Aside from whether the prediction is realistic under this assumption, UBI under any realistic financing scheme doesn't do that. It replaces (and potentially increases the net benefit of) means-tested welfare at the bottom end of the income distribution and spreads the clawback from a set of relatively sharp cliffs that occur between working poor and middle income levels to a much more gradual effective trail-off over nearly the whole income distribution as part of progressive income taxation.
The idea would be that when automation advances to the point that something can be made with very little labor the government would build automated factories to produce that thing and make the output available for free.
There would still be room for private companies to make those things too. They could make fancier or higher end models for those people who want something more than the free models from the government.
The only scenario where UBI/UGI would make sense is one where AI can replace most/all humans at any job they could have. At that point it makes no sense for there to be a economic hierarchy at all.
UBG is a completely different story, though.
- If they don't have employment, and incomes are $0, then in the absence of UBI, would rent also drop to $0? If not, then I think we're better off with UBI.
- These higher prices for rent and groceries seem like strong incentives for competition. Maybe we can't expect that in NIMBY San Francisco, but without a jobs market, the only attraction to live there is the weather. Why not move somewhere cheaper?
Any system with UBI requires other sources of income to exist (thr absence of such sources means that nothing of value is being produced for exchange, in which case any money printed is basically monopoly money and how you distribute it doesn't matter because it isn't doing anything), and a major premise of UBI has always been that it enables those transitionally deprived of income more freedom to reconfigure their lives and ramp up these sources of income (and does so with less redundant—with the progressive tax system—bureaucratic overhead) than do means- and behavior-tested welfare programs.
The particular mix of available other forms of income between wage labor, independent business, or capital don’t really change the basic arguments.
The idea of adopting a downward-redistributive policy like UBI is to do it before that occurs.
Access to cheap loans has lead to an explosion in costs.
If cost of housing goes up, building and moving become more attractive by comparison. Instead of saving 500/mo by commuting, now you might save $1000 by relocating.
Rate limit edit: I said commuting, not going going to live in some random place.
Do you think "just move away from the city centers (where all the jobs that you used to need are) to random middle-of-nowhere wherever-we-have-space" will hold forever, and won't trail off once the initial phenomenon of everyone dispersing is finished?
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.