5 ms·

> Rather than alleviating poverty, UBI will most likely exacerbate it. The core reasoning is quite simple: the prices that people pay for housing and other nece

> Rather than alleviating poverty, UBI will most likely exacerbate it. The core reasoning is quite simple: the prices that people pay for housing and other necessities are derived from how much they can afford to pay in the first place. Obviously, higher demand means higher prices - but people's need for "necessities" (basic food, shelter) is constant! In that case, it shouldn't rise under UBI. My intuition is that prices would only rise for more limited, optional, luxurious goods, and that's a very good thing.

dilemma 10y ago
While demand for shelter remains constant, the supply of money increases, pushing prices higher.
- bryanlarsen 10y ago
  If demand for shelter doesn't change, and supply for shelter doesn't change, what's pushing the price higher? Supply of money only affects prices when it can change demand or supply.
  - jerf 10y ago
    Think auction rather than static supply/demand curves. If we both used to have $500/month for shelter, and our bids settle into some stable relationship based on personal preferences, if UBI comes in and now we both have $1000/month for shelter, we can now outbid someone else who stubbornly insists that UBI shouldn't change the price. The stubborn person can either drop their stubborness and bid higher, or see themselves outbid and be forced to take something they prefer less now. The stable outcome is that the money goes to the landowners in this incredibly limited and isolated model, which I am using only to illustrate the point in a simple way. In a less simple way, there are many people, including me, who rather believe that making it easy to get money for college is the root cause of colleges getting more expensive. Having been back to my own alma mater about a year ago and seeing the unbelievably glorious meal hall they have now, which is more accurately described as a meal mall, it is abundantly clear that they have more money than they know what to do with and are spending wildly on things that have little to do with education. They're caught in their own trap; since the money is free to the students (at least for now), the university is forced to compete to be ever nicer themselves. Nobody has the power to decide to just go to a cheaper university because they'll get outcompeted by people anomalously flush with "free money". So college prices spiral ever upwards and the market mechanisms can't do much about it, because we broke the market by giving everybody "free" money, or more accurately, money whose costs were deferred beyond most people's ability to think about the future. One of the reasons I stand against UBI is that the same thing will happen. The UBI will come out, but time doesn't freeze. The UBI will then affect the economy, and people won't quite get what they wanted out it as capital owners figure out how to extract the extra funds. And the politicians will be falling over themselves to be the ones who get the credit for raising it; who would ever be re-elected who lowers the UBI? UBI takes a "free benefit" death spiral we're arguably already on and throws it into high gear, and I can't see how we'd ever escape from it short of outright collapse. Nobody will ever vote against the free money. It creates a society where the short-term incentives are always in favor of more free money, even as the long-term looms ever more obviously in everybody's face, which would actually just make the short term "get what I can while the getting's good" problem even worse. It's a catastrophically broken way to set up incentives in a society.
    - JoeAltmaier 10y ago
      Many benefits exist now; politicians seem to be falling over one another trying to restrict them. I don't see the risk as that great.
      - jerf 10y ago
        "Many benefits exist now; politicians seem to be falling over one another trying to restrict them." Which benefits have been cut in the US in past ten years? Be specific. I won't count things that were cut to be replaced with something else bigger, like Obamacare. There's a few politicians appealing to the people who'd like to see some things trimmed, but they haven't done anything significant about it in a decade or more. This is a part of the reason you're seeing Trump's level of success, the perception by these people that they keep trying send people to DC to cut things down, who then make a big show of resisting while not actually resisting.
        JoeAltmaier 10y ago
        SNAP benefits in 2013. SS Disability this year. VA funding in the current budget. You don't have to look far to find scissors-wielding politicians.
    - bryanlarsen 10y ago
      In other words, supply of money has increased demand.
      - jerf 10y ago
        It depends on your definition of "demand". It has raised the amount of currency that people are willing to spend on the good, but it hasn't raised the subjective value of the good in "utils".
- thelamest 10y ago
  Surely there would be higher price competition for some desirable locations, but UBI also means people are more free to live elsewhere, anywhere. More speculatively, in many formulations of UBI, authors say it wouldn't be much more expensive than current social safety nets.
- dragonwriter 10y ago
  Increasing supply of money is a reason that demand for shelter increases (demand is the function relating price and quantity demanded.)
  - dilemma 10y ago
    Nominal price changes do not necessarily reflect changes in demand. I.e. when the value or supply of money changes.
knucklesandwich 10y ago
I'm pretty ignorant about economics, but doesn't this assume perfect competition? For housing that's probably a reach (depending on the location) given the possibility of limited supply and near monopoly power of real estate owners in a given area. Maybe other areas can't be considered due to other factors like proximity to work, lack of public transit, etc. It seems hard to guarantee that these kinds of things work out as planned except in optimistic conditions.
- thelamest 10y ago
  I'm ignorant as well. I agree it would increase prices for some desirable locations - but also, increase freedom of choice of where to work and live. Hard to guarantee, but the latter seems more significant-ish to me.

