The landlord might raise rent from $1000 to $1600, but not to $3,000.
I understand that, in reality, the rent increase will probably not be 100% of the maximum possible theoretical increase that the current tenants could handle. In reality, it will be some fraction of that.
But what I am saying is that theoretical value for the new rent amount in that pricing model is $3000, not $2000 like the other poster was saying. Thus their arguments don't work.
If it’s so obvious, why do all supporters of UBI ignore the issue? If you really care about the well being of the worlds population then address the underlying problems.
Provide them access to the education you received (starting with primary school, not college).
Prevent their exploitation by the companies. Especially those that we often work for!
I would bet a better effect can be realized by investing in public education at the primary-high school levels. Make teacher salaries competitive with engineers. Enable all schools to have the equipment and teacher qualities they need.
Getting a good education is a lot easier when you have notebooks, filling breakfast, and parents whose stress or sleep-deprivation doesn't exacerbate untreated mental health issues.
We're not ignoring the issue, we just don't think the issue is the same one you do.
The main issue in the world at the moment is income inequality, the things that you are listing stem from that, you can't fix education inequality without first addressing the income issue - UBI proposes that we tackle the source of the problem rather than trying to patch things up downstream
You cannot fix wealth inequality by giving the paltry amount of monthly stipend UBI is discussing. To address wealth inequality you need to educate the public better and you need to regulate capitalism better. Simply giving people UBI is a gift to the educated capitalist who will simply raise prices while simultaneously paying lobbyists to insure raising their prices is legal.
What paltry amount are we discussing? The concept of UBI is that it pays a living wage, enough to feed, clothe and house someone. It might not eradicate wealth inequality but it definitely narrows the gap/reduces it.
I'm assuming you accept that the poor are getting poorer and the wealthy are getting wealthier - how do you propose to stop that without UBI?
UBI alone is not a solution, it needs to be accompanied with access to adequately funded education and affordable housing and healthcare. Education is the #1 driver of success, and at minimum a better commitment to education by the United States will pay back multiple times over. Additionally, what leads you to believe UBI will allow an individual enough to feed, clothe and house themselves? Sure, that's the "idea" but in this world you think that would become a reality? No way. UBI as implemented will be watered down and it's effect will be a net zero, triggering the conservatives to cry "see! it does not work!"
>How are you more at the mercy of the rich if you have more money?
Because that money is coming from the rich. Would you say your boss/employer has less power over you the more you make? IF that is the case, it's not because of how much you make but rather because of how much value you have to the company. In the case of UBI, there is no value exchange, only a handout. If there is a value exchange, it's merely the prospect of less riots/civil unrest.
(This is not even to mention the wash effects of inflation, which are covered well in the other comments on this thread)
There's a difference between random one-time gifts of $1,200, and depending on the largess of a single patron every month in order to feed yourself. The B in UBI stands for basic, not luxury, and it's unclear that those dependent on UBI to survive would be able to save money.
UBI will help the destitute, but if the person holding the purse strings, be it a billionaire philanthropist, the government, or your employer, and you're dependent on that to survive, that gives that entity power over you.
for welfare, and other welfare-like government services. Other services, like issuing passports, the DMV/RMV, running busses, would still continue to exist.
It puts you at the mercy of the government. Of course, you could argue that that practically puts you at the mercy of the rich because governments are heavily influenced by the rich, but it really doesn't matter who you're at the mercy of. It's a mistake to fixate solely on the rich as the only people you should worry about being at the mercy of.
Take government grants and other forms of funding received by universities. Sure, it sounds nice, but the result is that institutions slowly begin to depend on these sources of funding to the degree that their successful operation and even very existence depends on them. This puts universities in a very dangerous position and this dependence has been used to steer universities in directions they might not otherwise have gone.
> also because there is a fixed amount of land (like literally the surface of the earth occupies a finite area at least on human time scales)
Not really. If the Earth's surface was populated at the same density as, say, Paris, that would be over 3 trillion people.
> and because building housing stock takes time
Not a whole lot of time actually with modern techniques. See the speed at which some of the Corona hospitals were built.
> and because of zoning restrictions and other institutional constraints
Which only apply to existing cities.
Right now there are houses in the middle of Iowa - or even Detroit - that cost a small fraction of what a house in a city with good job prospects costs. If UBI became a thing, people would be able to move to those places. Not everyone would want to, but some would, and that would be enough to move the prices.
Can you provide some evidence for this? Your argument, by extension, would mean that anything that increases a person's income is effectively pointless. Increased minimum wage? Prices increase and eat the income increase. Collective bargaining? Prices increase and eat the income increase. Taken to the extreme, any action to improve the lot of the poor/low-income is wasted effort, because rent seekers will always collect the maximum rent.
I'm willing to concede UBI (or other unrestricted cash grants) could impact specific segments of a market. But, I can't find good evidence one way or the other that those negative pricing impacts offset increases in productivity, wellness, etc.
The good news is that, to take one of your examples, while the minimum wage does have a small effect on prices, the inflationary effect seems to be vanishingly tiny compared to the actual wage rise offered. (PDF link) https://mitsloan.mit.edu/shared/ods/documents/?PublicationDo...
Some people think the price of going to college has gone up because so much money has been made available to students through financial aid. I don’t know if that’s been proven but it sounds plausible.
I'm actually in the higher education world (on the periphery, as a software developer). It's more complicated than that.
Over the same time period that loans have become easily obtainable (via US government backing), massive amounts of regulation has also been imposed on colleges/universities.
While people love to talk about football stadiums, luxury dorms, and other amenities, one of the largest increases in the cost of running a college is administrators to keep up with regulatory demands.
I'm not claiming administrators are solely responsible, only that it's not as simple as "Uncle Sam gives students money and college spend every penny".
Additionally, public funding of colleges has dropped over the same time period. As of 2018, state funding of public colleges was down ~$7 billion since 2008. It was slashed during the down economy, but never brought back up again.
To add a small bit of context for the last point about funding. A $7B reduction in funding sounds like a lot, but during that same period student loan debt increased by $760B.[0] On the balance, the reduction in state funding seems like an insignificant piece of the puzzle.
There is a myth that administrators drive up the cost of colleges. The truth is that overall university headcount, including administrators, professors, etc. have all increased, and the costs along with that headcount has as well.
The rapidly increasing headcount growth, including professor headcount growth is driving the increased cost which is driving increased borrowing.
Universities need much bigger class sizes, many fewer professors, and many fewer administrators. Overall headcount at universities needs to shrink by ~70% to get the cost back inline.
No politician, or university president is going to say that because it would be so brutal to oversee. But... students are suffering with massive debt loads and someone is going to have to make the right choices to cut those costs.
They've all increased, but the rate at which administration positions has increased dwarfs that of professors and students. According to the figures in the article cited here, administration positions grew at 3.5x the rate that professors have, and 2x the rate that students between 1975 and 2005 [0].
They stated "...administrators to keep up with regulatory demands."
I wonder, however, if administrations just take on a life of their own and grow bounded only by available budget. It seems like this happens in the private sectors with layer upon layer of management.
That's certainly been my experience; management and bureaucracy will expand to fill any available budget unless constrained. Since management almost always runs the show, there's almost never constraint.
Hiring bodies to perform the administrative work required by law. Lots of compliance - title 9, etc at the federal level, plus more at the state level.
