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I still haven't seen a good explanation for how UBI on a truly universal scale isn't going to just raise housing prices to capture the surplus. I mean, if my l

I still haven't seen a good explanation for how UBI on a truly universal scale isn't going to just raise housing prices to capture the surplus. I mean, if my landlord knew I (and anybody else who could theoretically live in my apartment) had a spare $2000/month, forever, I'm pretty sure he'd want it.

rarec 8y ago
That's always been what I wondered as well. UBI solves everything, except for the part where an actor who knows explicitly that all of his tenants will be getting a flat amount per month, then why not raise prices to capture some of that as well? Why wouldn't everything just increase in price slightly, everyone can afford a little bit more now.
- lr4444lr 8y ago
  I'd presume defenders would say, because with the increased purchasing power at hand, there would be more incentive for developers to build. When instead the money is squandered through public housing, homeless shelters, halfway houses, and other intermediaries, the housing is slow to be built, with low accountability for either landlord or tenant to get and receive their value.
- pmiller2 8y ago
  I'm focused specifically on housing because approximately everybody needs somewhere to live. That ought to raise purchase prices and rent prices. In effect, it would mean anyone who bought before UBI raised the price would be subsidized by those who buy or rent afterward. It seems like roughly the same economics as rent control: if I, as a landlord, own rent controlled units, then I want to make as much money off them as if they were not rent controlled. Unless I can get them reclassified, the only way to do so is to raise the monthly price so that over the course of an average tenancy, the numbers add up to what I could have rented the unit for without rent control. What you end up with is effectively a Ponzi scheme.
- stouset 8y ago
  These are really excellent points I hadn’t considered. On the other hand, let’s run the experiment the other way. We currently have significant numbers of people working with no hope of financial stability in their future. Will taxing them to fill the coffers of the rich improve their situation? Given the current situation of increasing wealth inequality seemingly exacerbating existing problems, I can’t imagine that this is a promising approach. Since UBI is essentially the most generalized form of a benefits program, I really have to hope that it works. If it doesn’t, that seems damning to other benefits programs which are inefficiently (and IMO ineffectively, due to perverse incentives) means-tested. If it doesn’t, and if anti-UBI is virtually axiomatically a bad idea, then I’m not sure what’s left.
  - ddingus 8y ago
    Public Works, using the post office as a model. We really do need to be building a lot of stuff, and or fixing stuff we have already done. That work is a direct stimulus, can pay pretty well, and benefits everyone public and private alike. Additionally, the returns from it can pay down all of the expensive bombs and non returned items that we currently spend or have spent on. An example is the interstate highway project. Our current president once the toll that, which is really stupid, but similar kinds of projects will deliver similar kinds of returns. The interstate highway project is still paying us great dividends years and years after it was created. Last figure I knew was 6/8 maybe 10 times the dollar spent. The post office still getting a lot of bad press right now, is actually exemplary and its performance in return to the public. It is entirely self-funded, doesn't take any tax dollars at all, pays good wages, has a lot of value to the public, and the benefits are worth working there. Other self-funded public works could work the very same way. Those that use it pay for it, and we all will benefit from the economic development. An example might beat networks, another example might be first line Healthcare, there are many to choose from. One that I've been thinking about lately is energy. Well distributed public investments in energy of all forms, managed on a higher level through something like a post office, might really pay us off, and deliver a lot of options making energy competitive and well distributed. The key thing to understanding all of this is government has agency, it's for us, by us, and we need to employ it to our mutual good. Yes, this will compete with Private Industry, but they should be competed with, otherwise they'll accumulate wealth stuff in the bank, and complain about the lack of opportunities to invest and make returns. There's nothing wrong with any of that, but it's a stalemate. One we don't need. I knocked this out really quick on Google Voice. I apologize in advance if this is a bit of a mess. Hopefully the gist comes through.
- modeless 8y ago
  > everyone can afford a little bit more now. This is not true. UBI doesn't create money out of nowhere. It redistributes existing money. Poor people can afford more, and rich people can afford less, because taxes increase.
