[randerson]

I'm UBI-curious, but surely inflation would be inevitable if everyone suddenly had $x more disposable income per year? Landlords and grocery stores and everyone else would raise prices because they know people can afford it. Obviously if you're living in poverty, anything is better than nothing, but would the average middle class person be better off? As far as I can tell no country has ever tested true UBI (unconditional and for all residents) so its all theoretical.

Musk's idea of a Universal High Income (where money is no longer necessary because robots and AI give us anything we want) sounds great too until you consider scarce resources like land. Who decides who gets to buy the best properties on Earth if money is no longer a factor? What if you want, say, a human hair stylist or therapist: who would do such a job if they don't have to? We would lose the human touch in our lives, and that sounds awful.

[jltsiren]

Is that what UBI has become these days? That everyone is supposed to get some extra money on top of whatever they already have?

~20 years ago, when UBI was a popular idea in my country, it was understood as a technical fix to the welfare and tax systems. It was supposed to simplify the systems and make them easier to understand. It was supposed to fix the perverse incentives people with low wages face, such as the extremely high (often >80%) effective marginal tax rates. It was supposed to automatically give people the benefits they are entitled to, without having to deal with the punitive bureaucracy. It was supposed to help people who fall between the categories in the existing welfare system. And so on.

And it was supposed to be funded by making it an accounting technicality, at least for the most part. Most basic welfare benefits, tax credits, and tax deductions would go away. Progressive taxation would go away. Standard deduction would either go away or become substantially smaller. And the highest income tax bracket would start at 0.

[elevatortrim]

Everything you say is still the idea and I agree but where does the idea that progressive taxation would go away coming from? What does it have to do with UBI?

[AnthonyMouse]

A UBI is a method of achieving the same effect as progressive taxation without the complexity and perverse incentives of tracking everyone's income and applying different marginal rates.

Suppose you have a tax system with progressive tax brackets and then a needs-based welfare system with benefits phase outs. It turns out, those two things (progressive rate structure and benefits phase outs) basically cancel each other out -- lower income people are supposed to pay lower marginal tax rates but if you're paying a 10% marginal tax rate and then have a 25% benefits phase out rate, that's the same as paying a 35% marginal tax rate. Worse, the benefits phase outs for different benefits often overlap, with the result that lower income people are often paying higher marginal tax rates than wealthy people, and there are some cases when their marginal rates even exceed 100% of marginal income.

So you have two unnecessarily complicated systems that mostly exist to cancel each other out, and to the extent that they don't they're doing something you don't actually want (excessively high marginal rates on poor people). It's better to just get rid of both -- no phase outs is the "universal" part of the UBI, and then you combine that with a uniform marginal tax rate for everyone.

You're basically getting rid of the progressive rate structure so you can lower the marginal tax rates on poor people to the ones being paid by rich people, and if that seems counterintuitive it's because the status quo is very stupid.

[zozbot234]

It turns out that a theoretically optimal non-linear taxation schedule features a UBI plus varying marginal tax rates (i.e. continuous tax brackets) that start out quite high (but sub-100%) in the UBI-clawback range (to manage the UBI break-even point while still offering a high subsidy to the very lowest earners) become very low for low-to-middle income earners and rise gradually for middle- and high-income earners. That's quite redistributive in intent, but the tax brackets themselves are neither "progressive" nor "regressive". Nevertheless, middle- and high-income earners do face moderately progressive rates.

[AnthonyMouse]

That seems like a lot of added complexity just to make sure the lower middle class gets screwed out of receiving the UBI.

[zozbot234]

They benefit from greatly lowered tax rates on their earned income (this is also a 'carrot' for the UBI net-receivers themselves, at least at the higher end), and high growth because you don't need to 'soak' higher-earning folks, who only pay moderately progressive rates. The alternative either has the lowest earning folks getting screwed out of receiving a meaningful subsidy (which is really bad) or pushes the break-even point way too high, which is not really what you want either and is the main criticism of UBI from a practical POV.

[jltsiren]

You should repeat that claim with concrete numbers.

What is the effective marginal tax rate in the UBI-clawback range, including any housing / healthcare / childcare / whatever benefits lost due to income? And what is the minimum hourly net income that would encourage someone with guaranteed basic income to take a job instead of staying at home? With those two numbers, you can calculate an effective minimum wage, below which it would be practically impossible to hire anyone.

[AnthonyMouse]

> And what is the minimum hourly net income that would encourage someone with guaranteed basic income to take a job instead of staying at home? With those two numbers, you can calculate an effective minimum wage, below which it would be practically impossible to hire anyone.

The answer to the first question varies from person to person, and from job to job since some of them are less desirable to do independent of what they pay, which means the threshold in the second question doesn't actually exist. There may be 100 people willing to work a specific job for $X/year but not 1000 people, etc.

