5 ms·

> how do you prevent that from turning into hyperinflation, where everyone's assets are completely devalued in a matter of decades? You are welcome to provide

> how do you prevent that from turning into hyperinflation, where everyone's assets are completely devalued in a matter of decades? You are welcome to provide an answer. In the mean time, do we have to stop all progress in fear of that outcome? Just like you said, we need to do something. This is the best something I have heard of. You are welcome to present any potential alternatives. Here's what I envision happening: UBI causes inflation. UBI must increase to accommodate that inflation, because that is its original intended purpose anyway. If this was the whole story, then it would fail exactly as you predicted. Thankfully, it isn't, because there is one more variable in this equation: property value. When the rate of inflation increases, UBI must increase to accommodate two distinct assets: goods and housing. Goods are already at pretty tight margins, so their cost will stay roughly the same relative to inflation and wages. Housing, on the other hand, is incredibly over-valued. The cost of rent has skyrocketed, with no end in sight. By increasing both UBI and inflation, the relative value of housing should decrease. Cheaper housing means cheaper rent, which means less need to grow UBI. Eventually, this system finds an equilibrium. The problem we are seeing already is that despite ever-accelerating inflation, the rise in property value is also accelerating. This is because the wages of middle-class workers (everyone above the poverty line) has increased fast enough to accommodate it. That sounds like a good thing, until you think about the growing collection of people who are left behind the poverty line. By redistributing the general increase of wages into UBI, middle-class workers would get relatively less income. That means that middle-class workers would not be able to afford the ever-increasing cost of rent. That sounds like a bad thing until you see the solution it provides: the market for ever-increasing rent would evaporate. Property values would finally find a ceiling, and rent would stop consuming such an outsized percentage of general income. If you can find another way to slow the growth of property values, I'm all ears. If not, then let's give UBI a shot.

lolinder 3y ago
All this explanation does is reinforce my fear that UBI is about wealth redistribution from the middle class to the poor, rather than from the rich to the poor. Under the best case scenario that you describe, the rich would be largely unaffected, while the middle class would merge in with the lower classes to form a new lower class (though one that's at least over the poverty line). This makes it politically a complete non-starter, but it also feels wrong to me. If we're going to redistribute wealth, let it be from the top down, not shared between the bottom 80%. Doing something, anything is not guaranteed to make things better than leaving the current system intact. If UBI makes wealth and power even more centralized in the few at the top of the food chain, with the rest of us comfortably above the poverty line but more dependent (on average) on the government and on the 1%, that is not necessarily a good outcome.
- thomastjeffery 3y ago
  The best case I described would move wealth from landlords, through the middle class, to the poor and middle class. It would accomplish that by both expanding and devaluing the middle class. Expanding the middle class would eliminate poverty (no more poor category). Devaluing the middle class would shrink the housing market (not enough high-paying renters to sustain runaway rent growth). Shrinking the housing market would move wealth from property owners back to middle-class income, which is exactly where it came from in the first place. The primary method that the poor and middle class are exploited by the rich is housing. The benefit of middle class life is captured by rent and mortgages; then moved into the portfolio of wealthy real estate owners. If we can put that in reverse, we all win. Ideally, UBI would move wealth back from real estate portfolios back into wages and disposable income. The middle class would be less wealthy on paper, but have more disposable income from not spending it on housing. It's not as elegant as directly stealing from the rich and giving to the poor, but that doesn't seem possible anyway.
derivagral 3y ago
> the relative value of housing should decrease Can you go into this? Sort of sounds like more money chasing a static supply, which is a situation where I wouldn't expect a decrease.
- thomastjeffery 3y ago
  It's the demand that would change. If only X people can afford the rent or mortgage for Y homes, raising the value of each Y becomes untenable. Right now, there is no floor for income. People who can't afford housing simply become homeless. This system functions because there are enough people who earn a high enough wage (X) to pay rent or mortgages (Y). Anyone who can't afford housing is unable to participate in the market, and has no effect on the system. The first goal of UBI is to set a high enough income floor for every person to afford housing. That would allow the lowest income earners to participate in the housing market. No matter where the money comes from, the higher UBI is set, the more inflated currency will be. That's the inevitable effect of putting money into circulation. The more inflated currency is, the more is needed by the poorest earners to afford the cheapest housing. The more money that is needed for housing, the more that is given through UBI. This cycle is specific to low wage earners (UBI recipients), but inflation affects everyone. More inflation means less buying power for average income earners. Less buying power makes housing less affordable. Everything up to this point sounds like the worst idea ever. Why would you want housing to be less affordable? Because it already is! That problem is here right now, and it's only getting worse. There is no sign that it will ever stop, because there is always room for the real estate market to grow. That room is made of income inequality. The housing crisis only affects poor people. The smaller your wage, the greater portion must be spent on a competitively priced home. The greater income inequality, the higher a competitive price is set! If we use inflation to move wealth from the middle class (and everyone else) to the poor, then suddenly there won't be enough money in the middle class to pay competitive rent/mortgages. With no one able to pay, housing prices must drop. Once housing costs drop enough that everyone can afford housing, the cycle is complete, and both UBI and inflation growth level out. The extra benefit is that despite the middle class losing buying power (from inflation), they get to hold onto a greater percentage of their income, because they don't have to spend as much on a hyper-inflated housing market anymore. Of course, all of this is theoretical, and could be broken through anticompetitive real estate behavior.