  - pmiller2 8y ago
    Rich people spend less relative to their wealth and income than poor people do. That means more people are going to be buying more things, increasing demand, which... raises prices.
    - modeless 8y ago
      Sure, the same is true of anything that increases the incomes of poor people. There's no reason to believe that the price increase would cancel out the entire benefit of UBI.
- peterwwillis 8y ago
  > UBI solves everything ?
dwc 8y ago
The money in (real) UBI comes from somewhere, obviously. It's not like everyone just has more money. If you can already afford the basics then it's going to come out of your money in taxes to a greater or lesser degree. So for people in a normal middle income range you pay and then get the money back. Higher income people would pay more and get back the same as you. Low income people would pay little or nothing and get the same back as you. How that actually plays out in a market like ours hasn't (can't) been fully tested, but it seems a promising idea.
- pmiller2 8y ago
  Yes, the money has to come from somewhere, but the traditional form is that UBI distributions replace most or all other forms of social services. Right now, I'm paying out and receiving little or nothing back directly (and I am not arguing that I should -- I don't need, say, food stamps, or subsidized housing at the moment, but those programs should be there for those who do). Why wouldn't it be rational for my landlord to want my UBI money?
- d1zzy 8y ago
  Even if the money comes from somewhere, if a large percentage of the population suddenly has more money to spend then inflation happens. I've seen this happen every time the government of a certain Eastern European country decided to raise pensions, a large percentage of the population depends on those pensions. Every time they did that, inflation went up, so it only provided a temporary benefit to those people. But it's a cool electoral trick so it happened quite often.
bsder 8y ago
> I still haven't seen a good explanation for how UBI on a truly universal scale isn't going to just raise housing prices to capture the surplus. I mean, if my landlord knew I (and anybody else who could theoretically live in my apartment) had a spare $2000/month, forever, I'm pretty sure he'd want it. This is one of the reasons why a local UBI doesn't really work. If you have a national UBI, people can move. That landlord may try to capture the surplus in California, but with a UBI you can simply move somewhere cheaper. People in the middle class forget that simply moving is expensive and requires a remarkable amount of cash up front.
- pmiller2 8y ago
  I don't really get this. If the surplus is efficiently captured (which markets are incredibly good at doing), how do these people come up with the cash to move?
marme 8y ago
That is not how any market works. Just because your customers have more money does not change the supply or demand for your product. A luxury apartment fetches a high price because there is demand from tenants willing to pay the luxury price. No one is going to pay more for the same apartment unless there is more demand for apartments than there is supply like you have in NYC and SF. More income causes prices to rise because people start outbidding each other for everything. Why sell your house for 100k when someone else is offering 120k
- eaandkw 8y ago
  You should see how the rent goes up in military towns every time our BAH goes up. If everyone knows the tenants are receiving more money the general price for rents will tend to go up. This might be the unintended consequences of a wage/ price spiral.
  - DuskStar 8y ago
    If I remember correctly, there's no benefit to the soldier involved if they choose an apartment that only costs half of the Basic Allowance for Housing - they don't get to keep the surplus.
    - eaandkw 8y ago
      No, they get to keep any left over money...if there is any. One way owners can somewhat control who can rent property is by raising the rent to the point that it is unaffordable to junior enlisted servicemen.
- ewams 8y ago
  This is exactly how the market works and will continue to as long as humans are involved. First hand experience here that seems to escape the engineering brethren that have never glimpsed into sales: The same exact product is sold to every customer at a different price. Yes sometimes there is a higher demand which might push price a tad but most of the time there is not. I always enjoy when people on HN complain that so-and-so doesn't publish pricing on their website. Of course not, because then they would lower their revenue. It also removes leverage, sometimes it makes sense to sell something at a lower cost today to negotiate some terms, and then down the road either sell at volume or raise the price. Sometimes you just like someone and give them a discount. Oh its the government? Yea raise the price a LOT. etc etc.
goda90 8y ago
What if it's not spare? It's their only $2000/month so they're not going to pay that much for rent, and someone else will offer lower prices to get that money. These same people aren't tied to a job, so they can more easily move somewhere cheaper too.