[Ferret7446]

Mathematically equivalent does not mean human psychologically equivalent. e.g., people prefer a discount, even if the actual final numbers are the same. The framing matters

[AnthonyMouse]

So do something that works exactly like a UBI but frame it as giving them a discount. Call the UBI a refundable tax credit.

[seanmcdirmid]

UBI basically is an equalizer, instead of a standard deduction and graduated taxation, you get $N off the top and pay X% of whatever you earn. The progression comes in the money you get since it comes out of taxes from everyone, theoretically it is wealth redistribution especially if it becomes a significant part of most people’s income.

[AnthonyMouse]

That's exactly what it's supposed to be, but then opponents (or just people who are confused) will often characterize it as something else which is easier to find fault with.

[6510]

It could start out like that while we gradually dial down the other systems it is suppose to replace.

> Progressive taxation would go away.

There should be very aggressive progressive taxation. When you've absorbed a lot we should encourage you to stop hoarding and get a life.

Maybe do a license for a fund for a specific purpose. Then you can continue playing the game but the fund may only be spend on [say] high speed rail.

It seems fun to leave all the money in the companies and require them to explain to a committee what they are going to do with it. If apple says they are going to make phones the size of the fund begs to question why they are not already spending it on making phones?

[nout]

The current UBI frame is nothing like what you said. And I think this is the issue with UBI - the incentives are not aligned for it to be stable and reasonable over time, but rather to get much worse and misused over time.

[readthenotes1]

"Is that what UBI has become these days? That everyone is supposed to get some extra money on top of whatever they already have?"

You do know that the I in UBI stands for Universal, don't you?

What the people in your country were talking about is a Guaranteed Minimum Income. Related but different

[Izkata]

All of that sounds nice, but the current understanding is what fell out when people started questioning the specifics of how all of that would work.

[pjmorris]

Agreed.

I tend to think a job guarantee would work better than UBI: have the government provide a job to anyone who can't find one somewhere else, something like what was done in the 1930's in the US. Come up with a list of things needed (can you think of anything that needs fixing?), and pay people a living wage and benefits to take care of those things. Call it 'Universal Basic Work.'

Beyond spending government money to take care of the country and beyond providing those hired with enough to take take of themselves, it'd force private employers to pay and provide benefits at least as well as the government UBW jobs if they want to hire employees.

I further imagine that a person making enough to get by would be less prone to being hopeless and frustrated, supporting social cohesion. And that there's a dignity in that both for the individual and the community they are a part of.

[JKCalhoun]

I like the idea of Universal Basic Work because, like you state, I think from work comes a sense of self-usefulness, utility and ultimately perhaps dignity, self-esteem. I don't see any of that from UBI.

[elevatortrim]

Not sure if that would work better:

1. The idea behind UBI is that it is near-zero effort, the cost to operate UBI should be minimal. UBW cannot be low overhead I suppose. 2. What motivation do I have to do the work if I can’t get fired?

[neilwilson]

You have to work if you want to get paid. Otherwise you will get fired. The obligation of the state is to provide you with a guaranteed alternative job offer, not a guaranteed income.

It’s up to you if you take up the state’s offer or not.

The UBI removes the motivation to work and turns everything into volunteering. The result is a rise in the “reservation wage gap” - the amount the private sector has to pay to get people to work for them.

The reservation wage gap with a job guarantee is near zero - which is more economically efficient.

Additionally the job guarantee acts as a powerful spend side automatic stabiliser that is temporal and spatially efficient - which removes the need to manipulate the base interest rate allowing it to return to its natural rate of zero. This allows permanent cheaper mortgages and business loans.

[xyzzy123]

One issue is that there's X% (debatable) of people who can't work for reasons that are complex or hard to explain. For many, even if they are physically able, you kinda don't want them to.

I mean, people who will create negative utility in a workplace or cost more in supervision expense than you get from them as output.

They create hazards for others by being drunk or on drugs on the job, or by harassing or bullying others, injuring themselves or others, causing personality conflicts or dramas due to trauma or unresolved mental health issues etc. I don't mean this as a value judgment, it's just like some people really aren't in a place in life where they can function well in work settings.

I'm not sure how you "guarantee" something that is dependent on complex situational decisions.

[neilwilson]

That confuses two points. Employees sell labour hours. At the basic living wage those hours are interchangeable between all people offering them. Even to the extent of age or infirmity. That’s what “unskilled labour” means.

The conversion of those hours into labour services is why the private sector is allowed to profit. If they want “better quality hours” then they have to bid up the price of those hours.

That should be market determined, rather than being administratively set as the gap between unemployment benefit and the minimum wage. You’ll be surprised how well the private sector can use hours once they see people doing the basics of turning up on time and doing something.

When we sentence offenders to “community service” we give them a job as rehabilitation, along with all the support mechanisms to straighten out lives. If we can do that for offenders, we can do that for everybody.

