7 ms·

It doesn’t depend on how it’s paid for. If I am a landlord and I know that my tenants now earn an additional $600/mo, and every other tenant in my market is als

It doesn’t depend on how it’s paid for. If I am a landlord and I know that my tenants now earn an additional $600/mo, and every other tenant in my market is also earning an additional $600/mo, I would be an idiot not to raise my rents by $600/mo, and so would every other landlord.

danenania 3y ago
You're only considering the first order effect. A tax increase large enough to fund UBI would change the whole economy.
- ethanbond 3y ago
  In ways that… mitigate rent increases? Say more what specific effect is relevant to this.
  - danenania 3y ago
    Well, you have the UBI increasing incomes at the lower end of the economy, which does apply upward pressure on lower-cost rents. But on the other side, you'd be decreasing the income/wealth at the top, which applies downward pressure at the high end of the market. The ultimate effect is not a straightforward calculation. I think the total size of the money supply is probably the most significant factor, and that wouldn't change if the UBI is funded by taxes.
    - ethanbond 3y ago
      But then you’re talking about the effects of a high marginal tax rate, not UBI.
      - danenania 3y ago
        I'm talking about the effects of wealth redistribution vs. money supply expansion. Redistribution doesn't necessarily increase prices since the total amount of purchasing power in the market doesn't change. It's certainly not as simplistic as "rent gets increased in proportion to the amount of the UBI" as you're implying.
        ethanbond 3y ago
        Taking into account redistribution, the story is even more bleak, not less. Lower income housing prices will rise faster than higher income housing prices.
        danenania 3y ago
        Why? What makes prices go up given a constant money supply?
        ethanbond 3y ago
        The ability to charge more? Analogous example in minimum wage increases: https://www.sciencedirect.com/science/article/abs/pii/S0094119021001030 https://www.sciencedirect.com/science/article/abs/pii/S00941... Evictions went down for 3 months, then rose again back to their prior levels as landlords increased rents.
        danenania 3y ago
        Again, it’s not clear that they’d be able to charge more given that less purchasing power for high income earners would push real estate prices (and therefore rents) downward. In the study you posted, it’s not possible to isolate the variable. Many things could have affected the (minor) changes in rents. Not a good analysis. Minimum wage increases purchasing power for the employed workers, but also increases unemployment, which has the opposite effect on prices.
        ethanbond 3y ago
        The decreased purchasing power at the high end 1) is a consequence of taxes, not UBI itself, and 2) wouldn’t push prices down for lower income housing writ large. At the absolute margins, a high-income earner who is being taxed into lower-income housing is increasing competition among tenants for the same low-income housing, which will increase those prices. If you want to tax high-income people into lower-income housing then just increase their taxes. What does UBI have to do with any of that? It’s not possible to “isolate the variable” in any economic study ever, so I suppose both of us will have to argue from conjecture. My conjecture, as a landlord, is that if incomes go up in my market, that is unambiguous signal that I can increase my prices. Your conjecture is “you won’t be able to,” but I already know I’m able to. That is how I’ve already set the price I charge. The best possible news for me, an absentee landlord, is a big company with high salaries opening an office nearby. Same as every other landlord.
- YiraldyGuber78 3y ago
  True, instead of just the low-income earners dropping out now that they have an unconditional deposit in their bank every week, now you also have a significant number of middle and high income earners consciously choosing to earn less because of the crushingly high taxes.
  - ethanbond 3y ago
    And competing for housing with lower-income people.
judofyr 3y ago
"Well, I'm a [store, café, bar, gym, etc] owner and I know that my customers now earn an additional $600/mo, and every other customer in my market is also earning an addition $600/mo, I would be an idiot not to raise my prices by $600/mo, and so would every other owner." "Oh, also, I'm building a new set of apartments and I discovered that when I set the rent to today's price + $300/mo then suddenly everyone was interested since everyone else on the market now takes +$600/mo." Yes, inflation is a real concern which should be discussed, but "duh, all the money will just go to X" is far too a simplistic argument.
- ethanbond 3y ago
  Store, cafe, bar, gym owners will try to raise their prices, and they’ll succeed (obviously not everyone independently by the $UBI amount). But then ya know what will happen? The store, cafe, bar, and gyms’ landlords will raise their rent accordingly and eat approximately all of the gains that came from their price increases. Why on earth do you think rent is so expensive near high-productivity? The buildings aren’t better. The land itself isn’t higher quality. The landlords aren’t better. It’s more expensive because it can be due to the market’s productivity, and corollary ability to pay high prices.