- pmiller2 8y ago
  What landlord would continue to rent an apartment out for $X when it's easily possible to rent it out for $X+2000 or $X+1500 (not capturing the whole surplus, but a majority of it, say)?
  - seiferteric 8y ago
    Your only looking at one side of the market equation. Landlords have to compete for tenants as well. They can't just raise rent to whatever they want, they all compete with eachother. Only in markets that are severely supply constrained like the bay area where this wouldn't work. Also, in areas where new supply could easily be added, if more people have money, it will create new demand for housing and it will be built.
  - CocaKoala 8y ago
    > when it's easily possible to rent it out for $X+2000 Just because somebody has an extra 2000 dollars in their pocket every month doesn't mean they can earmark all of that money for rent; they surely have other bills that they need to pay as well. If the apartment was rentable at $X+2000, then why wasn't the landlord renting it at that price before everybody got the extra cash from UBI? Why do you think that somebody would say "Yes, now that I'm getting an extra two thousand dollars a month, my apartment is definitely worth an extra two thousand dollars a month" instead of saying "welp, rent is too high here, guess I'll move to some place else that's charging closer to what I used to pay"?
michaelchisari 8y ago
This is essentially the inflation argument and we have a lot of indicators that a UBI doesn't lead to significant inflation. But it brings up the point that a UBI will not solve all of our problems. An extra $2000 a month doesn't help you if you don't have medical insurance and get a $500k bill from a terminal disease, for instance. What a UBI does is removes a lot of bureaucracy around welfare for recurring costs (rent, clothes, food, gas, etc) and it addresses the scaling problem we're having with inequality. It's an imperfect solution, of course, but I haven't heard many other viable (by capitalist standards) options.
- pmiller2 8y ago
  I disagree that this is the same as a simple inflation argument. If no new money is injected to pay for the program, we have the same amount of money paying for the same stuff, so no overall increase in prices. Housing is special in that everybody needs to live somewhere, and you can't take it with you anywhere. If I want to work in a certain geographical area, I simply have to live near there as well. The vast majority of the population does not have the option of remote work. Since landlords know this, they know that if they're not already offering subsidized housing, that their tenants can afford more, so they do the rational thing and raise prices.
rm_-rf_slash 8y ago
Look up Henry George and the Single Tax: the tax on economic rents. Land ownership, intellectual property, and so on are taxed. This was pitched as an alternative to income taxes, which deincentivie labor and reduce income and thus the ability for people to be self-reliant instead of dependent on charity or government programs, and sales taxes, which fall disproportionately on poorer people who have to spend a larger share of their income on basic needs. Even Milton Friedman, no friend of taxes, thought if George’s Single Tax proposal as “the least worst tax,” because it would (theoretically) have the least depressing effect on economic growth. Theoretically, your landlord could not raise rents to avoid their tax burden, as the increase in rent would directly correlate with their tax burden. George also suggested that Single Tax revenues could provide for a UBI, although the size and scope of government was much smaller in 1880. Speaking as a junior white-collar worker whose only significant capital is held in a retirement account, the idea of a tax on economic rents (and an assumed cut in my income/payroll/sales taxes) is very appealing, far more than a paltry UBI check each month.
noonespecial 8y ago
Even if UBI does nothing for homelessness, I'd rather be homeless with an extra 2k per month than without! I'd have a much nicer van down by the river...
coryrc 8y ago
People can move to where housing is cheap, but there aren't jobs or ones quite as good, leaving less demand in the tight areas.
white-flame 8y ago
I'm of the mind that UBI might work with the absolute minimum of amounts. Give enough for food, a bus pass, renting a room (not an entire apartment), and some for incidentals. It would basically be "stay out of trouble" money, from which people can physically live, which allows them to then go forth and pursue something societally beneficial, because you don't just want to stay at that level. In theory, this might make their income less available to predatory targeting. However, with a looming jobs crisis, the assumption of being able to go out to earn more remains to be seen.
Veelox 8y ago
I think that if the government work to provide a lower UBI of say ~$750/month, healthcare, and also provide housing similar to military barracks available to everyone free of charge it would circumvent the instance increase in rent and would also provide an incentive for people to do some work.