[pjmorris]

> UBW cannot be low overhead I suppose.

There would be overhead in asking people to do something (UBW) rather than simply offering money (UBI). It strikes me that the benefits of being able to limit unemployment directly rather than indirectly, of being able to direct community work that supports all of us, of more people being able to pay their bills instead of wondering how to do so, and of putting a floor under private sector wages and benefits is worth the overhead involved.

I'd note that UBI also requires administrative effort and expense.

> What motivation do I have to do the work if I can’t get fired?

As the other poster described, you've still got to work to get paid. It's a job, not just a paycheck. Another poster described the problems with hiring people who are not able to work. UBW shouldn't replace mental health facilities or jails... although I suspect that it'd reduce the number of people who need either of those facilities. I'd say that both of these types of problems are relatively small compared to the population and to the benefits that a UBW program would provide. Pilot UBW programs might help assess the validity of the above theories.

[zozbot234]

The government already does this by subsidizing low income earners via the EITC. It just outsources the actual job provision to the private sector, which is an effective alternative to wasteful make-work.

[neilwilson]

Except that doesn’t work as there remains a systemic shortage of jobs on offer.

The societal deal with the private sector is that it employs everybody at a rate that allows an individual to live in return for the chance to make a profit. A job guarantee ensures that the private sector overall cannot shirk that responsibility.

If the private sector does its job, nobody will be employed on a job guarantee.

[zozbot234]

An income subsidy does the same thing at lesser cost. Whether that subsidy is a UBI or a wage supplement is to some extent a political choice: we got the EITC instead of a proper UBI (managed as a "negative" income tax bill for low-earning folks) largely due to political objections to the notion of getting money "for doing nothing".

[neilwilson]

Yet the state pension tells us that isn’t the case. The state pension is a UBI allocated by age rather than physical area. We have millions of data points showing that when people receive sufficient to live on they stop working.

The result is political pressure to remove the state pension or increase the age at which it is received.

If UBI worked as you suggest then the resulting increase in productivity would drive the state pension age down not up.

The evidence is against you. Giving people money reduces productivity and makes it more difficult for firms to get the labour they require, and at huge cost to the state that uses up the finite taxation space there is available.

[zozbot234]

Often the state pension gets clawed back at such a rate if you go back to work that it makes working a bad deal for the elderly.

[defrost]

Disingenuous at best.

Sixty five year olds qualifying for a pension is worlds away from twenty year olds looking to learn or start a business.

[marcosdumay]

Inflation is a common red herring that people arguing in bad faith throw at policies they don't like, because most people don't know enough to reject it.

The monetary side of the economy deals with money volumes orders of magnitude larger than the real side, and reacts to change also orders of magnitude faster. Because of that, inflation is almost always completely determined by monetary policy. A real shock that can out-impact monetary policy looks like the end of the world.

[randerson]

Oil is up due to shortages due to the war in Iran. RAM is up in price due to supply shortages due to AI. During COVID much of the early inflation was caused by supply shortages due to factories shutting down. Then house prices shot up in suburbs as people moved out of cities so the demand went up there. None of that is due to monetary policy.

Saying that the total money supply is the cause of inflation is a very simplified view. There are currently trillions of dollars in M2 doing nothing except sitting in wealthy people's bank accounts and investments as generational wealth. That does not raise the prices of anything until it is being spent.

[marcosdumay]

Yes, we are in a situation today where the real economy may send inflation out of control in some countries. As we were at the early days of covid (but not an year or two later).

I don't know what relation you see between that and UBI.

[randerson]

I think UBI would have a similar effect just via increased demand instead of a decreased supply. When the poor and middle class are all getting supplemental income, and they're competing for the same rentals, the landlords will raise prices, and so on. Same for anything else in limited supply.

[marcosdumay]

You think UBI would be a constant shock on the economy in a size similar to closing the Strait of Hormuz?

[BJones12]

> Inflation is a common red herring that people arguing in bad faith throw at policies they don't like, because most people don't know enough to reject it.

That's very dismissive. Since you know so much, why don't you try to reject it?

[throwaway94275]

In places that consist of many people with subsidized incomes, like elderly housing complexes, why aren't local grocery stores and gas stations higher than elsewhere?

Also, aside from that question, prices will only rise if there's no competition. In a working market, if more people can afford a higher rent more apartments will be built.

[estearum]

Because the subsidies aren't on top of base income?

The subsidy isn't the problem per se, it's the net increase in income.

It is obviously self-evident everywhere that high incomes create high cost of living, which can be traced through higher costs all the way down to the land rents (the rent someone is willing to pay to have market access to the high local incomes).

[NicuCalcea]

I don't see why UBI would necessarily be an increase of income for everyone. It could be that, but it could also be a decrease in hours worked, or a more equal distribution of wealth, or any combination of these.

