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My concern is that lenders will start loaning against it at ridiculously high rates on UBI income streams - "Get 100K today for signing away your UBI payments!

by mlac 6y ago

My concern is that lenders will start loaning against it at ridiculously high rates on UBI income streams - "Get 100K today for signing away your UBI payments!" or "just pay us the monthly amount of your UBI payment!". After thinking about it a while, I realized the law would need to protect the UBI payments from being accessible in bankruptcy. That would significantly limit lenders willing to lend on that money. Those who did would be charging very high-interest rates on it and probably limit the total amount backed by it, so someone can't borrow 200k and then declare bankruptcy but have it be protected. Even writing this out now, I'm not sure that this would work because I'm not sure how you prioritize lenders for someone's assets who declares bankruptcy. I also see upward pressure on housing prices - right now, few landlords know what the market can take for pricing. It would be easy to bump everyone's rent by a few hundred dollars when UBI kicks in because you know everyone can afford it. Technology and the market structure are so efficient at extracting value from things that it's hard to design any policy that will effectively achieve the desired outcome of providing food, clothing, and shelter for all citizens without some wonky unintended consequences.

jessaustin 6y ago
Congress changes the terms of credit and bankruptcy all the time. See the limitations that lenders bribed Biden into including in his "Bankruptcy Abuse Prevention and Consumer Protection Act". As a part of a UBI law, they could just say that creditors have no right to recover UBI payments. Take everything he owns, but you can't come back next week to take more. It could be that housing rents in certain situations could increase in response to UBI, but in most cases having more money gives one more choice, not less. A family who are now stuck in a rattrap located conveniently with respect to public transport might move to a better cheaper place in a more remote location and buy an old car. They wouldn't have to stay at the mercy of their current landlord. Other people in other situations might respond in other ways.
- mlac 6y ago
  I hear you, but I still question how long those on UBI could get ahead of the rat traps before the non-rat trap options become their old cost + the cost of UBI, effectively transferring most of the UBI benefit to the landlords and ending us up in a similar place. In my mind, it's about answering the question of how we lower barriers to moving to ownership and getting people out of the poverty cycles. There are two major hurdles I see: - The current structure right now, and incentives that exist, are so good at extracting money that they might quickly eat up the additional money handed out - whether it's through financial instruments or increased prices for basic necessities. - The people that consistently don't have money are bad at earning money, bad at keeping money, or some combination of the two. UBI only helps the people who can't earn money, but doesn't solve the financial literacy problem or the root cause that a group of people is bad at keeping money.

by mlac 6y ago

jessaustin 6y ago

Congress changes the terms of credit and bankruptcy all the time. See the limitations that lenders bribed Biden into including in his "Bankruptcy Abuse Prevention and Consumer Protection Act". As a part of a UBI law, they could just say that creditors have no right to recover UBI payments. Take everything he owns, but you can't come back next week to take more. It could be that housing rents in certain situations could increase in response to UBI, but in most cases having more money gives one more choice, not less. A family who are now stuck in a rattrap located conveniently with respect to public transport might move to a better cheaper place in a more remote location and buy an old car. They wouldn't have to stay at the mercy of their current landlord. Other people in other situations might respond in other ways.

mlac 6y ago
I hear you, but I still question how long those on UBI could get ahead of the rat traps before the non-rat trap options become their old cost + the cost of UBI, effectively transferring most of the UBI benefit to the landlords and ending us up in a similar place. In my mind, it's about answering the question of how we lower barriers to moving to ownership and getting people out of the poverty cycles. There are two major hurdles I see: - The current structure right now, and incentives that exist, are so good at extracting money that they might quickly eat up the additional money handed out - whether it's through financial instruments or increased prices for basic necessities. - The people that consistently don't have money are bad at earning money, bad at keeping money, or some combination of the two. UBI only helps the people who can't earn money, but doesn't solve the financial literacy problem or the root cause that a group of people is bad at keeping money.