5 ms·

> Someone who's yearly income is in the 5th percentile is still earning in the 5th percentile. Isn't this an intended feature of UBI? The idea of UBI is that s

> Someone who's yearly income is in the 5th percentile is still earning in the 5th percentile. Isn't this an intended feature of UBI? The idea of UBI is that some level of material support should be guaranteed. It's about bringing "up" the floor, not really re-arranging relative equal and unequal positions. Plenty of people dislike that about it, but it's an intended feature. That said, this is basically inflationary pressure and we have a lot of tools to deal with inflationary pressure. It is a challenge, but I am always struck by how differently people speak about it in this context v.s. when average incomes rise because the labor market is doing better. On some level, average incomes going up across society is the most normal thing in the world for welfare state capitalism and is one of the challenges we are best-equipped to deal with.

superfrank 2y ago
> Isn't this an intended feature of UBI? The idea of UBI is that some level of material support should be guaranteed. It's about bringing "up" the floor, not really re-arranging relative equal and unequal positions. Plenty of people dislike that about it, but it's an intended feature. Absolutely, but I guess I don't see how just giving everyone money brings that floor up. Maybe I'm looking at this naively, but I don't see what's preventing things from just costing more after UBI. If the government gives everyone $1000/mo so landlords raise rent by $1000/mo then the floor is unchanged. I realize it's not that simple and that type of inflation wouldn't happen over night, but it seems like that's the direction it would head. Just looking at the housing aspect of it, it actually seems like the people who would benefit the most from UBI would be the people at the middle to upper end of the wage scale since they are more likely to own a house which means their housing costs are more fixed than someone renting. To me it seems like we need some way to control the cost of basic needs otherwise it's just a constant race between the government raising UBI and the market raising prices (although, admittedly, it seems like the same argument could be made about minimum wage). This is definitely not something I'm super well versed in though, so I might be looking at it wrong and am very open to people showing me what I'm missing.
- aeturnum 2y ago
  That's super fair and I think you are absolutely right that it's an obvious question. Generally when people get more money for some reason the people who they buy from don't know it - but in this case they would know it! It would be foolish to ignore it. I don't have a pat answer to your concerns, but I also want you to think about what stops your landlord from raising your rent by $1000 / month right now. Like, why not just go for it? Unless there's rent control it's allowed. The classic "efficient markets" answer is that providing housing does have underlying costs and, though people having more money does tend to lead prices to go up, sellers are still competing for buyers. At least historically, even in boom economic times, housing costs did not 100% stay even with rising incomes (which is just what this is). That said, us housing has been getting worse for most people for a long time. House costs have outpaced inflation for 60 years[1]. Rents are even worse[2]. Reporting suggests this is now being made worse by highly concentrated rental conglomerates[3]. That is to say that the cost of these services is not tied to how much money people have to pay for them - your scenario where landlords just raise prices to new income levels is actually optimistic. There's also practical evidence that local factors and competition will lead prices to go down under "the right" local conditions[4]. So I think my answer is that your concern is based on an idealized economic model, but the actual trends US in housing haven't really been following the economic ideal for some time. I don't think all gains from UBI would be snapped up by raising prices, but like all inflation we'd lose some! Overall, to me, the weakness here is that the study doesn't show that many benefits for a ~40% (!!) increase in income. Which seems WILD. Just not what you would expect at all. [1] https://www.cnbc.com/2024/03/19/why-home-prices-have-risen-faster-than-inflation-since-the-1960s.html https://www.cnbc.com/2024/03/19/why-home-prices-have-risen-f... [2] https://www.realestatewitch.com/rent-to-income-ratio-2022/ https://www.realestatewitch.com/rent-to-income-ratio-2022/ [3] https://accountable.us/watchdog-major-landlord-companies-continue-to-price-gouge-despite-through-the-roof-profits/ https://accountable.us/watchdog-major-landlord-companies-con... [4] https://sfist.com/2024/03/29/report-sf-rents-still-coming-down-despite-rents-going-up-pretty-much-everywhere-else-nationwide/ https://sfist.com/2024/03/29/report-sf-rents-still-coming-do...
  - superfrank 2y ago
    > I also want you to think about what stops your landlord from raising your rent by $1000 / month right now. Like, why not just go for it? Answering as a landlord (I have one property I used to live in that I rent out), the reason I don't just keep raising rent is mainly because I like my tenant and want to be fair to them. Having had bad tenants in the past, a good tenant is worth their weight in gold. More relevant to your question though, the other reason is because I know there's a ceiling after a certain point where the number of people who have the money to rent my property starts to shrink and the time it would take to find a new tenant would cost more than the amount of money I would make by raising rent. If rent is $2000/mo and raising it by $100/mo means it's going to take an extra month to find a tenant, then I need to believe that that tenant is going to stay for at least 20 months to break even. If everyone all of a sudden has an extra $1000/mo I could be fairly certain that my tenant won't be priced out if I were to raise rent a few hundred dollars.