I don't want a higher income, I want to benefit from the productivity gains I and everyone else made happen by having more time to do things I like.

[estearum]

> I don't want a higher income, I want to benefit from the productivity gains I and everyone else made happen by having more time to do things I like.

Why don't you just do that now and work half the amount of hours you're currently working?

[phil21]

> Why don't you just do that now and work half the amount of hours you're currently working?

Show me the job like mine where this is an option, and I'll take it in a second. Hire another me and we'll split duties.

These sorts of "professional job that pays a professional hourly rate but is for 20 hours a week" are exceedingly rare. You'll usually be taking far less than 50% pay - far worse if you include benefits in the calculation.

I've been halfway keeping my eye open for such an opportunity so I could fund the basics of my life, plus have time to do personal projects with utterly no chance of monetary payback. Just stuff like paint the house, teach myself how to weld, work on backyard art, volunteer, etc.

I could certainly find a job that pays 50% of what I get now for working the same number of hours though. Perhaps moderately less stress and no "off hours" chance of being called in for an emergency. But that's not a great tradeoff since I'm looking to trade money for time.

This may not be the point you're making, but it really is sort of frustrating this isn't an option. I get why - I employ folks too and understand the overheads involved - but man it's the dream!

[bombcar]

The biggest opportunity for it is to work for yourself as a consultant or other hired gun at $X an hour; and just only schedule half-work.

[NicuCalcea]

Money.

[estearum]

More precisely: purchasing power.

And that's my point.

Your purchasing power will not change.

[throwaway94275]

So ... why work or have a career then? If we're damned if we do (UBI=higher inflation=no advantage in costs) and don't (work hard to increase income=no advantage in costs) then it seems UBI will clear the field for those who like to work because they enjoy it.

Is the problem that money is becoming worthless and relationships are what matter? I'm not wealthy, and never have been, but I suspect relationships and not wealth-as-in-dollars matters after $500 million net worth or so.

[estearum]

Because it’s good to have shelter and food, and other people are willing to compete for those resources so you must (to a greater or lesser degree per your priorities) compete as well.

[OneDeuxTriSeiGo]

The trick though is that you aren't really increasing net income. You are just adjusting the way you provide your safety net while increasing the volume of money and the "velocity" of that money.

A Universal Basic Income gives everyone a flat monthly or bi-weekly income. Whatever jobs you work on top of that also provide you income.

As a standard W-2 employee (in US terms) this UBI payment would be factored into your W-4 paperwork (income tax withholding). As your wage increases your withholding increases as well and at the end of the year ideally your return has a clean net 0 under/overpaid.

Below some income threshold your total income tax contribution would be less than the UBI payments and so you'd be receiving a prorated negative income tax throughout the year. You could also call it a prorated tax credit or fixed disbursement social welfare grant or whatever.

At that income threshold you are receiving an interest free loan from the government for the year with loan disbursment on a fixed schedule throughout the year. And of course you promise to pay back in full by the tax deadline (either via withholding and/or with a lump sum at the end of the tax year).

Above that income threshold you are still receiving that fixed disbursement schedule interest free loan from the government but you also start paying additional income taxes on top of that loan. This is of course all still handled via W-4 deductions during payroll and nobody touches your regular UBI disbursement that shows up in the bank as a direct deposit or as a check in the mail. It still shows up every 2 weeks or every month.

But importantly this system is resilient to sudden changes in income. If your income suddenly increases, you factor that in via your W-4 and nothing changes. But if you suddenly lose your job or you move to a much lower paying job, you keep receiving your UBI disbursements on that fixed interval and you aren't left with a tax burden for it at the end of the year.

And so UBI as a system is purely an implementation detail. If we took existing welfare systems. Housing subsidies, food security subsidies (SNAP, etc), insurance subsidies, etc. We factor their per person cost/payout and roll it all together into one fixed interval UBI check. We keep income tax rates the exact same as they are now but shifted to factor in this UBI income (i.e. start everyone at a negative income floor that slowly gets filled to 0 dollars once every UBI check for the tax year pays out). The taxes paid and the net incomes for everyone stays identical (more or less due to variations in thresholds for existing benefits programs).

So at the end of the day your income stays the exact same but there's more money moving around and more consistency for the tax payer/citizen/resident even when suddenly life events change their financial situation.

/rant. sorry for the wall of text

[nostrebored]

Because “many” is different than all and these stores would otherwise not exist?

[georgemcbay]

> What if you want, say, a human hair stylist or therapist: who would do such a job if they don't have to?

I have no faith in Musk's vision of an abundance utopia for many reasons, but I suspect a lot of people would still want to do the job of being a human therapist or hair stylist even if they technically didn't need to for money.

They may want to work less than 40 hours a week, but most people do have an inate need to feel like their life has some sort of productive value beyond just base level existing.

