So, even with a fairly paltry UBI, you're talking about UBI representing an increase of taxes of almost 70% of total federal taxes.
Make the UBI $1500/mo per adult citizen and UBI costs more than every dollar of federal tax received currently.
Pay the $1K UBI to every resident of the US and UBI represents basically 100% of current federal tax receipts.
Every time we look at fixing an issue like this, it seems like we're only looking at the half of the problem that involves creating the benefit, because paying for it is unpopular. But wealth accrual in this economy is a net drag. The tax side of trickle-down means that we're only ever working with a trickle to power major public benefits that could otherwise consistently run our economy, and provide robustness where we have a lot of weakness.
You could pay for UBI by heavily taxing stock portfolios of the richest people. + 10% tax on the richest 1% of stock portfolios would raise about 2.3T (source CNBC). It would also take money from people who "can't spend it all" (something Bezos has literally claimed, he has trouble with), and give it to the 300M people who actually have something to spend it on, as evidenced by the huge boom in the economy created by the stimulus package.
It's not that you can't find the money to tax this, it's that no one has the political will to tax anything.
The point I'm making is that the problem is there's a lot of stagnant dollars providing no value to us, that you could readily reinvest in something like this.
Also, before someone brings up inflation in response, I will point out the reason inflation is rampant, is we're not pulling the money out of the economy at the same rate we're putting it in...
It's really odd to stand on the pretense that the UBI wouldn't (effectively anyway) be taxed.
Today, about 57% of households pay no net federal individual income tax. That figure would only increase with UBI implemented as a negative income tax.
Maybe it seems reasonable to some for the median household to receive money from the feds on top of the services they get today for free. That doesn’t seem stable and sustainable to me.
Perhaps this would be a more convincing argument if the article proposed some way to pay for UBI other than handwaving it away through more taxation.
For context: you could take literally every penny doled out to the military industrial complex and throw it into UBI and it would barely put a dent in that overall cost.
Landlords don't set rents, they are price takers. Now if everyone gets more money and wants to live closer to work, then yes, prices will go up to meet increased demand.
Landlords increase the rent to the maximum that people are willing to pay. You can dress up a unit and maybe get a little more but no one will pay you 5k a month for a 600 sqft unit last updated in the 80s. If they will then you have a housing shortage and you need to let landlords and builders build.
543 sqft condo, $2901/mo. ~10 seconds to find.
https://homefinder.com/property/547922513/Makati-San-Jose-CA...
> you have a housing shortage and you need to let landlords and builders build.
That existing homeowners have a counterproductive influence over housing starts is one of the factors that needs to be addressed - absolutely.
Yes, and?
And, if you institute a UBI of $1000/month, the maximum that people are willing (and able) to pay suddenly increases by around $1000/month. And since landlords are mostly not complete idiots, they will recognize this and increase rents by approximately $1000/month.
Which was the point of the poster you originally replied to.
The only way that won't happen is if another, cheaper, alternative exists (like buying a place to live instead of renting). Except that, wouldn't you know it, people selling houses have also realized that they can raise prices by the amount equivalent to a $1000/month increase in mortgage payments.
Most people are not willing to spend all of their excess money on rent. It will increase demand in desirable areas but landlords do not get to just raise rents because they want more money.
Your cause and effect are mixed up. Home owners don't do a calculation macro conditions and interest rates when setting a price. They look at comps, list, then go "wow, we got 3 bids over asking". They accept the highest one. The next sellers see their sale and set prices accordingly.
Rent control creates a first mover advantage where the incumbents have a good deal and everyone else suffers. Whether this is fair depends on your beliefs, but I would rather have healthy turn over to give more people an opportunity to experience an area.
And as much as that is permitted to happen, the devastation to society increases.
We presently have people entering homelessness with money in the bank. It's unlikely we've hit the possible upper limit on our broad housing catastrophe - but wherever that limit is, we certainly know how to reach it.
