4 ms·

I still don't think we can put out the fire by pouring more fuel. For instance, rents are proportionally related to the income of the population. How can we pr

by typ 7y ago

I still don't think we can put out the fire by pouring more fuel. For instance, rents are proportionally related to the income of the population. How can we prevent the extra cash flow from being translated into higher rent/housing prices? If I have that extra cash, I would certainly 'leverage' it to expand my real estate portfolio :) That said, I don't object to UBI per se and I agree that the Fed's policy would lead to some undesirable consequences. But without addressing the problem systematically, UBI would go nowhere better, I am afraid.

zajio1am 7y ago
Rents should be limited by marginal utility of living in costly city. If you can have higher wage by living in costly city compared to small town, than it make sense to accept higher rent. But if you receive extra income regardless of where you live, then it is hard to say what effect it would have on prices. It may even cause people to prefer cheaper small towns as marginal utility from wage difference would be lower.
- typ 7y ago
  That has to assume that most people would choose lower-paying jobs if the extra income presents. But I don't think it is necessarily true. It is also unlikely that people would right away leave their current job if rents are on the rise, at least not until the net gain gets surpassed by the alternatives. The extra income probably gives the tenants more 'tolerance' to the rent increase and that is simply how subsidies interact with market.
qqqwerty 7y ago
I think you are looking at this from SF/SV centric point of view. The correct solution to the problem to high housing costs is to build more housing, not lower everyones income. Here is another angle to look at the issue from. We have been relying on monetary stimulus for the last decade to keep the economy chugging along. The landlord class has been benefiting from that via cheaper interest rates. What if, instead of lowering rates, we did a UBI and in your proposed scenario, most of that money just results in high rents. Well, we would be roughly in the same spot we are in (stimulus largely benefiting landlords), but with the key difference that people who are really struggling (living in their car for example) can use that cash to get back on their feet. Also, because the money passes through multiple peoples hands before eventually getting sucked up by the wealthy, it will actually result in higher measured economic activity (because GDP is basically measure the velocity of money). So I guess, that is what I don't understand. Our current policy is to just shovel money to the wealthy. They in turn just bid up the price of stocks, real estate, art, yachts, super bowl tickets, etc.. creating an inflationary bubble for rich people things. With a UBI, the working class gets first dibs on that stimulus, and every one up the chain will benefit (including small businesses, which also don't bet much benefit from monetary stimulus).

by typ 7y ago

zajio1am 7y ago

Rents should be limited by marginal utility of living in costly city. If you can have higher wage by living in costly city compared to small town, than it make sense to accept higher rent. But if you receive extra income regardless of where you live, then it is hard to say what effect it would have on prices. It may even cause people to prefer cheaper small towns as marginal utility from wage difference would be lower.

typ 7y ago
That has to assume that most people would choose lower-paying jobs if the extra income presents. But I don't think it is necessarily true. It is also unlikely that people would right away leave their current job if rents are on the rise, at least not until the net gain gets surpassed by the alternatives. The extra income probably gives the tenants more 'tolerance' to the rent increase and that is simply how subsidies interact with market.

qqqwerty 7y ago

I think you are looking at this from SF/SV centric point of view. The correct solution to the problem to high housing costs is to build more housing, not lower everyones income. Here is another angle to look at the issue from. We have been relying on monetary stimulus for the last decade to keep the economy chugging along. The landlord class has been benefiting from that via cheaper interest rates. What if, instead of lowering rates, we did a UBI and in your proposed scenario, most of that money just results in high rents. Well, we would be roughly in the same spot we are in (stimulus largely benefiting landlords), but with the key difference that people who are really struggling (living in their car for example) can use that cash to get back on their feet. Also, because the money passes through multiple peoples hands before eventually getting sucked up by the wealthy, it will actually result in higher measured economic activity (because GDP is basically measure the velocity of money). So I guess, that is what I don't understand. Our current policy is to just shovel money to the wealthy. They in turn just bid up the price of stocks, real estate, art, yachts, super bowl tickets, etc.. creating an inflationary bubble for rich people things. With a UBI, the working class gets first dibs on that stimulus, and every one up the chain will benefit (including small businesses, which also don't bet much benefit from monetary stimulus).