[scarmig]

Inflation isn't inevitable, especially in the long term. But of course it depends on implementation.

The goal of a UBI is to make sure people get their essentials to live. Right now, people get those essentials, one way or another (otherwise, they'd be dead; and to the extent people starve to death in the developed world, it's issues of distribution, not production or money). This makes the UBI an accounting trick: there's no actual goods not being produced that need to be produced, and it is just shifting costs from welfare, charity, family and friends, etc to the UBI program. This is not inflationary and frees up human effort to focus on higher needs than scraping together a basket of things merely to live.

A lot of the time, though, people also want some non-essential but still pretty important things covered, which is a bit trickier. In this case, there is the potential for more money to be chasing a fixed supply of goods. This will drive inflation in the short term. However, in the longer term, capital will be redeployed to capture that increased demand (while being deployed away from the desires of those taxed to fund the UBI).

This all assumes that the UBI is revenue neutral; if not, yeah, we will get a lot of inflation.

[jdejean]

I find it hard to believe shifting spending from welfare to cash won’t result in inflation. It’s about accessibility and how liquid the assistance is. It’s also about how evenly that’s distributed.

To the parent comment’s point, if UBI is evenly distributed across everyone (“Universal”) and exists as liquid spending power (“Income”), there’s no way that doesn’t result in a rate of inflation that perfectly counteracts the existence of UBI.

Prices are only low when the seller wants to scale/reach more buyers. If low/no income buyers disappear, why would prices stay low? If there were an infinite number of high income buyers, cheap products wouldn’t even exist in a freely capitalistic system. Instead we have a limited number of buyers in a wide range of income levels, which drives a wide range of prices and sellers competing at every price point.

It feels like the laws of physics, once you cut off one side of the scale it will fling in the other direction. I also hate everything I just said, I would love to exist in a world that wasn’t subject to these forces. Just seems impossible in a freely capitalistic system.

[scarmig]

The point is that, if limited to a level that just covers essential goods, it won't change their distribution, just their payer. If it did change the distribution of the good, then it wasn't essential (because it's the floor; without it, the consumer of the good would be dead; above it, and the vast majority of people immediately spend their income on luxury substitutes).

That is, to be clear, a much lower floor than what many people mean by "essential," which has undergone a kind of concept creep in modern discussion that, depending on the person, might be a cell phone, to an education at a private university, to owning a condo in San Francisco. My essential here means enough to afford enough caloric and nutrient intake to maintain a livable body mass; a couple sets of plain tee shirts and jeans; and a minimal shared living space in a low cost of living area. That's quite below what the US considers the current poverty line and a quite bleak existence (and most people would wonder what's even the point of it).

Income beyond that would drive inflation, at least in the short term.

[Spooky23]

That’s one of the flawed arguments used against minimum wage. The answer is, no.

[clhodapp]

It depends. On its own, UBI puts a downward pressure on the value of money. Some other things (e.g. setting low interest rates) also put a downward pressure on the value of money. However, some things (e.g. taxes) put an upward pressure on the value of money. So it comes down to how all of those factors balance out.

[alpaca128]

If UBI is so high that people can afford paying extra without working for it then maybe, but I don't think that is the idea behind UBI. There still needs to be an incentive for people to work, they should just be in a place where they actually have a choice instead of living in survival mode every day.

[estearum]

Doesn't matter at all how much it is. It'll be (almost entirely or entirely) eaten by landlords.

I am a landlord.

I am setting prices for renewal.

I have come to learn that 100% of my possible customer base now has $200/mo more to spend.

I raise prices $200/mo with absolute certainty that I will find a renter.

Congrats, mission accomplished.

[PaulDavisThe1st]

I am a progessive state government.

I am considering legislation for the next fiscal year.

I have come to learn that 100% of private landlords have increased their rents by the full amount of the UBI we introduced last year.

I ban private rentals and/or private ownership of homes and/or introduce strict rent control policies (depending on precisely how progressive we're feeling this year).

Congrats, mission accomplished.

[estearum]

Yes! Excellent work. Now there is no incentive for anyone to build housing for our growing population!

[EGG_CREAM]

I am a progressive government. The free market has failed to provide a necessary service. So now I pass a law that creates a not for profit contractor that builds houses. It’s not that complicated. We do it with fire departments, police, and many other services already. Free market might have been more efficient theoretically, but when it fails in practice we find another solution.

[bequanna]

So in this version of the future, everyone lives in government housing?

[estearum]

Yes, so un-complicated that we're now talking about state-built housing just to make UBI do anything other than enrich landlords.

UBI is a bad idea.

State-built housing is not necessarily a bad idea.

You can just do the latter and skip the former.

[rybosworld]

Are you implying that landlords are naturally incentivized to build homes? Because in most circumstances, the exact opposite is true. In the U.S., the government has a number of programs that offer landlords vouchers in order to encourage them to build out more homes.