rarec 8y ago

That's always been what I wondered as well. UBI solves everything, except for the part where an actor who knows explicitly that all of his tenants will be getting a flat amount per month, then why not raise prices to capture some of that as well? Why wouldn't everything just increase in price slightly, everyone can afford a little bit more now.

lr4444lr 8y ago
I'd presume defenders would say, because with the increased purchasing power at hand, there would be more incentive for developers to build. When instead the money is squandered through public housing, homeless shelters, halfway houses, and other intermediaries, the housing is slow to be built, with low accountability for either landlord or tenant to get and receive their value.
pmiller2 8y ago
I'm focused specifically on housing because approximately everybody needs somewhere to live. That ought to raise purchase prices and rent prices. In effect, it would mean anyone who bought before UBI raised the price would be subsidized by those who buy or rent afterward. It seems like roughly the same economics as rent control: if I, as a landlord, own rent controlled units, then I want to make as much money off them as if they were not rent controlled. Unless I can get them reclassified, the only way to do so is to raise the monthly price so that over the course of an average tenancy, the numbers add up to what I could have rented the unit for without rent control. What you end up with is effectively a Ponzi scheme.
stouset 8y ago
These are really excellent points I hadn’t considered. On the other hand, let’s run the experiment the other way. We currently have significant numbers of people working with no hope of financial stability in their future. Will taxing them to fill the coffers of the rich improve their situation? Given the current situation of increasing wealth inequality seemingly exacerbating existing problems, I can’t imagine that this is a promising approach. Since UBI is essentially the most generalized form of a benefits program, I really have to hope that it works. If it doesn’t, that seems damning to other benefits programs which are inefficiently (and IMO ineffectively, due to perverse incentives) means-tested. If it doesn’t, and if anti-UBI is virtually axiomatically a bad idea, then I’m not sure what’s left.
- ddingus 8y ago
  Public Works, using the post office as a model. We really do need to be building a lot of stuff, and or fixing stuff we have already done. That work is a direct stimulus, can pay pretty well, and benefits everyone public and private alike. Additionally, the returns from it can pay down all of the expensive bombs and non returned items that we currently spend or have spent on. An example is the interstate highway project. Our current president once the toll that, which is really stupid, but similar kinds of projects will deliver similar kinds of returns. The interstate highway project is still paying us great dividends years and years after it was created. Last figure I knew was 6/8 maybe 10 times the dollar spent. The post office still getting a lot of bad press right now, is actually exemplary and its performance in return to the public. It is entirely self-funded, doesn't take any tax dollars at all, pays good wages, has a lot of value to the public, and the benefits are worth working there. Other self-funded public works could work the very same way. Those that use it pay for it, and we all will benefit from the economic development. An example might beat networks, another example might be first line Healthcare, there are many to choose from. One that I've been thinking about lately is energy. Well distributed public investments in energy of all forms, managed on a higher level through something like a post office, might really pay us off, and deliver a lot of options making energy competitive and well distributed. The key thing to understanding all of this is government has agency, it's for us, by us, and we need to employ it to our mutual good. Yes, this will compete with Private Industry, but they should be competed with, otherwise they'll accumulate wealth stuff in the bank, and complain about the lack of opportunities to invest and make returns. There's nothing wrong with any of that, but it's a stalemate. One we don't need. I knocked this out really quick on Google Voice. I apologize in advance if this is a bit of a mess. Hopefully the gist comes through.
modeless 8y ago
> everyone can afford a little bit more now. This is not true. UBI doesn't create money out of nowhere. It redistributes existing money. Poor people can afford more, and rich people can afford less, because taxes increase.
- pmiller2 8y ago
  Rich people spend less relative to their wealth and income than poor people do. That means more people are going to be buying more things, increasing demand, which... raises prices.
  - modeless 8y ago
    Sure, the same is true of anything that increases the incomes of poor people. There's no reason to believe that the price increase would cancel out the entire benefit of UBI.
peterwwillis 8y ago
> UBI solves everything ?

