8 ms·

UBI won't fix much for a far more trivial and mechanistic reason: adding $1,000/mo to everyone's income merely gives landlords the ability to charge ($1,000*n b

UBI won't fix much for a far more trivial and mechanistic reason: adding $1,000/mo to everyone's income merely gives landlords the ability to charge ($1,000*n bedrooms)/mo more in rent.

markus_zhang 2y ago
I think this can be fixed with social housing. Not a fundamental issue but yes I agree this is an issue. The UBI in my mind is not $$$ but merchandises and services coupons.
bryanlarsen 2y ago
Landlords have pricing power because people have to live close to their jobs. If UBI lets people move freely, landlords lose their pricing power.
- deleted 2y ago
  [deleted]
- tcfunk 2y ago
  I always disagree with this moving freely argument. Certainly some live where they do specifically for work, but some are also there to be close to family. They will not be interested in relocating to save a buck.
  - bryanlarsen 2y ago
    In other words, the real estate market is sticky. There are large costs to moving, so consumers put up with price increases more readily than they do in other markets. But there's a big gulf between "sticky" and "laws of supply and demand don't apply". People on UBI will be much more price sensitive than those supplementing with wage income since the UBI dependent will be time rich and money poor. Landlords will have less power over them. They'll still have some power because of the stickiness.
    - llamaimperative 2y ago
      There's a big gulf between "eventually all marginal productivity increases are eaten by rising land rent" and "laws of supply and demand don't apply." You have no reason to believe people with new marginal income from UBI would move to lower COL areas. We have strong reason to believe they'd spend that money to move toward high COL areas. Evidence for this is the fact that people, when they have money, choose to live in high COL areas.
      - bryanlarsen 2y ago
        People living solely on UBI will be the poorest people in the country. It's absurd to believe that UBI will be generous enough to cover more than basic living expenses. They're not going to behave like "people with money".
        llamaimperative 2y ago
        I didn't say anything about "people living solely on UBI" Your claim is, I guess, that people supplementing wages with UBI will move to poorer locations, because they are less tied to their jobs, and then the poorest of the poor (those who already live in bottom-percentile COL locations) will... move to even poorer locations? Seems like a wacky argument relative to: "people will do what they literally always do with new marginal income, which is move to nicer areas, and since everyone is doing it simultaneously without new supply, prices will go up and nobody will improve their lifestyle."
krapp 2y ago
Landlords can't simply arbitrarily raise rents like that. If they could, they would already charge every individual tenant 100% of their income. Renting is a market like any other, and markets have limits and competition. The renters that do try to increase rent by $1000 will simply not have tenants anymore, and those that didn't, would, because UBI means people can basically move anywhere, any time they like.
- llamaimperative 2y ago
  It’s not “arbitrary.” It’s raising rents for the same reason rents are ever raised: people’s willingness/ability to pay has gone up. That can happen because of a new subway station, a hot new employer nearby, or simply because money appeared in their pockets. If money were no object, more people would live in high COL areas, not fewer. You know this is true because you see it in the prices. To prevent rent increases you’d need people all to have $n appeared in their pockets and to have a pact not to then spend $n to upgrade their living arrangements. The cruel irony of course being if everyone attempts to upgrade, then no one achieves an upgrade but they do achieve spending their new money!
  - krapp 2y ago
    Does your rent go up by the precise amount of your increase in income every year? Mine doesn't. My landlord isn't checking my W2 or tax statements for extra rent money, that isn't how it works. The assumption that all rents, everywhere, would go up by the amount of UBI is the definition of "arbitrary."
    - llamaimperative 2y ago
      Are we talking about one person’s income going up, or knowably every single person’s income going up by a known amount? When minimum wage rises, yes rents rise. When high paying employers come to an area, yes rents rise. These are a lot more random/diffuse in the market than UBI is, but they still cause the same effect. Can you please explain why rents go up at all?
dragonwriter 2y ago
No, it doesn't, and the proof of that is that landlords don't already charge 100% of income. You seem to be assuming housing rental is an perfectly monopolistic market, which it isn't, and any place where it even loosely approximates that needs to correct that whether or not UBI is adopted.
- llamaimperative 2y ago
  Okay then you tell me: why do rents go up at all?
  - sdenton4 2y ago
    Because the landlords use price-fixing software. https://www.justice.gov/archives/opa/pr/justice-department-sues-realpage-algorithmic-pricing-scheme-harms-millions-american-renters https://www.justice.gov/archives/opa/pr/justice-department-s...
    - llamaimperative 2y ago
      And before that software rent never went up?
- ryandrake 2y ago
  Most participants in mature markets know approximately what percentage of the public's wallet they can grab. Obviously it's not 100% for any of them, but they all know what they can get away with. My guess is that if UBI added $1,000/mo to everyone's income, landlords would respond by raising rent by about $400-$500 or so, grocery stores would raise their prices by a percentage of that new income, and so on for all businesses, until all $1,000 was soaked up and the public is no better off than they were before.
  - llamaimperative 2y ago
    Very obviously correct^
  - 2y ago
jimbokun 2y ago
Applying it to rent is arbitrary. The general point is that it is inflationary for all goods and services. That is assuming UBI is funded through government borrowing as we saw with COVID stimulus. If funded through new taxes the inflationary impact should be much less. (I don’t have enough economic training to determine how much less.)
- llamaimperative 2y ago
  Well it's not quite arbitrary because it will induce supply in other goods and services. Rent in high COL areas is driven primarily by land rent (i.e. cost of land, regardless of whether that land is actually rented to the building on top of it or not), which has zero supply elasticity. And then the other portion of rent (the building itself) is also pretty darn supply-inelastic as well, though not entirely.
  - greenie_beans 2y ago
    i live in a high COL area and rent is not high because of land costs. there are several empty lots that people want to build on but the discretionary review process for entitlements make it too easy to wreck the permit process (everybody knows this in the entire world; this is the YIMBY line which has truth to it). another factor is the cost per bedroom to build is very high, due to the cost of building in the market (labor, cost of goods, etc). so it's actually everything to do with the building/entitlements and nothing to do with land cost. at least where i live right now. proof: the college cancelled a massive housing project because it was gonna be too expensive per bedroom. this wasn't because of land costs but building costs. aside, while i'm at it, let's take another swipe at free market and housing: the YIMBY line has truth about regulations preventing building, but if you look at build starts for like the 10 years after the 2008 crisis, you'll see a lack of buildings that happened during that time. they had record housing starts leading up to the crisis, and you know what also existed then? the same regulatory regime that we are now tearing down to help us build what we need. but after the crisis, the builders stopped building because they were fearful about the market. this suggests to me that "regulations prevent building, just let the free market take care of it," is too simplistic and ignores very real data. the market took care of it by not building.
SkyBelow 2y ago
Increasing the rent price makes it much easier for new rentals to come online, as long as the government isn't effectively stopping new competitors. Much the reason why grocery stores, car mechanics, etc. aren't going to raise their prices by an average of $1k/mo.