dilemma 10y ago

While demand for shelter remains constant, the supply of money increases, pushing prices higher.

bryanlarsen 10y ago
If demand for shelter doesn't change, and supply for shelter doesn't change, what's pushing the price higher? Supply of money only affects prices when it can change demand or supply.
- jerf 10y ago
  Think auction rather than static supply/demand curves. If we both used to have $500/month for shelter, and our bids settle into some stable relationship based on personal preferences, if UBI comes in and now we both have $1000/month for shelter, we can now outbid someone else who stubbornly insists that UBI shouldn't change the price. The stubborn person can either drop their stubborness and bid higher, or see themselves outbid and be forced to take something they prefer less now. The stable outcome is that the money goes to the landowners in this incredibly limited and isolated model, which I am using only to illustrate the point in a simple way. In a less simple way, there are many people, including me, who rather believe that making it easy to get money for college is the root cause of colleges getting more expensive. Having been back to my own alma mater about a year ago and seeing the unbelievably glorious meal hall they have now, which is more accurately described as a meal mall, it is abundantly clear that they have more money than they know what to do with and are spending wildly on things that have little to do with education. They're caught in their own trap; since the money is free to the students (at least for now), the university is forced to compete to be ever nicer themselves. Nobody has the power to decide to just go to a cheaper university because they'll get outcompeted by people anomalously flush with "free money". So college prices spiral ever upwards and the market mechanisms can't do much about it, because we broke the market by giving everybody "free" money, or more accurately, money whose costs were deferred beyond most people's ability to think about the future. One of the reasons I stand against UBI is that the same thing will happen. The UBI will come out, but time doesn't freeze. The UBI will then affect the economy, and people won't quite get what they wanted out it as capital owners figure out how to extract the extra funds. And the politicians will be falling over themselves to be the ones who get the credit for raising it; who would ever be re-elected who lowers the UBI? UBI takes a "free benefit" death spiral we're arguably already on and throws it into high gear, and I can't see how we'd ever escape from it short of outright collapse. Nobody will ever vote against the free money. It creates a society where the short-term incentives are always in favor of more free money, even as the long-term looms ever more obviously in everybody's face, which would actually just make the short term "get what I can while the getting's good" problem even worse. It's a catastrophically broken way to set up incentives in a society.
  - JoeAltmaier 10y ago
    Many benefits exist now; politicians seem to be falling over one another trying to restrict them. I don't see the risk as that great.
    - jerf 10y ago
      "Many benefits exist now; politicians seem to be falling over one another trying to restrict them." Which benefits have been cut in the US in past ten years? Be specific. I won't count things that were cut to be replaced with something else bigger, like Obamacare. There's a few politicians appealing to the people who'd like to see some things trimmed, but they haven't done anything significant about it in a decade or more. This is a part of the reason you're seeing Trump's level of success, the perception by these people that they keep trying send people to DC to cut things down, who then make a big show of resisting while not actually resisting.
      - JoeAltmaier 10y ago
        SNAP benefits in 2013. SS Disability this year. VA funding in the current budget. You don't have to look far to find scissors-wielding politicians.
  - bryanlarsen 10y ago
    In other words, supply of money has increased demand.
    - jerf 10y ago
      It depends on your definition of "demand". It has raised the amount of currency that people are willing to spend on the good, but it hasn't raised the subjective value of the good in "utils".
thelamest 10y ago
Surely there would be higher price competition for some desirable locations, but UBI also means people are more free to live elsewhere, anywhere. More speculatively, in many formulations of UBI, authors say it wouldn't be much more expensive than current social safety nets.
dragonwriter 10y ago
Increasing supply of money is a reason that demand for shelter increases (demand is the function relating price and quantity demanded.)
- dilemma 10y ago
  Nominal price changes do not necessarily reflect changes in demand. I.e. when the value or supply of money changes.

knucklesandwich 10y ago

I'm pretty ignorant about economics, but doesn't this assume perfect competition? For housing that's probably a reach (depending on the location) given the possibility of limited supply and near monopoly power of real estate owners in a given area. Maybe other areas can't be considered due to other factors like proximity to work, lack of public transit, etc. It seems hard to guarantee that these kinds of things work out as planned except in optimistic conditions.

thelamest 10y ago
I'm ignorant as well. I agree it would increase prices for some desirable locations - but also, increase freedom of choice of where to work and live. Hard to guarantee, but the latter seems more significant-ish to me.