[estearum]

Landlords are different things from developers.

Sometimes (more rarely than people think) a single entity plays both roles, but it's impossible to reason about this space if you conflate the two

Yes, developers build homes to make money. This is how approximately 100% of the housing supply in the US was created.

[PaulDavisThe1st]

Indeed, a critical problem. But wait ... what's that? You say there are places where the state builds housing? How could it be?

[estearum]

Sure but now you're not just talking about UBI, are you?

You're now talking about UBI, plus rent controls, plus state-built housing.

All to make UBI actually do anything at all other than enrich existing landlords.

Why don't we just skip the UBI and the rent controls and instead just have the state build housing?

[UncleMeat]

Of course there is an incentive to build housing. Developers build homes and then sell them to people who live in those homes.

[estearum]

Did you miss the part where GP was proposing price controls?

[LightBug1]

Did you just imply that landlords are incentivised to build housing for a growing population?! * scream laughs *

[estearum]

Landlords != developers

You should take some time to understand this extremely basic distinction before forming such strong conclusions.

[SoftTalker]

How do you control what other landlords do? Why won't any undercut you by $200 and get your tenants?

[estimator7292]

Because tenants are not scarce. If you cut your prices, you lose $200/mo forever. If you simply follow the maximum market price and wait, someone will fill your room eventually and you have them locked into a higher rate forever.

Competition doesn't work for necessities. Someone will rent your room at any price because it's necessary for survival. One of the major crises of our time is the fact that there are more people who need housing than there are rooms to rent to them.

Why don't landlords undercut one another? They literally don't have to. The only outcome is less profit. You'll find a tenant eventually, at any price. Getting tenants in rooms a few months earlier at the cost of lower rent means you make less money, and are less competitive as a business.

[Anon1096]

You're failing to explain what dictates the price the market will bear.

> Why don't landlords undercut one another? They literally don't have to. The only outcome is less profit. You'll find a tenant eventually, at any price.

is very obviously not true, otherwise prices right now would be effectively infinite. Why are prices for an apartment in SF only 3k/mo instead of 30k? Surely under your reasoning a landlord could just wait and get a tenant at any price they set?

The answer is always supply and demand. As long as the supply is constrained or demand goes up faster the price will rise. But UBI doesn't change that math at all. (I say this as someone not actually a fan of UBI)

[estearum]

> Why are prices for an apartment in SF only 3k/mo instead of 30k? Surely under your reasoning a landlord could just wait and get a tenant at any price they set?

No, because local wages cannot sustain those prices

If local wages could sustain those prices, then yes all rents would rise to that new higher local income level

That is (quite self-evidently) prices are so phenomenally high in ultra high-income areas like SF

Every single landlord is setting prices by the same metric: what can the people who would live here be able to afford? Competition between landlords is almost nil, which is why you find almost no "deals" anywhere. The market is totally efficient. Everyone agrees on how to set prices: by local wages.

[randerson]

> You're failing to explain what dictates the price the market will bear.

Most people like to live in the nicest place they can afford. This is a force pulling prices upward when many people with excess cash are competing for a limited supply of homes. Its why you'll pay more for the same size property in a wealthy neighborhood.

> Why are prices for an apartment in SF only 3k/mo instead of 30k?

Because some people in SF can only afford 3K/month. But if you added 3k/month to literally everyone's income, that number would increase.

(In case you're wondering why the many people with more than 3k/month don't crowd those people out: the wealthy depend on those 3k/month people for labor. At least for now.)

[PaulDavisThe1st]

Everything you've written here presupposes a housing shortage.

Fixing the housing shortage is a central tenet of progressive policies (regardless of whether or not they may ever actually accomplish this).

[estearum]

Housing will always fall short of demand. Nobody, progressive or not, is actually willing to sustain an oversupply of housing.

[kbelder]

In a normal market, they would. But housing is highly regulated with artificial shortages, so that pricing is very distorted.

[estearum]

Regulation is not what suppresses production, but the actual profit margins. It's extremely hard to make money building housing because the cost of land and labor are so high. These costs are high because we now live in an advanced economy where land can do much more valuable things than "be housing", and laborers can do much more productive things than "build housing."

[joe_the_user]

I disagree. Zoning, building permits, inflated utility hook-up charges, etc is what restricts me from buying a one-acre parcel and putting in 30 snug cabins.

[cogman10]

Yup. Development companies contract when the housing market contracts. They aren't building houses for the fun of it, they are building them because they believe the 100 houses they build in a hot market will ultimately pay back the land purchase rights. They will never build so many houses as to decrease the cost of a home.

I actually got my home from a developer right after the housing bubble. They confided in me that they were giving away these homes pretty much at cost and that they had to fire a huge portion of their staff because the market was just crap at the time.