We have several teams of developers pushing out state-level regulatory updates to our software (and these updates are frequent and often done on short notice), plus more teams doing annual federal regulatory updates.
And again, I'm not claiming this is the largest contributor, only that it's one of many reasons (easy access to loans included as well).
A good example is the parallel legal and law enforcement systems on college campuses. In the past, you'd call the regular police and you'd take issues to the courts used by all other citizens outside the university. Now universities maintain their own law enforcement and farcical "justice" system. This stuff is not cheap to operate and comes with tons of overhead.
"We
find a pass-through effect on tuition of changes in subsidized loan maximums of about 60 cents
on the dollar, and smaller but positive effects for unsubsidized federal loans. The subsidized loan
effect is most pronounced for more expensive degrees, those offered by private institutions, and
for two-year or vocational programs."
Sure, and I conceded that in my initial post. What I'm looking for is published work that indicates that changes in consumer prices equals the increase in income due to unrestricted cash grants/UBI.
I've looked, but all I see is conjecture. Nothing academic. The academic articles I do find tend to assert the opposite - that any changes in consumer prices are smaller than increases in income, granting the recipient more buying power.
they won't be equal because not all ubi income will be spent on consumption. it will stimulate consumption, however, which was the primary reasoning behind the op and that will lead to some form of inflation edit: inflation because based on the assumptions of the op, the supply side has stagnated and so there is less downward pressure on aggregate prices. the degree of that inflation is unclear and i'm not familiar with any empirical studies. either way inflation won't match one to one with the increase in income.
fwiw i noticed above you mentioned that there will be an increase in productivity, wellness etc. although i tend to agree with the wellness aspect (esp. compared to our current circumstances) the degree to which wellness would increase is also unclear. for some colinear studies, i'm thinking of finkelstein's work on medicaid expansion in oregon where they found exposure to medicaid increased reported well being of recipients.
and i don't think productivity increases under a ubi holds water on theoretical grounds.
you seem to be assuming large increases in productivity and wellness and other benefits and then asking if inflation will erode that, when we also need to consider that the possible benefits will themselves be attenuated, particularly for those already at lower incomes or those who will earn a ubi.
Housing is supply and demand. More demand for housing without an increase in supply will increase cost. That said, a guaranteed income may allow many people to safely choose to move out of an area that was hard to accomplish previously. If you're living paycheck to paycheck, how do you move far enough away from a high-cost area to actually reduce your housing cost while still allowing you to reach your job, since you can't quit it and still afford to pay rent? All you can usually do is trade commute time for rent cost, and then you pay in time and vehicle wear and gas.
UBI would allow an unprecedented level of freedom for people to relocate with little risk, and that would itself have a massive influence on city make-up and the housing market. If a lot of the unskilled labor in the bay area actually chose to move somewhere else, wages for those people would either have to increase greatly to meet demand, or the area would finally have to allow much more cheap housing.
I imagine other shifts like that would play out large in small in almost all aspects of the economy. UBI entirely changes everything.
If we assume that income reflects society's demand for an individual's labor/skills/knowledge, and we arbitrarily increase income with no concomitant increase in demand then we have to assume something else is going to shift. A couple of outcomes seem likely to me:
* employer wages for low-demand workers will drop, as competition for low-demand workers will not increase, and those workers will accept a lower wage reasoning that the UBI 'makes up the difference'
* if employer wages are not allowed to drop below a certain point (the minimum wage), then more disposable income will create increased demand for scarce resources (e.g., housing that is a bit better than currently occupied) thereby causing prices to rise.
I'm no Econ major, so happy to hear how my reasoning may be in error.
The logical leap that you are missing is that prices don’t always rise quickly enough as a response to increase in wages. What a person is willing to pay is only part of the pricing equation. You also have to consider what competitors are charging and how much potential margin there is to play with.
Inevitably though, all prices consolidate and all players in the market will charge more to meet the increase in wages, it’s just a slow process.
The only time it happens quickly is if each business conspires to raise prices simultaneously, which isn’t going to happen or may be illegal.
So yes, increase in wages or handing out UBI inevitably raises prices after a period of time, necessitating the need for even more increase in wages and more UBI. It’s not a one and done thing.
Here's the thing though: typically, the market discerns that wages have increased slowly and incrementally, which is why it's only able to incorporate that information over a period of time. If we passed a UBI in this country, suddenly, my landlord, the grocery store, etc. would all instantly know that my wages have increased, and by what amount.
Because housing expenses are generally the single largest expense in any household budget, that means landlords are going to reap the majority of the benefit here. People selling homes also know that wages have gone up and by what amount, so this will impact the sale price of new homes. So, any amount of UBI would end up being a huge cash transfer from renters to landlords and other existing homeowners.
While land is constrained and should probably be dealt with separately, wouldn't the price increase in consumer goods, i.e. the grocery store to use your example, require collusion between every merchant?
Isn't the other part of Adam Smith's supply and demand stuff the idea that competition will drive down prices? Sure, everyone's got another $2,000, but if I can undercut the guy who's trying to mop it all up, wouldn't I? And wouldn't someone else try and undercut me?
Wouldn't that bring prices down? And if not, why not? If there's another larger force at work keeping prices high and keeping people in poverty -- and if poverty is something we want to do something about -- doesn't that suggest that we need to constrain sellers' behavior in some ways we aren't really doing now (like laws against gouging)?
> Inevitably though, all prices consolidate and all players in the market will charge more to meet the increase in wages, it’s just a slow process.
All prices? No. Clothing is now effectively free, for example.
Prices of necessities are the only things you want to watch. Basic food products, healthcare, etc. Those prices have risen around the same as the rate of inflation or spiraled out beyond. Food prices cannot outstrip the inflation ever, because of food subsidy and/or ebt which is tied to it.
You could buy a shirt for $5 at walmart. And there is even a reasonable chance the material quality would be good. It almost certainly won't be fashionable. Purchasing quality second-hand clothing in North America is even cheaper.
For food, some people buy bulk staples and some buy high-end food at Wholefoods.
The degree of substitutes and variety available on the market is staggering for consumer items.
Dirt poor people being slightly less dirt poor and not having to worry about where their next meal is going to come from will not inflate basic goods that much.
We've seen this with higher minimum wages. The amount of inflation is much lower than than the wage increase, and poor people end up with more buying power.
A serious distinction is that increased minimum wages incur a burden on employers which they pass around to their customers and business partners. The increase of burden is directly proportional to the amount of work of an hourly employee. UBI does not come from an employer and is not tied to an effort. There is no direct market burden, but yet an increase of cash is available none the less.
It should also be noted that inflation is not immediately present following a cash stimulus. It takes time for inflation to set in as a response to market conditions and as such inflation is measured as an adjustable change over a given period of time. That said specific single time examples of UBI not adjusting inflation only demonstrates a faulty understanding of economics.
Money at the government level is not a zero-sum game, so thinking it's as simple as raising taxes is an oversimplification, and while unchecked printing of money is problematic leading to inflation, how the monetary base grows would need to be part of a well-considered implementation plan.
the theoretical reasons for not increasing minimum wage is not inflation. it's a decrease in employment.
empirically, however, things are sticky and so we have not observed concomitant decreases in employment with (small to moderate) increases in the minimum wage. my other guess (not sure if this is supported by the literature) this can also be because not only is the market sticky, but because workers were being paid a lower wage than their employer could have afforded.