They know their market. They know the max price they can set and fill easily.
https://www.seattletimes.com/seattle-news/data/seattle-media...
https://www.zillow.com/rental-manager/market-trends/seattle-...
1. https://www.google.com/search?q=seattle+median+income&rlz=1C... https://www.google.com/search?q=redmond+wa+median+income&rlz...
Sorta yea. Realistically traditional Econ 101 concepts don’t always apply to housing. Supply is limited and can’t be increased as much as demand because building housing is quite hard and conversely demand is capped at the household income of people who will live there (eg Medina vs Renton are entirely different markets). Generally, people pay ~25% of their household income on housing (once they leave being low-income). Therefore prices will trend to that value for the given demographics. Because people can out bid each other on purchasing or landlords will charge higher rent prices knowing someone will pay it.
Redmond is wealthier than seattle (as a rich suburb), and I bet the median cost-to-acquire-housing in Redmond is greater than seattle even if the cost of a “750sqft 1br with parking” is cheaper. Being a family town with a good school, people probably want multi bedroom housing, and probably want a yard etc. So people who will live alone with a one bedroom is different from most of Redmond.
If UBI is indeed universal and you'll get it regardless of where you live, then the value of "living there" will go down proportionally, because the value of living elsewhere will go up, relatively speaking. Another way of looking at this is that demand to living in expensive areas will go down because it'll be (proportionally) less necessary to live where the jobs are.
Expensive areas are expensive not only because of jobs but for many other reasons, mainly related to entertainment. Even with UBI, NYC will remain far more attractive than middle America because of a better {dating, restaurants, bars, museums, ...} scene.
If you set price to low, you’re leaving money on the table, price too high and you won’t find a tenant. Price high (but not too high), it may take longer to find a tenant (more lost rent), price low and you’ll get lower income tenants (who will be more likely to miss rent, because they’re less likely to be non-salary workers). The rents will “naturally” trend to a rate that is affordable but budget-filling of the desirable demographic -in a big city that’s well paid office workers who move a lot.
Rent absolutely will go up regardless the exact mechanism, but rent and the specific mechanism by which rent rates are set, is just a detail and silly to focus on.
It's just a stand-in for a concept. Replace "rent" with "cost of living".
Their stated point was that the money will be re-absorbed by the same people it was meant to combat, by countless mechanisms.
If the money is meant to empower people currently too disadvantaged, it mostly won't, because the entities in control of things that resulted in some people being squeezed too hard, will still be in control of the same things, and the net result will be that the extra money becomes a no-op number shuffle.
It's rather weird that people can convince themselves that having more money to spend won't make any difference.
The issue is that money seems to have a gravity whereby having more will get you more.
Splash a lot of money evenly around? That's simply more money to end up in the Bezos Black Hole.
I haven't followed up but you're right in pointing out this problem of money syphoning.
The problem with UBI is that economic decision making stays within the hands of a small minority, who then tilt the whole economy in their favor. This is why worker ownership of the means of production (or as I like to say, community ownership of the means of production) is so important. What’s important to understand is that this is a mechanistic choice for how to run an economy. We can choose to do this voluntary because we recognize the value this arrangement offers to most people. It does not need to be done by force as attempted by autocrats in the 20th century. In any case, it requires less force than UBI!
And being a purely voluntary concept I’m suggesting, you don’t really need “a country” to do this. You could have just some groups within a country do this and they would see some benefits.
If you want to avoid ubi being eaten to these sources, you need to acknowledge what mechanisms are being used to gouge people of their needs, and ameliorate them by allowing new entrants to enter the market currently dominated by existing players (in this case existing landlords, who would prefer to have their prices march up and up without having to invest in redevelopment to add more rentable units on their lot, than to have more competition and pressure to keep prices at a minimum level). Just like with water during a hurricane, the government can use laws like rent control to prevent this gouging, and reforms like increasing the zoned capacity of a given area to meet the number of workers in the given area to incentivize "delivering more waterbottles" so to speak as the only way to increase the quarterly profit of your lot (versus leaving it relatively undeveloped compared to demand and taking advantage of the resulting supply dearth you've artificially created).