Really, the only way to actually achieve lower housing prices is through the state ownership and build out. The state could also spend a premium on building homes that it sells at a loss or rents at lower rates. But that will be pretty unpopular with the general public.

[davyAdewoyin]

It doesn't matter, because land is scarce resource

[gruez]

Land might be scarce in the technical sense, but not in the practical sense. Housing is only expensive because people want to live in superstar cities, which in turn is because that's where all the jobs are. If UBI eliminates the imperative to live in superstar cities, that makes scarcity a non-issue.

[randerson]

I can work from anywhere, but I like to live in a superstar city because I find it boring living in the suburbs. I want to be near my friends, near the live events, near the buzzing restaurants and art galleries and clothing stores where I can walk around and touch things. There will always be a concentration of people in cities for these reasons.

[estearum]

Just need UBI, unlike all other forms of marginal increases in income, to spur people to move away from cities rather than towards them.

[chr1]

That extra 200 will also allow some people to move to a rural area, decreasing demand, which means you won't find a renter.

[lenkite]

This - since you can live in a rural area with UBI - and you get more time in the day to manage your accommodations, the move to urban housing is not so critical.

[estearum]

Yes if you simply assert an upside down reality, this is a good solution.

However, people actually move toward higher COL areas as their income permits them to.

If more income meant people moved away from high COL areas, cities wouldn't exist. We'd have a flat distribution of people across approximately all land with ultra-low COL and ultra-low productivity everywhere.

[auggierose]

You make a logical error here: UBI is independent from where you live. Normal income is not.

[estearum]

You make a logical error here: you are supposing I'm referring to the case of someone moving to a place in order to earn more. I am not. I am referring to the case of when people earn more, they end up choosing to live in more expensive places. Both scenarios are true, but only one is the one I'm pointing to because it's economically identical to UBI.

[zozbot234]

> I am a landlord.

> I am setting prices for renewal.

Landlords do not really set prices arbitrarily, especially not in HCOL areas where most of the cost is land rent. The rent is set by the market, and if there's a new UBI only a negligible fraction of it will go towards rent. Rents might even decrease since any given UBI amount will go a lot further in a lower-COL area, which incents people to move out (reversing gentrification dynamics) and creates future opportunities for job creation in these economically depressed areas where such opportunities are most clearly needed.

[estearum]

You’re making an argument for my point of view.

Rents are set by local wages (via mechanism of land rents)

> Rents might even decrease since any given UBI amount will go a lot further in a lower-COL area, which incents people to move out (reversing gentrification dynamics)

Can you identify any historical analogy to this claim?

History shows — across the board — people move toward higher COL areas as their ability to pay for COL grows.

Why would this be different?

[zozbot234]

> Can you identify any historical analogy to this claim?

It's difficult because the main driver is clearly towards increased urbanization, driven by the high productivity of urban jobs. But if you're planning to live mostly on your UBI and work less if at all, you won't care as much about that. There were several "back to the land" movements in the history of modern developed countries, and the early stages of succesful gentrification - often involving comparatively marginalized folks and highly mobile groups, such as artists and youths - demonstrate a similar dynamic that can ultimately lead to the flourishing of new urban areas as the stages of gentrification progress.

[ItsMonkk]

Your concern can easily be addressed by having a 100% tax on the value of land and then distributing this tax money through a citizen's dividend.

But this isn't all that related to the productivity dividend. That's more natural by setting banks to have a full reserve requirement. At that point new innovations would yield deflation, which would be harmful. The Fed would then have to step up and be the creator and distributor of new money. That money would then be the UBI, distributed equally to all.

[zozbot234]

You can't literally tax 100%, but this matters little: you just have to tax a sizeable fraction of land rent and this has as an outsized effect on land values due to capitalization, which vastly improves the effectiveness of the real estate market as a whole. You see this today partially, where states with high property tax rates tend to have broadly lower real estate costs.

[iso1631]

Unless of course that UBI is funded by a land value tax.

[SoftTalker]

How does land value tax help in particular here? Landlord pays land value tax, which is distributed via UBI, and then paid back to the landlord in higher rents (in the above scenaro).

[larsiusprime]

This is a good resource on the question -- Land Value Tax is not passed on to tenants, the landlord eats it. This is pretty unique among taxes, which is why LVT is a particularly good way to fund UBI, otherwise you would expect the UBI to result in inflated rents.

https://progressandpovertyinstitute.org/wp-content/uploads/P...

[SoftTalker]

The argument seems to be "that landlords are already charging the maximum that tenants are willing to pay for access to a given location and so cannot arbitrarily raise rents when a LVT is imposed."

But, if the tenants now have more money in the form of UBI, then that argument doesn't hold.

[hackable_sand]

UBI frees people up to work ...