Sure, if UBI is implemented without a matching increase in government revenue, or reallocation of existing government revenue. Every serious proposal for UBI does one, the other, or both of those.
There is plenty of literature that contradicts your assertion. Here are a few links...
And time and time again, things that by conventional wisdom would increase inflation somehow don't. Macroeconomics isn't that simple, and posting a wikipedia article isn't an argument.
You'd think that employers would be all over UBI then because it means that they can instantly cut the wages of their workers by the amount of the UBI and that more people will have money to purchase their goods and services.
Why? It means that they can pay less than they do now and still retain workers. How is it not a positive benefit for them? It potentially means that people working for them actually want to work and aren’t doing it just to survive.
Because the jobs they're offering are shitty, demeaning and menial, and most people who take them are doing so because they need to survive. Absent the survival need, the companies will have to dramatically improve working conditions to maintain the sheer quantity of labor they require.
Perhaps, but the reduced wages (since total income is now UBI + wage instead of 0 + wages) sounds like it will more than make up for whatever increased costs they may have to make the working environment less shitty.
Just saying “inflation” is both condescending and lazy. Billions of people have been lifted out of abject poverty over the past few decades while also dealing with inflation. We know it’s a concept and it has relevance to the discussion, so merely saying the word brings literally nothing to the table.
Discarding the term merely for its presense is by argument equally lazy. I didn't provide only a word, but also provided qualifying source material.
What the other replies have failed to consider is that UBI is just injection of cash. It isn't a voucher for a specific class of goods, such as rent. It is just cash that can be used for absolutely anything. If that means burning cash on a $5000 handbag then so be it. Inflation is literaly the injection of cash into a market.
The problem with inflation is lost value. Cash is an abstraction of value to conduct an exchange. The real world worth of that abstraction is variable. When the availability of that abstraction increases disproportionately to a real world value it will be able to purchase less. The most common reason is that prices increase to follow the increased availibility of cash, but there are other reasons as well.
When everybody equally has uniformly increased purchasing power the natural counter-reaction is to reduce availability of goods and services. That can mean raising prices. It can also mean removing goods from market to make them more exclusive. Any means of restoring value to the prior state will happen to lower disruption to the transfer of goods.
Had you read the wikipedia article it would have addressed everything I just said.
If you had a more well versed economics background, you might be more privy to how narrow of a view you have regarding inflation.
Australia currently has a program where anyone impacted from the effects of the pandemic, receives $1,500 a fortnight- and yet is experiencing deflation. The very fact of this debunks your argument, as it is a significant portion of the population who is now receiving a cash injection. This money is not exclusively for rent, nor is it tied to food stamps; it is $1,500 to spend as you wish.
Further, The Reserve Bank Of Australia is in favour of these payments.
And it's also worth noting, many economies have an inflation target of about 3%, which indicates that inflation is healthy and to so staunchly avoid anything that may affect inflation is a fools errand.
Regardless, please read more than a wikipedia article before holding such a strong opinion. The other commenter called you out for being lazy, and I wholeheartedly agree with them.
The pandemic will deflate most economies. So much so that that attempts to correct for this by injecting cash, controlled intentional inflation, only lightly softens the blow. The US economy is expected to see a contraction of 35% to the GDP this year, which is huge. I believe the great depression only contracted the US economy by around 22%. This great deflation is even after several rounds of economic stimulus, which are largely comprised of giving people money from the government in similar spirit to a UBI.
In this case the goal of stimulus is inflation and it isn't enough to repair the economic disruption.
Despite the sharp and historic deflation this is not unusual though. Pandemics are historically known for economic deflation. Europe experienced a devastating pandemic about once a century for more than 10 centuries in a row yielding plenty of economic evidence to this.
The most important thing to learn from this is that a sudden economic deflation hurts poor people and corrections insufficiently help poor people. Wealthy people are not directly impacted, at all. Attempting to correct for that difference with an economic stimulus, such as giving poor people cash, does not at all balance that disparity.
If anything this current pandemic illustrates that a UBI is an insufficient control for balance. Instead of focusing on what to do about poor people if the goal is to balance the disparities of wealthy people against poor people then wonder what to do about wealthy people. Tax the shit out of wealthy people and use that increased government revenue to grow the economy directly in ways only business can: increased infrastructure (there is more to that than just roads and telephone poles).
As for taxing wealth I am a huge fan of a complete estate tax and not a huge fan of income taxes. Take everything greater than $10 million of estate value when a wealthy patron dies.
Inflation certainly is a curious animal and the Wall Street bailouts and the recent record-setting currency printing has primarily inflated capital markets rather than raw goods necessarily. Consumer price index is perhaps more important to consider than the general macroeconomic inflation figure used. Modern Monetary Theory gets a few things right showing how printing money isn’t necessarily going to result in inflation and that taxes can be used to offset spiking demand.
Australian deflation is false though, as the CPI has been impacted significantly by the free child care. Wait and see what it looks like in ~6 months time when the next figures come out without any influence of free childcare.
That the inflationary effect of a cash injection is not sufficient to counteract the deflationary effect of people going out less and buying less debunks nothing.
Come on, man. Linking to Wikipedia and expecting people to read a 12,000 word article to magically construct the ~200 word argument you've laid out here is almost a textbook definition of laziness. I stand by what I said.
I suspect that rents might even go down. One of the reasons that rents are so high is that many people are forced to live in cities (i.e. high rent places) to have a chance at a miserable job. Freeing them from that could also foster more people living in the countryside with much cheaper housing (or gasp! even ownership).
I suspect that this is the sort of thing that can only be determined by running either a simulation or a pilot. This is too complex to be determined by logic or thought experiment.
Multiple pilots have been run in real-world circumstances. They aren’t true UBI (because they’re a tested cross-section of people, not everyone in a society), but the results have been positive for the recipients in every single pilot…and employment has gone _up_ in every single pilot (mostly because people are able to go back and get education that increases their employability).
> They aren’t true UBI (because they’re a tested cross-section of people, not everyone in a society)…
They're also time-limited, and the funds come from outside the test group. An actual UBI at scale would need to be effectively permanent and self-funded.
What the tests have shown so far is basically that if you pump a bunch of outside funding into a small community it tends to make most of the recipients a bit happier. Which isn't much of a surprise. They take the opportunity to improve their employability because the experiment is going to end soon, leaving them to fend for themselves. Who can say whether that effect would still be there if the extra income were guaranteed for life? That certainly doesn't seem to be the case for many lottery winners, and many people who inherit wealth from responsible parents end up spending it frivolously.
Is WFH actually more acceptable? Sure some tech companies have promised to go permanently WFH. But every other business that isn't a social media company cannot wait to get back to the office and constantly complain about lost productivity due to online meetings.
Maybe it's just my bubble, but unless someone had a tech job, they seem to hate WFH.
In the UK at least there are indications that several major companies are preparing to cancel leases and reduce their total office footprint.
Both Barclays and Lloyds for example have flagged that they expect to reduce the size and number of offices, with Barclays' CEO saying "putting 7,000 people in a building may be a thing of the past".
I don't think it will be a quick process, not least because there are a lot of long term leases in place, but odds are a lot of businesses will use e.g. expansion or leases expiring as an opportunity to experiment with more working from home to see how it works before making new long term commitments, and assuming it works there is every chance there will be increasing pressure from shareholders etc. if people see competitors slashing office costs dramatically.