1. Arguing that rent control doesn't suppress development because it only affects rent increases is misleading. Developers are operating on a decades-long investment horizon, so the fact that long-term renters are going to be underpaying within a few years is definitely a factor taken into account.
I would have happily rented for forever if we had been able to get a great apartment that was rent stabilized and had good tenant protections. It was just the unpredictability of rentals in NYC that drove us to buy.
The only way rent control doesn't suppress returns on development is if the maximum rent increases are higher than what the rental increases would be absent rent control.
Now, there is a solid argument that apartments have gotten too expensive due to regulation. Look at any apartment building and what do you often see? Its cladded in tiny 3 feet by 8 feet balconies that can scarcely hold a cafe table, it often has some big central mostly useless courtyard like area within the complex itself to check a box for some outdoor space requirement, and it has a parking garage that extends 100 feet into the earth. All of these things are also brought on by regulation that demands the developer to build these things if they are to see the build approved. These can also all be nixed, and in many cases they have been used pretty much to just serve as a vehicle for graft for city officials. Put a bag of popcorn in your microwave and then read about Jose Huizar if you want a brief of how these sorts of things function in large american cities.
That being said there is no rational reason to support advancing rents past wages. Why would there be? Its the snake eating itself; the race to the bottom is that you end up with only the high income sliver of your regional economy of workers living where the job activity takes place, which is pretty wholly terrible for the environment and also deprives most of the opportunities that present themselves from being able to live near a major job center. We should be doing anything we can to prevent this race to the bottom, just for our own climates sake if the mere wellbeing of your fellow worker isn't enough.
There's also the political ramifications of rent control: people paying far below market rates have little incentive to support the construction of additional housing, and more frequently try to shut down developments. One of the most ardent anti-development activists in San Francisco turned out to be paying $740 a month in an apartment estimated to rent for $4,500 at market rate. Get rid of price controls, and I bet this person would stop being a NIMBY overnight.
> That being said there is no rational reason to support advancing rents past wages. Why would there be?
To spur the construction of new housing! If there's a food shortage, the last thing you want to do is cap the price of bread. No, you let the prices rise so that more farmers grow food. If people are struggling to buy food maybe subsidize it to make it affordable. If the price of food is capped, then there's nothing to drive greater food production.
The same dynamic exists with rent control: cap the price of housing and people end up paying less than market rate. Developers realize they won't be making a favorable return on investment when they build in a rent controlled city so they move elsewhere.
1. http://furmancenter.org/files/sotc/SOC2009_State_of_New_York... 2. https://la.curbed.com/2015/4/8/9972362/everything-wrong-with...
Two ways:
1. Some people will naturally want to move out of their rent-controlled apartment, for example to be closer to a new job or to get more space for a newborn. Those people are disincentivized to move because rent control means they are currently paying below-market rent.
Incidentally, that also increases traffic congestion because nobody wants to move across town to be closer to work. So you commute to where I live and I commute to where you live, instead of us both living within walking distance of work.
2. Rent control normally does not include an adjustment for inflation. And, when it does, the rule is usually "rent can increase by x% of rent or y% of CPI, whichever is lower ". That means that over decades, rent falls in real-dollar terms.
Since potential landlords can do math (they have that technology) they can see that the ROI of an apartment building (measured in decades) is lower in places with rent control. That disincentivizes them to buying or building apartments.
Lastly, it seems like you're really trying to hang your hat on zoned capacity. The thing is that zoning can change. If the ROI looks right, landlords will lobby the city for a zoning variance to increase capacity. If it doesn't, they won't.
While I still think that UBI can be quite a useful tool to solve poverty problems, this is not a silver bullet and has its own caveats. We still need to understand how those powers are working in practice and handle them one by one. Otherwise, this could be easily repurposed into a tool to reinforce the established power structure.