dwc 8y ago

The money in (real) UBI comes from somewhere, obviously. It's not like everyone just has more money. If you can already afford the basics then it's going to come out of your money in taxes to a greater or lesser degree. So for people in a normal middle income range you pay and then get the money back. Higher income people would pay more and get back the same as you. Low income people would pay little or nothing and get the same back as you. How that actually plays out in a market like ours hasn't (can't) been fully tested, but it seems a promising idea.

pmiller2 8y ago
Yes, the money has to come from somewhere, but the traditional form is that UBI distributions replace most or all other forms of social services. Right now, I'm paying out and receiving little or nothing back directly (and I am not arguing that I should -- I don't need, say, food stamps, or subsidized housing at the moment, but those programs should be there for those who do). Why wouldn't it be rational for my landlord to want my UBI money?
d1zzy 8y ago
Even if the money comes from somewhere, if a large percentage of the population suddenly has more money to spend then inflation happens. I've seen this happen every time the government of a certain Eastern European country decided to raise pensions, a large percentage of the population depends on those pensions. Every time they did that, inflation went up, so it only provided a temporary benefit to those people. But it's a cool electoral trick so it happened quite often.

bsder 8y ago

> I still haven't seen a good explanation for how UBI on a truly universal scale isn't going to just raise housing prices to capture the surplus. I mean, if my landlord knew I (and anybody else who could theoretically live in my apartment) had a spare $2000/month, forever, I'm pretty sure he'd want it. This is one of the reasons why a local UBI doesn't really work. If you have a national UBI, people can move. That landlord may try to capture the surplus in California, but with a UBI you can simply move somewhere cheaper. People in the middle class forget that simply moving is expensive and requires a remarkable amount of cash up front.

pmiller2 8y ago
I don't really get this. If the surplus is efficiently captured (which markets are incredibly good at doing), how do these people come up with the cash to move?

marme 8y ago

That is not how any market works. Just because your customers have more money does not change the supply or demand for your product. A luxury apartment fetches a high price because there is demand from tenants willing to pay the luxury price. No one is going to pay more for the same apartment unless there is more demand for apartments than there is supply like you have in NYC and SF. More income causes prices to rise because people start outbidding each other for everything. Why sell your house for 100k when someone else is offering 120k

eaandkw 8y ago
You should see how the rent goes up in military towns every time our BAH goes up. If everyone knows the tenants are receiving more money the general price for rents will tend to go up. This might be the unintended consequences of a wage/ price spiral.
- DuskStar 8y ago
  If I remember correctly, there's no benefit to the soldier involved if they choose an apartment that only costs half of the Basic Allowance for Housing - they don't get to keep the surplus.
  - eaandkw 8y ago
    No, they get to keep any left over money...if there is any. One way owners can somewhat control who can rent property is by raising the rent to the point that it is unaffordable to junior enlisted servicemen.
ewams 8y ago
This is exactly how the market works and will continue to as long as humans are involved. First hand experience here that seems to escape the engineering brethren that have never glimpsed into sales: The same exact product is sold to every customer at a different price. Yes sometimes there is a higher demand which might push price a tad but most of the time there is not. I always enjoy when people on HN complain that so-and-so doesn't publish pricing on their website. Of course not, because then they would lower their revenue. It also removes leverage, sometimes it makes sense to sell something at a lower cost today to negotiate some terms, and then down the road either sell at volume or raise the price. Sometimes you just like someone and give them a discount. Oh its the government? Yea raise the price a LOT. etc etc.

goda90 8y ago

What if it's not spare? It's their only $2000/month so they're not going to pay that much for rent, and someone else will offer lower prices to get that money. These same people aren't tied to a job, so they can more easily move somewhere cheaper too.