I think that reflects more of a question of how to manage a transition. E.g. Barclays appears to have wanted to get rid of its investment banking office in London since before Covid anyway, for example, and even in this article, it says:
> In his latest remarks, Mr Staley appeared to cast doubt on the idea of abandoning those hubs, saying: "We also have a responsibility to places like Canary Wharf, like Manchester, like Glasgow."
>
> He added: "We want our people back together, to make sure we ensure the evolution of our culture and our controls, and I think that will happen over time."
Which sounds like more of a question of how to handle the fact they're sitting on vast amounts of land in long leases in prime locations and have realised leaving offices empty without being able to point to economic benefits will lead to all the wrong kinds of attention, while realising that it will take them time to make it happen smoothly.
Also further down in the article, it points out this:
> However, not all big banks take the same view. Last week, NatWest told more than 50,000 staff in a memo that they could continue to work from home until next year.
>
> The bank, then known as RBS Group, said it had been reconsidering how the bank works "in the longer term" and intended to tell staff about "future ways of working" later this year.
It's clear it will take a long time before things starts going back to normal any way, and every month these employers have to adjust to working remotely, and recover efficiency while working remotely, the incentive to go back to big offices will drop.
I also know someone who worked at UBS when they moved into their new London offices, and they'd totally ditched fixed offices for most staff and moved to hot-desking for everyone, with the intent of significantly reducing the proportion of staff in the office at any one day. That was well over a year ago. Many of these banks have been looking for ways to reduce their office footprints for years already.
The current situation may prove temporary, so some are hesitant to change their living arrangements. It is too early to see if wages will move for white collar city dwellers (since wages mostly change when people switch roles this has a lag). Already rents in some major cities such as London have declined.
But if people stop doing those miserable jobs, salaries will have to go up, which in turn will increase the price of goods and services, therefore creating inflation.
That hasn't been a huge problem as minimum wages have been raised.
In theory, yeah, sure, that is the textbook phrasing.
But the lowest tier jobs that are going to be affected is this scenario aren;t remotely close to the largest percentage of total wages, so I can't see any huge shift being induced.
UBI affects the cashflow of those making more than just subsistence money less and less, and I think that diminishing percentage is an aspect of this that gets lost in the battle of philosphicals.
I agree with inflation but not because the salary raise, but because with UBI the people purchasing power is theoretically higher so companies will just raise prices.
IMO I don't believe those people doing miserable jobs with low pays take a significant part of wage expenses, related to higher managements. If there are data about proportion of the wage we'll get more information.
Yeah it’s like UBI people believe rent prices are set by something other than the maximum that the landlord can get for it. If you give people ability to pay greater rent, as say the advent of the motorized plow did, then rent goes up. Simple as that.
By this logic why the current rents are not even higher? Why do people still have any money left for iphones, netflix etc.? Why is it not all taken up by rent?
I suspect rents rise to where it is just about tolerable for most people in any particular renting cohort, where the cohort is matched to the type & quality of housing.
When it's not tolerable, people leave the cohort and move down a grade, to lower quality and therefore cheaper housing.
Obviously it's not tolerable if you don't have enough money left for food & essential bills.
Not sure why iPhone & Netflix come into this, because they are so extraordinarily cheap compared with rent, food and bills. But of course a phone is essential, and an iPhone very useful, cheap (on contract) and arguably essential these days - for some people it's their only access to the internet. People would not find it tolerable if they couldn't afford a few nice, cheap things, such as Netflix.
When you account for rent, food, bills and a few nice things, as far as I can tell that does take up all the income for many. Have you noticed that a lot of people aren't saving anything?
Of those who are saving, mostly they are saving for a deposit on a mortgage, and/or a pension.
Because people want to buy those things badly enough that they will spend less on housing, to a point, to afford them.
Theoretically a nationwide increase in discretionary income could create new classes of goods that would be desired enough to compete with rent and phones. Or it might not and people would just spend more on rent and phones up to their new limit. Phones would probably move upmarket to capture this revenue as they are essentially globally competitive. Rent would not as much due to the nature of housing supply and the effort of moving cities.
Because you can often get iPhones for <$100 or even free if you get one a couple generations old and sign a 2-year contract. Why do people still use "iPhones" as some sort of litmus test to judge if someone is poor?
Because housing is inelastic and in short supply -- everybody needs it and if the price increases they will still pay for it.
If you increase the housing supply, the price falls. Increase it to a point where there are some vacancies and suddenly landlords don't have as much bargaining power to take your entire UBI. At some point a landlord is going to say
"well better to fill it for $900/month rather than let it sit empty".
I think a huge part of UBI is making the economics of the essential things in life work out so normal people have the power when it comes to basic needs.
Personally, I really hate this comment, for several reasons.
First, let's consider the price of the rent. Assume for a moment that somebody manages to fix all mental health problems, alcoholism and so on, and that magically everyone manages to find a good job that pays reasonably well. This is supposedly the dream land of the pure capitalists: everyone works and is productive and so no handouts are received. Well, what would you suppose happens to the rent in this situation? If everyone is able to pay, then rents would go up, wouldn't they? So the difference between UBI and this is only that in one case people don't necessarily have to work, while in the latter case they have to spend 8+ of their lives doing stuff they may not like.
What this means is that your main point is simply that you don't want people to have money to pay for housing, because that may make prices go up for you. You are literally advocating that some people must be homeless so that life for us is easier.
Secondly, the rent argument consistently ignores the fact that if you don't have to work, you can go live wherever you want. One could go live in Alaska and buy 1km2 of land for 10$ because who gives a shit? construct their own igloo or something and then live there forever. This would additionally free them up to spend a larger part of UBI on other products. Instead there is this weird assumption that people will forever cluster in SF or other highly populated centers, because apparently humans are ants and like to breathe pollution.
You’re articulating clearly why even solving all underlying causes of homelessness wouldn’t actually cure homelessness. Why don’t you believe your own argument?
In any case, while that is the obvious conclusion (as you’ve stated), I never took the position that we merely need to fix mental health etc. I am not saying UBI will work but will make prices go up so I don’t like it.
I am saying that UBI won’t work, it will in fact make inequality worse, AND there’s a solution that will work. It’s the LVT. Once we have LVT, then we could do UBI and the upside would not get absorbed by landlords.
It’s odd to me that you’re claiming that I’m being dismissive of poor folks but you’re literally advocating moving to an igloo in Alaska as a solution?
I apologize if using hyperboles makes my point less clear. I'm not literally advocating Alaska, I'm trying to make the point that cities as we currently know them only exist because they are the most efficient solution when the population mostly has to work in the same location. Once you remove this constraint, it's much more viable to have smaller and more distributed population centers, without necessarily resorting to living alone in Alaska. This would still significantly reduce rents, and even better allows competition between distant locations which wouldn't otherwise be competing on prices.
For the other point, UBI as I know it must be financed by some sort of increased taxation of the rich, it is not the government blindly printing money and distributing it. I don't know whether that taxation should be LVT or something else, I'm simply talking about why the argument that UBI doesn't work due to rent is, in my opinion, incorrect.
If we accept that a feature of cities is people want to live in them, and will compete for that, therefore UBI won't help people live in cities.
How does LVT help poorer people live in cities? The competition for clustered housing continues, that's a fundamental cause.
Richer people still have an advantage over poorer people in economic competition. Instead of people renting and landlords scooping up all the UBI, with LVT you have people competing to buy housing and LVT scooping up all that people can obtain (whether it's UBI, earnings or something else).
