It's illustrated well in Churchill's story about the do-gooders who bought out a bridge and lifted the toll, only to find that rents went up by the exact cost of regularly crossing the bridge.
http://www.landvaluetax.org/current-affairs-comment/winston-...
(Search for "bridge".)
If rents just advance to capture the BI, all you've done is give a big subsidy to landowners.
We actually do, both when it is driven by rational (e.g., shifting money into a monopolized market) and irrational (encouraging time-deferred costs that people are known empirically to discount) forces.
> If rents just advance to capture the BI, all you've done is give a big subsidy to landowners.
But they can't, because UBI is a redistributive scheme; without price discrimination based on income before both UBI and the taxes funding it, you can't adjust rents to capture it.
"It's driven by rational and irrational forces" isn't an explanation.
>But they can't, because UBI is a redistributive scheme; without price discrimination based on income before both UBI and the taxes funding it, you can't adjust rents to capture it.
So you're saying the bridge scenario didn't and can't happen?
Nor was it posed as one, it is your condensation of my description (which also includes specific examples in each category) of broad classes of sources which we understand very well that produce the described effect.
> So you're saying the bridge scenario didn't and can't happen?
I was not saying anything about the bridge scenario, which is structurally unlike a UBI and thus a non-useful analogy. Though, sure, I would say that the bridge example reads a lot like more like a parable than a historical account, and politicians constructing such parables with weak, if any, factual basis is about as uncommon as ocean spray containing salt. More to the point, it's exactly about one f the specific examples I gave of effects we understand quite well.
Do you deny generally that rents go up with public infrastructure? Or that lifting a toll would raise rents (because it now becomes a more desirable place to live)? Or, which supply/demand curves do you think differ here from the UBI case?
They would go up; but, absent a perfect monopoly (which real property available for rent is usually not subject to in even the short term), it would be unlikely to go up the exact amount of the subsidy (considering only the effect of the subsidy).
> Or, which supply/demand curves do you think differ here from the UBI case?
The difference is that its a lot more plausible for residential rental property in a particular locality to be effectively monopolized than for that to be the national norm. And, to the extent the effect is under consideration is real, it is explicitly a monopoly effect.
In a way a basic income can almost be seen as a decentralization of government as it enables citizens to direct government funded spending at their discretion.
This same logic applies to corporate welfare as well - and you can see the results (see latest tax bill).
The differentiating factor is that, in one case you give to those without much political power vs. giving to those who have enough power to play havoc with your politics (or have already controlled/captured it).
A bit of perspective helps to balance the slippery slope danger you presented.
This article would look very different if some members of the tribe were taxed heavily to provide the payments to other members.
Edmund Burke famously made this argument in the 18th century as an example of a problem with universal franchise (letting non-property owners vote). Supposedly the "masses" would vote for more and more handouts.
Personally, I think the universal franchise has worked out pretty well overall, and this problem has, if anything, gone the wrong way even during the big bouts of progressivism in the late 19th and early 20th centuries.
And even when they went overboard as they did in the UK, they recovered, perhaps over-recovered. But in the long run it seems to converge fine.
How is this a problem? If enough people support an increase in the UBI that politicians feel they have to raise it, isn't that a good thing?
If people could vote themselves more money the voter turnout would be insane. How would anyone control something like that? Anyone who ran against the increases would be easily defeated with something like this: "My opponent wants to take the money you deserve!".
At some point you would be giving people more money than you produce as a country and then it's only a matter of time until the money runs out. Once the money runs out then your government will evaporate as the enraged populace tries to pin the blame on one group.
This of course is on of the central issues with government run wealth redistribution programs, nobody wants less money and they will go to the polls to protect it. Whatever you think of the ACA/Obamacare in the US, once it got established and started paying out there is almost no way to repeal it as no one wants to lose their benefits. Even establishment Republicans learned their lesson and are now leaving it alone after seeing that they angered many Americans who enjoyed those benefits and threatened their chances of being re-elected.
Yeah, that seems mostly fine to me though (aside from the rhetoric.) If an increase in UBI makes life meaningfully better for enough people and they turn out to increase it that seems like democracy in action.
>At some point you would be giving people more money than you produce as a country and then it's only a matter of time until the money runs out. Once the money runs out then your government will evaporate as the enraged populace tries to pin the blame on one group.
Seems pretty hyperbolic.
You cannot continually raise the UBI, as this is economically untenable, however there will be significant pressure to raise it every time there is a vote. I haven't seen any UBI proposal that addresses this.
Plus there is another real issue with a true UBI: inflation. If everyone in the US made $100,000 a year then an iPhone would cost $8000 instead of $800 as people could afford to pay more and Apple would adjust their price accordingly. How do existing UBI schemes plan to avoid this?
Because there's still the same total amount of money in the system, (inflation adjusted) prices can't go up too much. According to the Econ 101 model, goods with a fixed supply will probably get more expensive since there are more potential customers wanting the same amount of stuff, but goods with an extremely flexible supply will get cheaper, again, because there are more potential customers to spread the fixed costs over.
* There's also a sort-of-UBI variant where the funds come from monetizing some big nationalized resource and distributing the proceeds (e.g. the Alaska Permanent Fund Dividend). In that case the above doesn't apply, but neither does your fear. Since in that case the pool of money is dictated by the market value of the resource the voters can't directly impact how much they'll receive.
We know empirically (see your comment, for instance) that some people would vote against a raise. That idea that 'people' is unable to control their passions is not supported by history. Not so long ago, basic income was rejected by referendum in Switzerland.
"At some point you would be giving people more money than you produce as a country"
That statement is meaningless. Any country that run his own currency can produce an infinity quantity of it. The real constrain is what real resources are available in the country. If you spent more that what is available the value of money will go down (also know as inflation).
Obviously, but in reality countries only mint more currency according to a strict schedule to avoid destabilizing their economy. UBI has to abide by this otherwise you will do real damage to your economy.
My statement is not without meaning, you cannot pretend that a country will be able to give out more wealth that it actually possesses. Technically, the US is over this threshold, but we have a massive amount of credit that we are able to leverage.
>We know empirically (see your comment, for instance) that some people would vote against a raise. That idea that 'people' is unable to control their passions is not supported by history. Not so long ago, basic income was rejected by referendum in Switzerland.
In regard to Switzerland rejecting UBI I think the issue is once people are dependent on UBI dialing back payouts is near impossible even if it makes the most sense economically.
Educated voters will reject raises, but this is like saying that educated people will not eat in excess of what they need. In reality, America has lots of people who know better but are still overweight because of the dependency cycle it creates.
Sometimes the bigger safety net people win, taxes go up, and payouts go up. Sometimes the lower taxes people win, taxes go down, and payouts shrink. Eventually these forces hit a stable equilibrium (or a semi-stable "pendulum") and the tax and benefit rates don't seem to explode or contract endlessly.
I don't see any reason to expect that a basic income would be any different.
In the end it's the classic choice. People want more from the government and they also want to pay less taxes which ends up at a balance point.