pmiller2 8y ago
What landlord would continue to rent an apartment out for $X when it's easily possible to rent it out for $X+2000 or $X+1500 (not capturing the whole surplus, but a majority of it, say)?
- seiferteric 8y ago
  Your only looking at one side of the market equation. Landlords have to compete for tenants as well. They can't just raise rent to whatever they want, they all compete with eachother. Only in markets that are severely supply constrained like the bay area where this wouldn't work. Also, in areas where new supply could easily be added, if more people have money, it will create new demand for housing and it will be built.
- CocaKoala 8y ago
  > when it's easily possible to rent it out for $X+2000 Just because somebody has an extra 2000 dollars in their pocket every month doesn't mean they can earmark all of that money for rent; they surely have other bills that they need to pay as well. If the apartment was rentable at $X+2000, then why wasn't the landlord renting it at that price before everybody got the extra cash from UBI? Why do you think that somebody would say "Yes, now that I'm getting an extra two thousand dollars a month, my apartment is definitely worth an extra two thousand dollars a month" instead of saying "welp, rent is too high here, guess I'll move to some place else that's charging closer to what I used to pay"?

michaelchisari 8y ago

This is essentially the inflation argument and we have a lot of indicators that a UBI doesn't lead to significant inflation. But it brings up the point that a UBI will not solve all of our problems. An extra $2000 a month doesn't help you if you don't have medical insurance and get a $500k bill from a terminal disease, for instance. What a UBI does is removes a lot of bureaucracy around welfare for recurring costs (rent, clothes, food, gas, etc) and it addresses the scaling problem we're having with inequality. It's an imperfect solution, of course, but I haven't heard many other viable (by capitalist standards) options.

pmiller2 8y ago
I disagree that this is the same as a simple inflation argument. If no new money is injected to pay for the program, we have the same amount of money paying for the same stuff, so no overall increase in prices. Housing is special in that everybody needs to live somewhere, and you can't take it with you anywhere. If I want to work in a certain geographical area, I simply have to live near there as well. The vast majority of the population does not have the option of remote work. Since landlords know this, they know that if they're not already offering subsidized housing, that their tenants can afford more, so they do the rational thing and raise prices.

rm_-rf_slash 8y ago

Look up Henry George and the Single Tax: the tax on economic rents. Land ownership, intellectual property, and so on are taxed. This was pitched as an alternative to income taxes, which deincentivie labor and reduce income and thus the ability for people to be self-reliant instead of dependent on charity or government programs, and sales taxes, which fall disproportionately on poorer people who have to spend a larger share of their income on basic needs. Even Milton Friedman, no friend of taxes, thought if George’s Single Tax proposal as “the least worst tax,” because it would (theoretically) have the least depressing effect on economic growth. Theoretically, your landlord could not raise rents to avoid their tax burden, as the increase in rent would directly correlate with their tax burden. George also suggested that Single Tax revenues could provide for a UBI, although the size and scope of government was much smaller in 1880. Speaking as a junior white-collar worker whose only significant capital is held in a retirement account, the idea of a tax on economic rents (and an assumed cut in my income/payroll/sales taxes) is very appealing, far more than a paltry UBI check each month.

noonespecial 8y ago

Even if UBI does nothing for homelessness, I'd rather be homeless with an extra 2k per month than without! I'd have a much nicer van down by the river...

coryrc 8y ago

People can move to where housing is cheap, but there aren't jobs or ones quite as good, leaving less demand in the tight areas.

white-flame 8y ago

I'm of the mind that UBI might work with the absolute minimum of amounts. Give enough for food, a bus pass, renting a room (not an entire apartment), and some for incidentals. It would basically be "stay out of trouble" money, from which people can physically live, which allows them to then go forth and pursue something societally beneficial, because you don't just want to stay at that level. In theory, this might make their income less available to predatory targeting. However, with a looming jobs crisis, the assumption of being able to go out to earn more remains to be seen.

Veelox 8y ago

I think that if the government work to provide a lower UBI of say ~$750/month, healthcare, and also provide housing similar to military barracks available to everyone free of charge it would circumvent the instance increase in rent and would also provide an incentive for people to do some work.