Poorer people don't have much luck buying housing in the first place, because of mortgage gatekeeping, even when the actual cost of purchase (mortgage payments) is significantly lower then renting. Even when they do, they pay more for the same level of housing in the end (mortgage interest).
So a switch to a city economy where housing is primarily based around purchases would seem to be not so good for poorer people trying to live there, unless something can be done about access to long-term credit.
1) Public investments such as subways yield increases to public coffers (today, the landlords who happen to own land near a new subway station get a windfall off the city’s billions of dollars of investment). This would incentivize public investment.
2) Land speculation goes away, and development is strongly incentivized, so more units come online and push prices down.
3) Both of the above improvements, as well as private investments made due to public/communal value (such as HQ2 not being built in the middle of nowhere), would funnel huge amounts of money to public coffers. We as a democratic society can decide if we want service workers living in our cities (I reckon anyone who lives in reality does want this) and have the resources to fund making that possible. Things like functioning transit systems go a long, long way.
Land tax is a better then income tax, because it is more efficient. UBI is better then 100 different need based programs because it is more efficient. But government/politicians do not value efficiency, they value bureaucracy. So they will stand in the way of anything better. Clearly what we need is a UBG, Universal Bureaucrat Guillotine.
> How does LVT help poorer people live in cities? The competition for clustered housing continues, that's a fundamental cause.
It means there are better incentives to build denser housing (redeveloping doesn't increase your property taxes, but as your area gets more desirable your land value tax goes up whether you redevelop or not) and public transit (because the city can fund it off the land value increases). So there's a bigger supply of clustered housing.
> Poorer people don't have much luck buying housing in the first place, because of mortgage gatekeeping, even when the actual cost of purchase (mortgage payments) is significantly lower then renting. Even when they do, they pay more for the same level of housing in the end (mortgage interest).
LVT helps a lot with that as well: property becomes less good as an investment, and you don't get to pay lower property taxes just because your bought a while ago.
> If we accept that a feature of cities is people want to live in them, and will compete for that, therefore UBI won't help people live in cities.
It depends on why people want to live in cities. The people who are living in cities mostly for the vibrant community will probably want to stay there. The people who are living in cities because they can't get a job outside the city will no longer have that constraint, and some of those people will move away. Not everyone has to move away for competition to decrease.
I think you are overestimating the ease of people moving from one place to another. While job may be a primary reason people live in the cities, there are other important reasons like access to entertainment, shops, being close to other friends who leave nearby etc. It's not as simple as saying "oh, I could spare 500$ a month by moving in the middle of nowhere, let's do it". Not everybody wants to live in suburban/rural areas and spend most of his time at home.
> oh, I could spare 500$ a month by moving in the middle of nowhere, let's do it
For $500/mo sure. But if it's like people say and landlords try to raise rent $2k/mo like people are saying, then yes people would definitely move.
Also you could easily save $500/mo right now by moving from a big city to somewhere small. Right now, without UBI being a thing. The rent difference under a hypothetical UBI rent increase would be far more than $500/mo.
You think suburban people stay home all the time? What sort of overgeneralization is that? Suburbs = guaranteed vehicle = travel not just mandatory for commuting, but at will, as desired.
If a city in the US existed where everyone magically got their problems fixed, I imaging it would be seen as a desirable place to live, so no wonder the rents go up.
Rent is an auction, so there is a dynamic/negation about living in a place. It's not true that rents go up if "everyone is able to pay" - only if "everyone is able willing to pay"; where are competing cities with lower rents in this example?
Increasing the supply of a good or service will only push the price down when enough of the demand has been satisfied. If the demand far outweighs the supply you're not going to see the price budge for a long long time.
This is basic Econ 101, not Nobel prize territory.
That's only in a dysfunctional market (as housing is in the US). The solution is to fix the housing market by disabling NIMBYism and other such things that cause the housing market to be wholly dysfunctional.
But yes, we should probably fix that before we implement UBI.
I reckon if you fix that, with say the LVT proposed by Henry George in SF during a similar explosion in wealth (and accompanying inequality), you’ll find UBI likely unnecessary. If it is still necessary, you’ll have overflowing public coffers to pay it out with, AND it won’t be eaten by landlords.
Somewhere like SF, a land value tax would simply be another incentive to developers / landlords to build more units. The problem is not caused by a lack of incentives, as evidenced by the sky-high rents - landlords already have huge incentives to build more houses. Why aren't they? I would have to guess, restrictive planning laws are limiting the supply of new housing.
Speculation affects housing prices only because of development restrictions. Because only a small fraction of land can legally be developed, it's possible to corner the market for new development. If all property can be developed, there would be orders of magnitude more competitors in the development space, and impossible for an individual or cartel to control.
You have land and are choosing not to utilize it (rent it out or sell it) in the belief that you will get a higher price for that same land tomorrow.
Today, your tax liability is tiny when you do this. This incentivizes landlords in hot markets to keep their land off the market, thus making the market hotter, this further incentivizing speculation, etc.
This is why you see empty storefronts or empty lots in incredibly expensive areas. The owner can sustain the cash flow loss today in exchange for higher prices tomorrow.
LVT would mean your tax burden is the same (moderate to high) whether you rent it out or do not rent it out, thus making it infeasible to sit and wait for a higher price tomorrow. This would bring more units onto the market and more efficient uses, thus bringing prices down.
Since LVT is often proposed as replacing other forms of taxation (or at least dramatically reducing them), the cost of actually building a dwelling or storefront also goes down — thus further incentivizing non-speculative behavior.
Indeed! A few points just so people who haven’t heard of LVT before don’t walk with easily addressed misconceptions:
1. The government today assesses land value. It also must assess the value of far, far more nebulous things that can be hidden, transfigured, created/destroyed, or moved offshore. Yes more importance would be tied to this singular assessment, but this assessment is singularly easy to assess!
2. The price/value itself would be set by the market. The assessment of that value, of course, would be by the government and you are correct there is risk of differential here (though mitigated by point 1)
3. Lastly, because land cannot be created, destroyed, or moved, a tax upon it is uniquely unable to either incur inefficiencies (deadweight loss) or to be passed onto tenants/consumers. This is contrast to every other form of taxation, which incur inefficiencies then get passed onto the consumer in the form of price increases anyway.
> This is why you see empty storefronts or empty lots in incredibly expensive areas.
The reason why the speculator leaves the storefronts or lots empty is that putting them to use right now would prevent them from being used for something even more valuable in the future. If they could use the property for something productive now without impacting the expected future use they would happily do so and collect the extra income. Coercing them into putting the property to use immediately, via LVT or zoning rules or whatever, is thus inefficient and economically destructive. The speculation serves a useful purpose.
Wrong. The "productive" activity for land holders under system without LVT is preventing others from utilizing it. Without LVT you only achieve massive resource underutilization and favoritism of the first who grabbed it.
If the landowners aren't using the land, and they're not letting anyone else use it, then no one is making any money–least of all the landowners, who also have an ongoing opportunity cost due to the capital they've tied up in the land itself. That's hardly productive. Or rationale. There is no profit in leaving land idle when it could be put to productive use without impairing its future earning potential. Are you claiming that landowners would maliciously prevent the land from being used, at their own expense? Please be specific.
Yes there are landlords who hold land out of use because they know there are or will be others who will eventually want to use it.