lolinder 3y ago

All this explanation does is reinforce my fear that UBI is about wealth redistribution from the middle class to the poor, rather than from the rich to the poor. Under the best case scenario that you describe, the rich would be largely unaffected, while the middle class would merge in with the lower classes to form a new lower class (though one that's at least over the poverty line). This makes it politically a complete non-starter, but it also feels wrong to me. If we're going to redistribute wealth, let it be from the top down, not shared between the bottom 80%. Doing something, anything is not guaranteed to make things better than leaving the current system intact. If UBI makes wealth and power even more centralized in the few at the top of the food chain, with the rest of us comfortably above the poverty line but more dependent (on average) on the government and on the 1%, that is not necessarily a good outcome.

thomastjeffery 3y ago
The best case I described would move wealth from landlords, through the middle class, to the poor and middle class. It would accomplish that by both expanding and devaluing the middle class. Expanding the middle class would eliminate poverty (no more poor category). Devaluing the middle class would shrink the housing market (not enough high-paying renters to sustain runaway rent growth). Shrinking the housing market would move wealth from property owners back to middle-class income, which is exactly where it came from in the first place. The primary method that the poor and middle class are exploited by the rich is housing. The benefit of middle class life is captured by rent and mortgages; then moved into the portfolio of wealthy real estate owners. If we can put that in reverse, we all win. Ideally, UBI would move wealth back from real estate portfolios back into wages and disposable income. The middle class would be less wealthy on paper, but have more disposable income from not spending it on housing. It's not as elegant as directly stealing from the rich and giving to the poor, but that doesn't seem possible anyway.

derivagral 3y ago

> the relative value of housing should decrease Can you go into this? Sort of sounds like more money chasing a static supply, which is a situation where I wouldn't expect a decrease.

thomastjeffery 3y ago
It's the demand that would change. If only X people can afford the rent or mortgage for Y homes, raising the value of each Y becomes untenable. Right now, there is no floor for income. People who can't afford housing simply become homeless. This system functions because there are enough people who earn a high enough wage (X) to pay rent or mortgages (Y). Anyone who can't afford housing is unable to participate in the market, and has no effect on the system. The first goal of UBI is to set a high enough income floor for every person to afford housing. That would allow the lowest income earners to participate in the housing market. No matter where the money comes from, the higher UBI is set, the more inflated currency will be. That's the inevitable effect of putting money into circulation. The more inflated currency is, the more is needed by the poorest earners to afford the cheapest housing. The more money that is needed for housing, the more that is given through UBI. This cycle is specific to low wage earners (UBI recipients), but inflation affects everyone. More inflation means less buying power for average income earners. Less buying power makes housing less affordable. Everything up to this point sounds like the worst idea ever. Why would you want housing to be less affordable? Because it already is! That problem is here right now, and it's only getting worse. There is no sign that it will ever stop, because there is always room for the real estate market to grow. That room is made of income inequality. The housing crisis only affects poor people. The smaller your wage, the greater portion must be spent on a competitively priced home. The greater income inequality, the higher a competitive price is set! If we use inflation to move wealth from the middle class (and everyone else) to the poor, then suddenly there won't be enough money in the middle class to pay competitive rent/mortgages. With no one able to pay, housing prices must drop. Once housing costs drop enough that everyone can afford housing, the cycle is complete, and both UBI and inflation growth level out. The extra benefit is that despite the middle class losing buying power (from inflation), they get to hold onto a greater percentage of their income, because they don't have to spend as much on a hyper-inflated housing market anymore. Of course, all of this is theoretical, and could be broken through anticompetitive real estate behavior.