danenania 3y ago

You're only considering the first order effect. A tax increase large enough to fund UBI would change the whole economy.

ethanbond 3y ago
In ways that… mitigate rent increases? Say more what specific effect is relevant to this.
- danenania 3y ago
  Well, you have the UBI increasing incomes at the lower end of the economy, which does apply upward pressure on lower-cost rents. But on the other side, you'd be decreasing the income/wealth at the top, which applies downward pressure at the high end of the market. The ultimate effect is not a straightforward calculation. I think the total size of the money supply is probably the most significant factor, and that wouldn't change if the UBI is funded by taxes.
  - ethanbond 3y ago
    But then you’re talking about the effects of a high marginal tax rate, not UBI.
    - danenania 3y ago
      I'm talking about the effects of wealth redistribution vs. money supply expansion. Redistribution doesn't necessarily increase prices since the total amount of purchasing power in the market doesn't change. It's certainly not as simplistic as "rent gets increased in proportion to the amount of the UBI" as you're implying.
      - ethanbond 3y ago
        Taking into account redistribution, the story is even more bleak, not less. Lower income housing prices will rise faster than higher income housing prices.
        danenania 3y ago
        Why? What makes prices go up given a constant money supply?
        ethanbond 3y ago
        The ability to charge more? Analogous example in minimum wage increases: https://www.sciencedirect.com/science/article/abs/pii/S0094119021001030 https://www.sciencedirect.com/science/article/abs/pii/S00941... Evictions went down for 3 months, then rose again back to their prior levels as landlords increased rents.
        danenania 3y ago
        Again, it’s not clear that they’d be able to charge more given that less purchasing power for high income earners would push real estate prices (and therefore rents) downward. In the study you posted, it’s not possible to isolate the variable. Many things could have affected the (minor) changes in rents. Not a good analysis. Minimum wage increases purchasing power for the employed workers, but also increases unemployment, which has the opposite effect on prices.
        ethanbond 3y ago
        The decreased purchasing power at the high end 1) is a consequence of taxes, not UBI itself, and 2) wouldn’t push prices down for lower income housing writ large. At the absolute margins, a high-income earner who is being taxed into lower-income housing is increasing competition among tenants for the same low-income housing, which will increase those prices. If you want to tax high-income people into lower-income housing then just increase their taxes. What does UBI have to do with any of that? It’s not possible to “isolate the variable” in any economic study ever, so I suppose both of us will have to argue from conjecture. My conjecture, as a landlord, is that if incomes go up in my market, that is unambiguous signal that I can increase my prices. Your conjecture is “you won’t be able to,” but I already know I’m able to. That is how I’ve already set the price I charge. The best possible news for me, an absentee landlord, is a big company with high salaries opening an office nearby. Same as every other landlord.
YiraldyGuber78 3y ago
True, instead of just the low-income earners dropping out now that they have an unconditional deposit in their bank every week, now you also have a significant number of middle and high income earners consciously choosing to earn less because of the crushingly high taxes.
- ethanbond 3y ago
  And competing for housing with lower-income people.

judofyr 3y ago

"Well, I'm a [store, café, bar, gym, etc] owner and I know that my customers now earn an additional $600/mo, and every other customer in my market is also earning an addition $600/mo, I would be an idiot not to raise my prices by $600/mo, and so would every other owner." "Oh, also, I'm building a new set of apartments and I discovered that when I set the rent to today's price + $300/mo then suddenly everyone was interested since everyone else on the market now takes +$600/mo." Yes, inflation is a real concern which should be discussed, but "duh, all the money will just go to X" is far too a simplistic argument.

ethanbond 3y ago
Store, cafe, bar, gym owners will try to raise their prices, and they’ll succeed (obviously not everyone independently by the $UBI amount). But then ya know what will happen? The store, cafe, bar, and gyms’ landlords will raise their rent accordingly and eat approximately all of the gains that came from their price increases. Why on earth do you think rent is so expensive near high-productivity? The buildings aren’t better. The land itself isn’t higher quality. The landlords aren’t better. It’s more expensive because it can be due to the market’s productivity, and corollary ability to pay high prices.