There is very clear profit in buying land for cheap and sitting on it until somebody wants it. Land doesn't depreciate unlike buildings. Building something on that land is often more risky for landowners whose business is pure speculation because at sell time the building will have to be torn down by the next user.
This is consistently evident in real world. It might not be in economic theories and textbooks which are designed only for utopia-land.
It really sounds like you're agreeing with me in every sense that matters. You just fail to see the downside of the alternative without speculation where someone buys the land for cheap, does something correspondingly low-value with it without regard for its future potential, and then when somebody else finally does want it for a more valuable use we either can't use it that way or have to tear down what the first user built (which is doubly wasteful when it could have simply been built somewhere else in the first place) and start over.
I honestly don't understand your point much. But let me add this about speculation and land holding for the next user.
There is zero need for a private owner to hold it. The land will not disappear, it will always be there. Government on behalf of the community can hold it just as well without the incentive of preventing others of using it.
This makes land different from other goods where if there were no speculators (dealers who hold inventory) the market would dry up (stocks, bonds, used cars).
Land is in this regard more similar to concert tickets. There are speculators who acquire this limited commodity but their profit stems from preventing others getting them and selling it to them at a later date at incresead price.
Society looks at this type of business as highly unethical.
> The land will not disappear, it will always be there.
The land might not disappear, but it can very easily be rendered unfit for purpose through misuse or neglect.
Let's put this in concrete terms. Say we have a plot of land which is suitable for various kinds of development. We have a prospective buyer who is looking to build a house. They like this property the best but there are several other suitable options; let's say they'd be willing to pay $25k, but not $30k, to acquire this land as the site for their home. The home will be worth perhaps $250k (not counting the land itself) with an expected lifetime of at least a century with proper maintenance, and effectively can't be moved once build.
Development trends in this area suggest that in perhaps ten years' time there will be demand for some sort of commercial development—office space, retail, services, whatever. They aren't here yet, but if trends continue then 10 years from now someone would be willing to pay up to $100k for this piece of land. (The other sites that the first buyer was considering for their home would not be suitable for this purpose.) However, they're not going to pay $250k extra for a house that they're just going to have to tear down to make room, even if the owner of that house were willing to uproot their family and move somewhere else.
Without speculation there is no reason not to sell the property to the first buyer for $25-30k and let them build their house. However, this represents an economic loss of at least $70k ten years later (the $100k value to the future developer minus the $30k maximum value to the residential buyer) since the land is no longer available at that time for the commercial development. To make it available at that point would cost around $250k just to offset the value of the house, plus the cost of tearing it down, never mind the hassle of moving the family.
With speculation, there is someone bidding say $75k for the property and the residential buyer picks one of the other available properties instead—perhaps not their first choice, but a good enough alternative. The speculator limits the use of the property to such things as can easily be removed in ten years to make way for the anticipated commercial use. Perhaps that means leaving it empty, though it could also be turned into a park, short-lease retail space or transient housing, something that could easily be cleared up to make room when the future demand materializes. Then, if all goes well and they predicted the market correctly, they sell the vacant property for $100k and make their well-deserved profit.
Of course, it may not all go well, in which case they'll be forced to take a loss. Speculation only pays when you make the right predictions.
> Government on behalf of the community can hold it just as well without the incentive of preventing others of using it.
If government correctly anticipates that the land will have more value in the future, they can act like a private owner and buy the land and hold it until that use materializes. Where this breaks down is that the government isn't risking their own capital in the process; if they are wrong and the value of the land decreases instead it's not the government that pays the price, but rather the public. Which means they have less incentive than a private owner to accurately predict the future value of the property, and are more likely to lose money on average. When they do lose they don't go bankrupt; they just take more money from the public via taxes. This is merely an inefficient, socialized, and corruption-prone version of private speculation fueled by public funds.
> Land is in fixed supply and everyone needs land to work, sleep, and exist upon.
For those who are convinced supply&demand doesn't work for dwellings, buy a rental and charge 10x the market rate. See how that goes. This applies to any business. For example, try selling something on Amazon/Ebay/Etsy/Craigslist. You can charge whatever you like for it. Whether someone will buy it is another thing entirely.
Everyone needs food, too, but ironically it's the unneeded food (like Starbucks) that's expensive.
Today how that goes is you get huge tax cuts for not making money and keeping valuable resources off the market.
How that should go is you get taxed at the same rate as if you had set it at a price it could be rented at, therefore encouraging you to set your price correctly.
That’s the LVT, that’s basically the entire thing.
You have to think of it in a deeper context than it being binary. It has very similar properties to oil. It's also fixed, but technology has done some phenomenal things to extract more of it with greater efficiency. The same is true for land and housing. UBI, self driving cars, and a greater shift away from working in offices are all going to change how we live and the type of land we will want to live on.
I don't think land is fixed in supply. We can build up and down and in the far future, into space. Either way, we are seemingly far from land being the bottleneck at the moment.
So you're saying that it's hypothetically everyone then? I say hypothetically because the U.S. is only partially a free market (i.e., not a free market), and so that makes any appeal to the "free market" hold little water.
In what way is the increasing ratio of rent to income working for renters?
The government is a monopolist land owner that hands out new land at prices designed to please existing private land owners and lobbyists. This is as far removed from a free market as an absolutist monarchy.
Of course it is a fact, it is one of the most basic laws of nature. It can be observed in interactions of other biological species not only ours. It would still hold if there were no humans. Claiming otherwise is like denying gravity.
A model working and producing a personally.desired outcome are two separate things.
The assumption of a labor shortage because of low nominal unemployment is incorrect - the gig economy is thin margin as it is even with poor pay. It utilizes the previously "idle" labor in a marginal business model but without sufficient demand in other sectors it only provides a low floor.
You are citing a political opinion from a newspaper to prove somehow supply and demand is not a natural law. What is next, an article in Astrology Today arguing 1 + 1 != 2.
"the maximum that the landlord can get for it" is a function of (approximately the minimum of) [1] the amount of money the tenant earns and [2] the price of the tenant's alternatives.
Just because [1] increases, doesn't necessarily mean [2] does.
There is a simpler model that works very well across the whole world. Rent is tied to the price of real estate, which is tied to the purchasing power of the average person living in the area. At some point it's not even worth for the renters to rent out and keep themselves outside the reach of rent controls because their property simply goes up in value and they can take loans against it. As banks expand credit at low risk premium, now to everybody thanks to the new income from UBI prices will only go up. Bank lending drives prices in the end and income and rates are the key factors.
Or just allow developers to build more housing, preferably high density.
The problem with the high cost of housing in markets like San Francisco, is the wealthy capitalists owing real estate create regulations preventing any new housing from being developed.
I see this line of thinking a lot, but it's a bad one. It's understandable that people think like this in a place like SF where landlords have grabbed up a lot of salary increases, but it really doesn't work that way.
If it was true, rents would keep climbing to 90+% of incomes but they don't. It would also imply that any other income income increases or redistribution (widespread pay rises, social security, etc etc) were pointless, you might as well give up on any kind of redistribution entirely.
Of course, if there was a UBI, there would be increased demand for stuff that low income people need like housing and food. That's the whole point of increasing equality! Shifting consumption from sports cars and chandeliers to food and shelter is the goal. But then supply would shift to compensate.
Another advantage of UBI is that even if you do wrongly assume it doesn't result in any net redistribution, it's still beneficial, because it smoothes income over the lifecycle, and a smoother income is much less stressful and unpleasant than a choppier income.
