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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 gr

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.

deleted 6y ago
[deleted]
fastball 6y ago
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.
- ethanbond 6y ago
  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.
  - HPsquared 6y ago
    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.
    - ethanbond 6y ago
      Restrictive planning is one, but another reason you’d not build is speculation. LVT eliminates speculation.
      - mac01021 6y ago
        I'm dense. Can you explain "another reason you’d not build is speculation"?
        ethanbond 6y ago
        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.
        fastball 6y ago
        Yep, I'm definitely a supporter of LVT. My only issue is that you end up making the govt more of an arbiter of what "value" is than it already is, which can end up causing issues.
        ethanbond 6y ago
        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.
WalterBright 6y ago
Ability to pay is not the same thing as willingness to pay. Supply&demand does work.
- ethanbond 6y ago
  Land is in fixed supply and everyone needs land to work, sleep, and exist upon. Neither UBI nor any other policy changes that. Housing costs in expensive markets are set primarily by land values and not by the value of the capital/building upon the land. Yes you can make a dent in the problem it by zoning for more units, but you cannot zone more land into existence in high value areas.
  - ALittleLight 6y ago
    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.
  - WalterBright 6y ago
    > 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.
    - ethanbond 6y ago
      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.
perfunctory 6y ago
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?
- 1123581321 6y ago
  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.
- jlokier 6y ago
  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.
- Sohcahtoa82 6y ago
  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? And Netflix is $9/month. C'mon now.
svalorzen 6y ago
Personally, I really hate this comment, for several reasons. First, let's consider the price of the rent. Assume for a moment that somebody manages to fix all mental health problems, alcoholism and so on, and that magically everyone manages to find a good job that pays reasonably well. This is supposedly the dream land of the pure capitalists: everyone works and is productive and so no handouts are received. Well, what would you suppose happens to the rent in this situation? If everyone is able to pay, then rents would go up, wouldn't they? So the difference between UBI and this is only that in one case people don't necessarily have to work, while in the latter case they have to spend 8+ of their lives doing stuff they may not like. What this means is that your main point is simply that you don't want people to have money to pay for housing, because that may make prices go up for you. You are literally advocating that some people must be homeless so that life for us is easier. Secondly, the rent argument consistently ignores the fact that if you don't have to work, you can go live wherever you want. One could go live in Alaska and buy 1km2 of land for 10$ 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.
- op00to 6y ago
  Thank you for this reply.
- ethanbond 6y ago
  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?
op00to 6y ago
It goes up by how much? Why? Doesn’t seem simple to me, but I prefer sound theory to just so stories.
learnstats2 6y ago
It's not obvious that UBI would increase the amount that landlords can get. If people are less beholden to their current situation and more able to move freely, isn't it just as likely that rents will go down? (Aside from the fact that plenty of places use mechanisms to control rents, if this is a real problem)
mac01021 6y ago
"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.
- vladimirralev 6y ago
  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.
scottious 6y ago
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.
afarrell 6y ago
UBI people also tend to be the same people that believe that housing costs will go down if you allow companies and non-profits to build more housing.
- onion2k 6y ago
  Are you suggesting that increasing the supply of something doesn't push the price down? That would be contrary to about 300 years of economic theory, so if you can prove it there's probably a Nobel Prize in it for you.
  - bregma 6y ago
    Consider price elasticity. 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.
    - meddlepal 6y ago
      Better to make some progress than no progress?
jimbokun 6y ago
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.
stocknoob 6y ago
You need food more than shelter. Why don't food prices rise until everyone is homeless but non-starving? Actually, you need water more than food. Why isn't fresh water $1000/gallon? Why do we have discretionary income at all?

deleted 6y ago

[deleted]

fastball 6y ago

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.

ethanbond 6y ago
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.
- HPsquared 6y ago
  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.
  - ethanbond 6y ago
    Restrictive planning is one, but another reason you’d not build is speculation. LVT eliminates speculation.
    - mac01021 6y ago
      I'm dense. Can you explain "another reason you’d not build is speculation"?
      - ethanbond 6y ago
        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.
        fastball 6y ago
        Yep, I'm definitely a supporter of LVT. My only issue is that you end up making the govt more of an arbiter of what "value" is than it already is, which can end up causing issues.
        ethanbond 6y ago
        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.

WalterBright 6y ago

Ability to pay is not the same thing as willingness to pay. Supply&demand does work.

ethanbond 6y ago
Land is in fixed supply and everyone needs land to work, sleep, and exist upon. Neither UBI nor any other policy changes that. Housing costs in expensive markets are set primarily by land values and not by the value of the capital/building upon the land. Yes you can make a dent in the problem it by zoning for more units, but you cannot zone more land into existence in high value areas.
- ALittleLight 6y ago
  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.
- WalterBright 6y ago
  > 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.
  - ethanbond 6y ago
    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.

perfunctory 6y ago

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?

1123581321 6y ago
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.
jlokier 6y ago
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.
Sohcahtoa82 6y ago
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? And Netflix is $9/month. C'mon now.

svalorzen 6y ago

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.

op00to 6y ago
Thank you for this reply.
ethanbond 6y ago
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?

op00to 6y ago

It goes up by how much? Why? Doesn’t seem simple to me, but I prefer sound theory to just so stories.

learnstats2 6y ago

It's not obvious that UBI would increase the amount that landlords can get. If people are less beholden to their current situation and more able to move freely, isn't it just as likely that rents will go down? (Aside from the fact that plenty of places use mechanisms to control rents, if this is a real problem)

mac01021 6y ago

"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.

vladimirralev 6y ago
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.

scottious 6y ago

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.

afarrell 6y ago

UBI people also tend to be the same people that believe that housing costs will go down if you allow companies and non-profits to build more housing.

onion2k 6y ago
Are you suggesting that increasing the supply of something doesn't push the price down? That would be contrary to about 300 years of economic theory, so if you can prove it there's probably a Nobel Prize in it for you.
- bregma 6y ago
  Consider price elasticity. 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.
  - meddlepal 6y ago
    Better to make some progress than no progress?

jimbokun 6y ago

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.

stocknoob 6y ago

You need food more than shelter. Why don't food prices rise until everyone is homeless but non-starving? Actually, you need water more than food. Why isn't fresh water $1000/gallon? Why do we have discretionary income at all?