UBI won't fix much for a far more trivial and mechanistic reason: adding $1,000/mo to everyone's income merely gives landlords the ability to charge ($1,000*n bedrooms)/mo more in rent.

markus_zhang 2y ago

I think this can be fixed with social housing. Not a fundamental issue but yes I agree this is an issue. The UBI in my mind is not $$$ but merchandises and services coupons.

bryanlarsen 2y ago

Landlords have pricing power because people have to live close to their jobs. If UBI lets people move freely, landlords lose their pricing power.

deleted 2y ago
[deleted]
tcfunk 2y ago
I always disagree with this moving freely argument. Certainly some live where they do specifically for work, but some are also there to be close to family. They will not be interested in relocating to save a buck.
- bryanlarsen 2y ago
  In other words, the real estate market is sticky. There are large costs to moving, so consumers put up with price increases more readily than they do in other markets. But there's a big gulf between "sticky" and "laws of supply and demand don't apply". People on UBI will be much more price sensitive than those supplementing with wage income since the UBI dependent will be time rich and money poor. Landlords will have less power over them. They'll still have some power because of the stickiness.
  - llamaimperative 2y ago
    There's a big gulf between "eventually all marginal productivity increases are eaten by rising land rent" and "laws of supply and demand don't apply." You have no reason to believe people with new marginal income from UBI would move to lower COL areas. We have strong reason to believe they'd spend that money to move toward high COL areas. Evidence for this is the fact that people, when they have money, choose to live in high COL areas.
    - bryanlarsen 2y ago
      People living solely on UBI will be the poorest people in the country. It's absurd to believe that UBI will be generous enough to cover more than basic living expenses. They're not going to behave like "people with money".
      - llamaimperative 2y ago
        I didn't say anything about "people living solely on UBI" Your claim is, I guess, that people supplementing wages with UBI will move to poorer locations, because they are less tied to their jobs, and then the poorest of the poor (those who already live in bottom-percentile COL locations) will... move to even poorer locations? Seems like a wacky argument relative to: "people will do what they literally always do with new marginal income, which is move to nicer areas, and since everyone is doing it simultaneously without new supply, prices will go up and nobody will improve their lifestyle."