> I see this line of thinking a lot, but it's a bad one.
You can't just state that and it be true.
> It's understandable that people think like this in a place like SF where landlords have grabbed up a lot of salary increases, but it really doesn't work that way.
Yet, it does work that way. In every city I have ever lived in, it's worked that way. For rent in particular, any excuse that more can be paid leads to higher rent prices. A company built a new office nearby? Rent goes up. More "affluent" people are moving into a particular area? Rent goes up. And so on.
> If it was true, rents would keep climbing to 90+% of incomes but they don't.
Why? That's not the implication. Rent increases are done in a cleverly predatory way. Often times, rent is increased in small to medium steps but frequently, and the notice of such rent increases is notified in the minimum (if that) time legally required. That often leaves renters stuck because there are other, big surprise, expensive barriers to moving. Rent is a predatory system that maximizes the amount of rent that can be collected. That doesn't mean it goes to 90% of incomes as you claim, which nobody else is claiming.
My overall point is not about just rent. By providing UBI and not putting other protections and improvements in place, a capitalistic society will not just sit around and leave meat on the bones. Things will simply shift and people will still be in poverty. A poor educational system will still be there. Creditors will still be around. Etc.
>A company built a new office nearby? Rent goes up. More "affluent" people are moving into a particular area? Rent goes up. And so on.
Those things seem to be due to demand. A new office means that people can make more money living in that location, so are willing to pay more for accommodation there. More affluent people moving to a location means that they must see some value in living there. How does UBI increase the demand for housing in any one place (or at all)?
"Everyone" doesn't make x more, some people make less. There's no more money overall. Money is just shifted around. Demand will increase on housing (particularly in the low end), but so will supply.
> People will receive UBI, but then other things, like rent, food, etc. will all just magically get more expensive.
In the same way that you declined a promotion because everything would magically got more expensive.
If things simply shift, then there is no reason to expect any of these to change and we might as well implement UBI right now, because it doesn't hurt, right?
If you are middle class now, then for you nothing changes except that your salary might include a line -$1000 salary decrease +$1000 UBI (no, if basic income were enough to retire, you would have retired already).
Things change for low wage jobs, where your employer now represents a share of your income, not all of it, and you can negotiate without fearing of being hungry on the street.
When I get a promotion, does everyone in the country get a promotion? A promotion is also private to everyone but the IRS, who does increase costs through tax, especially for the lower and middle class. The analogy you present doesn't make sense.
I mentioned this in another comment, but I fear UBI will be an excuse for those in power to have even less incentive to care about other problems like education, healthcare, the credit system, consumerism, etc. I fear it will be the case of "we're giving you free money, what more do you want?" from the government and wealthy.
You don’t think very clearly if you think prices magically raise.
There are still market forces and people retain freedom to move.
“Predatory nature of those in power is put in check” UBI puts it in check by allowing the market to solve for everything while guaranteeing a minimum market participant power for all members.
Why do you think SF housing prices have gone up x% over the last 20 years?
Are the buildings x% better to live in?
Are the landlords providing x% better services?
No. The people who work there are producing x% more capital, therefore landlords take that x% and call it “cost of living.” This is not a new phenomenon in any regard, and UBI proponents must answer for it.
If their solution is rent control, then rent control is a solution even without UBI. Which of course it’s not a real solution, because then you’re distorting the price of housing and not going to get your construction/maintenance needs met.
LVT is a tax scheme that lets the market set prices for what it’s worth to live in an area (land rent/ground rent), then recoups that as a tax upon the people who claim special privilege to decide what to do with that land.
I guess I'm not following your counter argument. The reason SF housing prices have gone up so much over he last 20 years is because people need to live there to get the job they want. If you can live anywhere...wouldn't that mean only the people who need to life in SF to do their work would live there? People who don't need the service job money would just move out. I'm just missing the issue here. When you decouple housing from working, the equilibrium would simply move out; you would no longer have a force keeping people in.
I wrote a big long article for you, but realized you’d counter with the idea that landlords will collectively decide to hike rents no matter what.
So, the simple argument that UBI will not increase minimum rents by 2k a month overnight with no improvement in living conditions: landlords will have to compete to get the UBI out of individuals hands. Right now, the lowest income housing isn’t in competition for individuals, it’s competing for government approval and integration. If everyone individually has 2k a month to spend, they have the luxury of shopping around.
>“UBI lets all the poor people leave” is not convincing at all.
The value proposition for service workers in high-COL cities like SF is probably already bad. How would UBI make it worse? At least it'd be easier to move away from those areas. Maybe cities would have to pay serivce workers more to make sure they stay.
Rents are high in SF because there is extremely high demand for those apartments at high prices, because they allow access to high incomes. The value of living in SF for a random serivce worker is not increased by them getting a $2k UBI cheque, it is decreased. For the tech workers driving the demand, $2k a month is not going to do much to change the value they assign to housing in SF either way. So I do not see how the UBI cheques would increase demand, and therefore rent, for housing in SF.
1. You didn't provide any actual evidence or deeper claims than (putting something in parenthesis). I don't really believe the coal mine claim, as in reality we don't see that happening. Mining towns are still among the cheapest and poorest towns in America.
2. That's a really naive sense of economic productivity. Here is a thought experiment.
A) Let's shut down all of Amazon HQ1.
B) Let's shut down the dams that provide 86% of Seattle greater area's electricity.
Which one of these entities is ACTUALLY responsible for that "productivity" then? And I bet you rents in Seattle without electricity would drop far greater proportionally than they do out by the dams. Rent follows incomes, not productivity.
There is no deeper claim being made. We are saying the same thing. You can call it income if you'd like. A person's wages are some portion of their productivity. The distinction is irrelevant for this point.
You don’t think it’s the high demand for housing in SF, combined with limited supply to meet that demand, that allows landlords to raise prices?
I suspect you’re used to thinking of an information economy where supply is effectively unlimited and “best services command top dollar” is the principal factor in pricing.
Supply is not just limited, it is fixed. When you pay rent you are making two distinct payments wrapped up in one. First is for the actual accommodation/building/apartment and it’s maintenance. The second is for the mere footprint of the building. Sometimes these two payments actually go to two different people.
There is a problem with limited supply of units, yes, but in reality the majority of cost of living comes from the second type of payment: the fee for the ground rent. The ground is in fixed supply.
With perfect development policy, prices would still go up, ground rent would continue to be seized by people who had nothing to do with its generated value.
The schools, employers, and natural appeal of SF makes its ground rent high. Landlords did none of that.
I love idiots screeching about big tech creating to much demand. Seriously? Too much demand is a bad thing? Hardly! How about reversing the crap zoning laws and NIMBY attitudes so supply can rise up to meet demand?
The SF housing crises was caused by a bunch of selfish people declaring through policy (zoning laws) that they have theirs and don't want where they are to change to accommodate others.
And this is supposed to be an enlightened leftist utopia? Talk is cheap until it can affect you personally is the real lesson of San Fransisco housing politics - playing out rather dramatically. Blaming landlords is laughable. San Fransisco has an embarrassment of jobs brought by the high tech companies in the bay area and instead of embracing them (by letting more housing be constructed) they resent them and blame everyone but the real root cause - severely restricted supply.
Rents do not eat up all income increases. Otherwise rents would be 90+% of incomes and all income increases (minimum wage increases, widespread pay rises, social security payments, etc etc) would be pointless.