superfrank 2y ago

> Isn't this an intended feature of UBI? The idea of UBI is that some level of material support should be guaranteed. It's about bringing "up" the floor, not really re-arranging relative equal and unequal positions. Plenty of people dislike that about it, but it's an intended feature. Absolutely, but I guess I don't see how just giving everyone money brings that floor up. Maybe I'm looking at this naively, but I don't see what's preventing things from just costing more after UBI. If the government gives everyone $1000/mo so landlords raise rent by $1000/mo then the floor is unchanged. I realize it's not that simple and that type of inflation wouldn't happen over night, but it seems like that's the direction it would head. Just looking at the housing aspect of it, it actually seems like the people who would benefit the most from UBI would be the people at the middle to upper end of the wage scale since they are more likely to own a house which means their housing costs are more fixed than someone renting. To me it seems like we need some way to control the cost of basic needs otherwise it's just a constant race between the government raising UBI and the market raising prices (although, admittedly, it seems like the same argument could be made about minimum wage). This is definitely not something I'm super well versed in though, so I might be looking at it wrong and am very open to people showing me what I'm missing.

aeturnum 2y ago
That's super fair and I think you are absolutely right that it's an obvious question. Generally when people get more money for some reason the people who they buy from don't know it - but in this case they would know it! It would be foolish to ignore it. I don't have a pat answer to your concerns, but I also want you to think about what stops your landlord from raising your rent by $1000 / month right now. Like, why not just go for it? Unless there's rent control it's allowed. The classic "efficient markets" answer is that providing housing does have underlying costs and, though people having more money does tend to lead prices to go up, sellers are still competing for buyers. At least historically, even in boom economic times, housing costs did not 100% stay even with rising incomes (which is just what this is). That said, us housing has been getting worse for most people for a long time. House costs have outpaced inflation for 60 years[1]. Rents are even worse[2]. Reporting suggests this is now being made worse by highly concentrated rental conglomerates[3]. That is to say that the cost of these services is not tied to how much money people have to pay for them - your scenario where landlords just raise prices to new income levels is actually optimistic. There's also practical evidence that local factors and competition will lead prices to go down under "the right" local conditions[4]. So I think my answer is that your concern is based on an idealized economic model, but the actual trends US in housing haven't really been following the economic ideal for some time. I don't think all gains from UBI would be snapped up by raising prices, but like all inflation we'd lose some! Overall, to me, the weakness here is that the study doesn't show that many benefits for a ~40% (!!) increase in income. Which seems WILD. Just not what you would expect at all. [1] https://www.cnbc.com/2024/03/19/why-home-prices-have-risen-faster-than-inflation-since-the-1960s.html https://www.cnbc.com/2024/03/19/why-home-prices-have-risen-f... [2] https://www.realestatewitch.com/rent-to-income-ratio-2022/ https://www.realestatewitch.com/rent-to-income-ratio-2022/ [3] https://accountable.us/watchdog-major-landlord-companies-continue-to-price-gouge-despite-through-the-roof-profits/ https://accountable.us/watchdog-major-landlord-companies-con... [4] https://sfist.com/2024/03/29/report-sf-rents-still-coming-down-despite-rents-going-up-pretty-much-everywhere-else-nationwide/ https://sfist.com/2024/03/29/report-sf-rents-still-coming-do...
- superfrank 2y ago
  > I also want you to think about what stops your landlord from raising your rent by $1000 / month right now. Like, why not just go for it? Answering as a landlord (I have one property I used to live in that I rent out), the reason I don't just keep raising rent is mainly because I like my tenant and want to be fair to them. Having had bad tenants in the past, a good tenant is worth their weight in gold. More relevant to your question though, the other reason is because I know there's a ceiling after a certain point where the number of people who have the money to rent my property starts to shrink and the time it would take to find a new tenant would cost more than the amount of money I would make by raising rent. If rent is $2000/mo and raising it by $100/mo means it's going to take an extra month to find a tenant, then I need to believe that that tenant is going to stay for at least 20 months to break even. If everyone all of a sudden has an extra $1000/mo I could be fairly certain that my tenant won't be priced out if I were to raise rent a few hundred dollars.