UBI is not a replacement for a job. And unless you wish to survive on extremely minimal living standards, UBI alone won't be of much help to you.
Maximizing social prosperity and stabilizing the economy would probably #1 and #2 for me.
This is a common misconception. In fact real estate is just as supply-elastic as everything else. New developments open up all the time. Development makes land more attractive for more people. And areas become blighted and therefore less attractive, lowering prices.
Some places have sharply-constrained supply, such as San Francisco, but this isn't the norm. The norm is cities slowly expanding outwards, as new investments in the center require more time and effort to bear fruit. Politics often throws a monkey wrench into market functionality, but the vast majority of real estate markets function and clear just fine.
Land (as in housing) is widely accepted as being supply-elastic, especially since in addition to scarcity it's also heavily regulated. You can't wave your hands at SF and say it's an exception because you want UBI to work. Markets like SF are proof that housing pricing is income-elastic, and can't be dismissed when discussing raising the income floor for entire populations.
If you built some electric poles in the middle of the tundra and by moving there people could pay significantly lower prices per KWh, people with high electricity consumption absolutely would show up there to consume it. There are companies that build data centers in cold climates just to save on air conditioning.
> Land (as in housing) is widely accepted as being supply-elastic, especially since in addition to scarcity it's also heavily regulated. You can't wave your hands at SF and say it's an exception because you want UBI to work.
Not all housing markets are hampered by bad regulations. Houston has much less restrictive zoning and rents are much lower there than SF. They're also lower in Tokyo despite the incredibly high demand for housing there, because Tokyo isn't afraid of density.
It doesn't say anything to say the combination of UBI and terrible zoning regulations will cause rents to be high in SF. They're already high in SF because of terrible zoning regulations even without a UBI. The only way to have reasonable rents is to fix the zoning rules, after which supply will meet demand as it ought to.
I fail to see the relationship to UBI with that.
Nobody denies that within the fixed number of locations that there can be dynamism, the question is how rent functions in lieu of this scarcity. It happens to follow the Law of Rent.
The Law of Rent requires a bunch of things to be true that frequently aren't true in practice, or that are only true in cities like SF with restrictive zoning laws that prevent new housing construction.
Suppose there are 1,000,000 tenants and 100,000 landlords whose land can each support 100 tenants if a tall building was built there. In the absence of collusion or zoning regulations to the contrary, each of the landlords has the incentive to add more apartments to their land until the net present value of rent of an apartment falls below the building cost, because the land isn't "scarce" in the sense that it can support ten times as many tenants as there actually are, and every landlord would prefer to make more money at the expense of the others.
Not at the same commute time and price. Home prices won't be that high, if there was fast, cheap and better public transport to far off places. That again takes a lot of tax money to build and maintain.
> Land has a perfectly inelastic supply, and thus expectations of more income will lead to increases in rent.
It seems like you're talking about housing rather than land, you don't think that more construction happens when there's more demand? Most of the populated world doesn't have the unique constraints present in the Bay area or NYC.
Because of the law of supply and demand, as it pertains to the outputs of a productive process in a relatively free market context. The prices will generally tend towards the costs (including opportunity costs) in the long run, and demand shocks will only cause temporary rises in price until production can catch up.
With naturally scarce commodities, that is not possible, because there is no production.
>you don't think that more construction happens when there's more demand?
Land supply is perfectly inelastic. Improvements on land are somewhat elastic, although ultimately anchored by lots of factors... and the speculative holding of land is a big one. Furthermore, there's an upper limit to the amount of density that a region can sustain and still be livable.
There's a "standard of comfort" that people have, which ultimately determines a lot of it, though. So, in theory, if we became more comfortable at higher densities, we could live like people in Hong Kong. Yet, that doesn't mean even they can sustain infinite density, and indeed they have high rents in Hong Kong.
Oil rights are a kind of land, of course, because that is what land really is... the rights.
Those rights are precisely quantifiable in the form of land titles. The scope of those titles, and the quantity of land subsumed under them, is precisely quantifiable and does not change from year to year.
The speculative holders of the rights are often neglecting to rent out the land, but in economic terms they are just consuming their own imputed rents. The rents are a flow that continuously accrues to the title.
One of the cool things about basic income is that because it distributes the incomes evenly, it flattens out the demand curve or increases the price elasticity of demand. This means that (even absent competition) if producers raise prices, they'll lose customers. Conversely, if they lower prices they'll get more customers.
A basic income creates an incentive for producers to keep their prices low. This incentive is higher than it would be without the basic income.
Another way to think about it is that basic income, doesn't give people more money to spend on goods they're already buying. Instead, it gives money to more people to spend on goods they wouldn't have bought before. It's the difference between giving money primarily to people who already have it and giving money to people who don't.
Basic income allows the economy to start activating previously unused productive capacity that was already available.
Of course this doesn't work for goods whose production is being constrained by resource limits. For example, under basic income, you might see the price of meat rise, which would cause people to buy less meat and substitute other types of food. We have the capacity to feed the world, but we don't necessarily have the capacity to feed everyone meat 24/7.
Sort of. But land is not a uniform commodity. Different parcels of land are subject different levels of demand. For a place like New York City, the demand for real estate is fairly inelastic. But a basic income would decrease the incentive for people to live near where the jobs are. This would likely cause real estate prices to crash in more expensive places like San Francisco and New York. Many of those prices are inflated due to speculation anyway.
If you implemented UBI federally, rents in general could take a huge hit. That is because people would use ubi to go from high rent to low rent places, because their marginal savings rate would be much better.
Without implementation details, its hard to say if it will raise or reduce rent.
These days, the amount of money the government is able to spend has very little to do with the size of their tax revenues. You can certainly tax landowners, but you should only do so if you want to punish people for owning land. The money you collect is meaningless.
As has been mentioned by me and others in other comments, basic income will push down real estate prices all on its own.
I think it's incorrect to think that a good has an intrinsically elastic or inelastic supply.
Whereas, by contrast, increases in the price of food quickly lead to increases in the supply of food.
As Matt Rognlie of MIT showed, rents have been responsible for almost all of the returns to the already-wealthy over the past few centuries that Piketty documented.