The burden is on answering: why not? What protections are in place now or are being proposed that would prevent such shifts?
People in power, i.e. those with money, don't like giving up money or potential profit. Without protections in place, prices will simply rise or adjust and people will stop worrying about unemployment. In the end, it just puts a different label on things, creating another category for poor people, and I doubt it actually improves anyone's lives. This is because the problems aren't necessarily all at the bottom. The majority of the source of problems are at the top of the socioeconomic ladder.
One possible reason is that people would be willing to pay more for the items since they now have more money. And since everybody gets the same free money, everybody will slightly increase their price-willing-to-pay threshold.
I doubt rent and food can go up much because of UBI as the basic versions of both seems more controlled by supply than demand. For areas where demand is higher than supply I do suspect that thing will get magically get more expensive in order to class distinguish between poor people under UBI and rich people.
Utilized farm land and output per farmer has steadily gone up each year with basic food prices falling as an result. I guess I could imagine that if more people would want to become farmers because of UBI it could lead to farm land becoming more expensive which in turn would lead towards higher food prices. UBI will likely also increase prices for status food where there is a low supply and high demand, so I would expect a rise in cost for food that get associated with wealth and status.
For rent it is more complicated. Low income jobs tend to force people to live in cities that are near industries. UBI would allow said people to live outside cities which tend to have significant lower rent as there is significant more supply of cheap houses and cheap land to build cheap houses. Being poor however tend to have a behavior impact where people want to live close to relatives, which in turn often has the result of people staying in cities even if they have cheaper living elsewhere. It is a possible risk with UBI that in cities the rent will go up a bit in low income areas, and significant in high income areas in order to keep people with UBI from living there.
>> People will receive UBI, but then other things, like rent, food, etc. will all just magically get more expensive.
Of course they will, but that's missing the point. The point is that the newly printed money will no longer enter the economy through corporations (corporate debt) but through people and this will change the fundamental dynamics of the entire system. It's about changing the flow of newly printed money and how it enters our economy. So instead of corporations trying to extract money from the government and banks and using their control over people as a bargaining chip as they do today, they will have to focus on actually delivering value to people and keeping them satisfied.
Employees will not be disposable bargaining chips for corporations to get something from the government or from banks, people will be the focus of all economic activities because that's where the money is going to be coming from.
Consider that in 20 years, there will be x times more money in circulation in the economy that there is today. Right now, all that money has to pass through the hands of banks and corporations first this makes people dependent on banks and corporations; this is an unhealthy and unjust dynamic because it's people who are creating economic value, not banks or corporations. Why is the government assuming that banks and corporations are the most efficient way to distribute new fiat money into the economy? Aren't people inherently better at figuring out what they need?
Look where corporations got us, people are effectively being told what they need through targeted advertising.
To me it seems like we're just trying to navigate a way to a post-scarcity society with the least amount of backlash/damage.
We could give people money, or we could say "up to so many kilowatt/hours this is free" or "you are entitled to this set-amount of groceries for free". Or to combat prices that inflate for UBI, the government could be reporting what is a reasonable price.
Man I wish I had taken economics. I truly don't know all the ways this could harm us.
> We could give people money, or we could say "up to so many kilowatt/hours this is free" or "you are entitled to this set-amount of groceries for free".
The point of the article, is that centralized planners are really bad at calculating these things, thus the eventual collapse of the Soviet Union and China moving to a much more market based economy.
Except that we do have approximate data that can give us hints at whether this works out or not: the differences in unemployment safety nets between countries, as well as how strong their minimum wage laws are (and other appropriate laws that are supposed to protect employees).
If someone is giving you money every month, for free, you are less at their mercy. Currently if people dont take whatever work is given to them, including being forced to go to work in a pandemic, they starve. If they have at least a basic set amount coming in every month they have the ability to actually pause and figure some things out. A married couple just through UBI may have enough to scrape by with no work. The work force suddenly has negotiating power because they don't have to take any job that comes along.
I could see society changing as well. If 20 people got together and formed a commune, that commune is essentially self maintaining as they get an income, can grow their own food etc.
To get a little off topic, a huge benefit I see is poor people would be less at the mercy of abuse.
Currently, women can be stuck in abusive relationships which are challenging to escape. Having a reliable stream of incoming money can help then run away.
Bankers are the first one that will eventually support UBI legislation in the US.
Because they understand that UBI will be a profit center for them without some sort of limitation on predatory pricing and lending.
1. The increase in demand will first short-circuit the supply of basic essentials.
2. Banks will be the first ones to step in the gap to finance companies working to meet UBI demand
3. Then eventually over time, banks will begin extending credit to overextended UBI-powered citizens. The citizen is the conduit for government-to-bank revenue exchange.
It should be easier for the poor to get mortgages if the bank knows UBI can be relied on. Landlords will lose some leverage as a result.
If target and walmart, currently competing for business on opposite sides of the same street, both raise their margins on food and clothing in response to the implementation of UBI then they are clearly colluding and I would hope that an enormous antitrust thing would ensue.
The real answer is that UBI isn't just money. Basic housing is free. Basic foodstuffs are free. In addition to everything else being sold, you can just get milk. Or rice, or cheese. Or lots of things I haven't mentioned or thought of. No questions asked.
It would be difficult to have predatory pricing if there's a suitable, free alternative.
It would take magic. The markets for most basic necessities are reasonably efficient. There's no major monopoly on them and it's not that hard for anyone to enter the market.
A key point, Like in the well off middle class people can get subsidies for solar panels, but a single parent who buys her electricity via a prepayment meter pays more per KwH.
This implies that people with resources will not do better by and for themselves, which contradicts most of the soft policy that guides eg- lax capital gains, dividends, and estate taxes.
If scarcity was a driving force in creating the competition that capitalism deems necessary, then there would be no point in hoarding or passing down more wealth than could be spent in a lifetime. So, it's an obvious mistruth.
And if the price of all things will increase because some people are no longer starving and able to afford to pay more, perhaps that's a fair trade. We will optimize for more convenience, higher quality, and more novel products, then.
Perhaps this only illuminates how close people who feel they are doing well are to the people that take most of the prejudice for their lack of wealth. Maybe being a small business owner doesn't put you in the same world as Wal-Mart any more than being white and working class makes you basically equals to Elon Musk.
Perhaps it's the tide that lifts all boats and not how many have sunk around you.
Please don't come at this with simple models since the real-world interactions are very complex. What you describe only works that way in non-competitive markets or where there are artificial constraints on supply. Food and product prices are pretty much all determined by marginal costs in competitive markets since if you try to increase your prices "because my customers have more money now", your competitors will undercut you and you'll go out of business. This is why things have been getting cheaper over time as a portion of income, even while incomes have risen [1].
Housing is its own story because anti-development policies have constrained supply, which artificially forces prices up. However, 1) it's important not to conflate it with cost trends of other basic needs, and 2) there's a strong argument that increasing base-level income also increases mobility to lower-cost areas, which has a stabilizing effect on housing. The few reputable studies on UBI-equivalents I've seen show pretty minimal price inflation in comparison to the income gains, for example [2].
That is a very strong statement that I don't think can be claimed at this point.
In my opinion, I feel things will simply shift under UBI. People will receive UBI, but then other things, like rent, food, etc. will all just magically get more expensive.
I cannot see any implementation of UBI working any better than things now unless the predatory nature of those in power is put in check.