krapp 2y ago

Landlords can't simply arbitrarily raise rents like that. If they could, they would already charge every individual tenant 100% of their income. Renting is a market like any other, and markets have limits and competition. The renters that do try to increase rent by $1000 will simply not have tenants anymore, and those that didn't, would, because UBI means people can basically move anywhere, any time they like.

llamaimperative 2y ago
It’s not “arbitrary.” It’s raising rents for the same reason rents are ever raised: people’s willingness/ability to pay has gone up. That can happen because of a new subway station, a hot new employer nearby, or simply because money appeared in their pockets. If money were no object, more people would live in high COL areas, not fewer. You know this is true because you see it in the prices. To prevent rent increases you’d need people all to have $n appeared in their pockets and to have a pact not to then spend $n to upgrade their living arrangements. The cruel irony of course being if everyone attempts to upgrade, then no one achieves an upgrade but they do achieve spending their new money!
- krapp 2y ago
  Does your rent go up by the precise amount of your increase in income every year? Mine doesn't. My landlord isn't checking my W2 or tax statements for extra rent money, that isn't how it works. The assumption that all rents, everywhere, would go up by the amount of UBI is the definition of "arbitrary."
  - llamaimperative 2y ago
    Are we talking about one person’s income going up, or knowably every single person’s income going up by a known amount? When minimum wage rises, yes rents rise. When high paying employers come to an area, yes rents rise. These are a lot more random/diffuse in the market than UBI is, but they still cause the same effect. Can you please explain why rents go up at all?

dragonwriter 2y ago

No, it doesn't, and the proof of that is that landlords don't already charge 100% of income. You seem to be assuming housing rental is an perfectly monopolistic market, which it isn't, and any place where it even loosely approximates that needs to correct that whether or not UBI is adopted.

llamaimperative 2y ago
Okay then you tell me: why do rents go up at all?
- sdenton4 2y ago
  Because the landlords use price-fixing software. https://www.justice.gov/archives/opa/pr/justice-department-sues-realpage-algorithmic-pricing-scheme-harms-millions-american-renters https://www.justice.gov/archives/opa/pr/justice-department-s...
  - llamaimperative 2y ago
    And before that software rent never went up?
ryandrake 2y ago
Most participants in mature markets know approximately what percentage of the public's wallet they can grab. Obviously it's not 100% for any of them, but they all know what they can get away with. My guess is that if UBI added $1,000/mo to everyone's income, landlords would respond by raising rent by about $400-$500 or so, grocery stores would raise their prices by a percentage of that new income, and so on for all businesses, until all $1,000 was soaked up and the public is no better off than they were before.
- llamaimperative 2y ago
  Very obviously correct^
- 2y ago

jimbokun 2y ago

Applying it to rent is arbitrary. The general point is that it is inflationary for all goods and services. That is assuming UBI is funded through government borrowing as we saw with COVID stimulus. If funded through new taxes the inflationary impact should be much less. (I don’t have enough economic training to determine how much less.)

llamaimperative 2y ago
Well it's not quite arbitrary because it will induce supply in other goods and services. Rent in high COL areas is driven primarily by land rent (i.e. cost of land, regardless of whether that land is actually rented to the building on top of it or not), which has zero supply elasticity. And then the other portion of rent (the building itself) is also pretty darn supply-inelastic as well, though not entirely.
- greenie_beans 2y ago
  i live in a high COL area and rent is not high because of land costs. there are several empty lots that people want to build on but the discretionary review process for entitlements make it too easy to wreck the permit process (everybody knows this in the entire world; this is the YIMBY line which has truth to it). another factor is the cost per bedroom to build is very high, due to the cost of building in the market (labor, cost of goods, etc). so it's actually everything to do with the building/entitlements and nothing to do with land cost. at least where i live right now. proof: the college cancelled a massive housing project because it was gonna be too expensive per bedroom. this wasn't because of land costs but building costs. aside, while i'm at it, let's take another swipe at free market and housing: the YIMBY line has truth about regulations preventing building, but if you look at build starts for like the 10 years after the 2008 crisis, you'll see a lack of buildings that happened during that time. they had record housing starts leading up to the crisis, and you know what also existed then? the same regulatory regime that we are now tearing down to help us build what we need. but after the crisis, the builders stopped building because they were fearful about the market. this suggests to me that "regulations prevent building, just let the free market take care of it," is too simplistic and ignores very real data. the market took care of it by not building.

SkyBelow 2y ago

Increasing the rent price makes it much easier for new rentals to come online, as long as the government isn't effectively stopping new competitors. Much the reason why grocery stores, car mechanics, etc. aren't going to raise their prices by an average of $1k/mo.