[SoftTalker]

It would not be inflationary if it's paid for with a tax on real value or income. Maybe somewhat inefficient, and prone to political meddling, but it's not introducing new money into the economy.

If it's just printed money, it would be.

[randerson]

It would be in a sense, because that money is otherwise mostly hoarded by the wealthy, whose spending would look the same whether or not they are taxed. If money is saved and not spent, it is not really part of the economy in this sense.

But if the money is transferred to others and spent on additional goods & services that is when it increases demand and raises prices.

[marcosdumay]

It wouldn't be inflationary. What it would do is to make the government's inflation policy have effects immediately, instead of delayed by a decade.

That would happen for whatever direction the government policy is pushing.

[PaulDavisThe1st]

Ah yes, the old "we should actually be grateful to the ultra-rich, because by not spending all the financial resources they accumulate, they save us from inflation!"

[randerson]

I see it more as, we should have taken their money sooner so that we don't have this problem now!

[6510]

> if everyone suddenly had $x more disposable income per year

You mean as opposed to very few people?

I'm told that if one is very curious about the topic one should not start by asking questions but read the 100+ years of the same questions being asked and answered again and again. I cant say I've followed the advice but it sounds very sensible.

[jmyeet]

So there are two basic versions of UBI:

1. The right-wing UBI is a tool to dismantle the social safety net. The idea of the likes of Milton Friedman is to replace all social safety programs with UBI. This doesn't make sense because, for example, being disabled in today's society makes everything more expensive; and

2. Left-wing UBI would seek to have everyone share in the wealth they create by supplementing social safety programs with UBI. UBI becomes a form of super-progressive taxation because it can be viewed as negative taxation.

As for your inflation comment, you have a point, to which I'll say: UBI alone isn't sufficient. You need economic reform and planning on top of that.

A good example is the US military. If you live off-base you get a housing allowance (ie BAH). Now around military bases, in the US and overseas, all the landlords know this so you'll find that weirdly all the houses to rent cost pretty much what BAH is.

So a more equitable economic system, including UBI, needs social housing. That is, the government needs to be a significant supplier of quality, affordable housing so landlords (private and insitutional) can't artificially drive up prices, as is the case now. A prime example is Vienna [1]. Housing simply can't be a speculative asset in a healthy economy.

If you wnat to see what an equitable planned economy looks like, look at China.

[1]: https://www.youtube.com/watch?v=41VJudBdYXY

[OneDeuxTriSeiGo]

It's worth noting that Left-wing UBI can still be seen as a mechanism to replace social safety programs. It just requires that disability payments, etc be merged with the UBI system such that added disability needs can be treated like additional tax credits that get applied to the fixed-interval interest-free loan disbursement from the government based on your taxes that UBI effectively is.

In such a system you get your base UBI tax credit which pushes your tax burden into the negative. Additional UBI-elligible tax credits can push that tax burden even further negative. You can file the paperwork to adjust this at any point in the year and if it's for the current year the tax credit is prorated relative to the date of the next disbursement date (and the full amount for the next year).

Then your UBI disbursement updates and you get it. It works the same way as updating your W-4 tax withholding for a standard W-2 position.

At the end of the year of course your taxes all need to zero out still and if not you either get a bill or a refund.

And this also moves all of the social safety program fraud prevention together into the same system within your tax agency (IRS for the US, or state/local agency, or whatever else).

So instead of a bunch of different agencies and systems for avoiding and finding fraud it all rolls together into the responsibility of the IRS tax assessors, auditors, and the IRS Criminal Investigation unit. And while the rich hate the IRS and common media frames them as incompetent, the people at the IRS are in general extremely competent and more than willing to help and accommodate your average person (less so for the rich who get caught systematically trying to defraud the IRS).

[lyu07282]

This is kind of like social security, medicare or the 5 day work week, if everyone suddenly had $x more disposable income per year? Landlords and grocery stores and everyone else would raise prices because they know people can afford it.

[bryanlarsen]

And UBI would give people the freedom to move to a place with cheap rent and groceries. Rent is high in places with jobs and low in places without.

Supply and demand will work better, lowering prices.

[lyu07282]

These people would argue against the weekend on economic grounds too if we didn't have it already, everything seems unimaginable until it becomes real. Its like trickle down economics, you can make the "economic" argument fit whatever you want to appeal to the oligarchy.

[lotsofpulp]

> I'm UBI-curious, but surely inflation would be inevitable if everyone suddenly had $x more disposable income per year?

This does not have to be the case if higher taxes decrease purchasing power for some.

[nostrebored]

This does not address the relative purchasing power change on the left of the bell curve.

[lotsofpulp]

The whole purpose of UBI is to increase the relative purchasing power on the left of the bell curve.

But inflation (sum total) is a moot point if total supply of dollars for total demand stays the same. Prices might temporarily increase for staples, such as shelter and food, but that should incentivize sellers in the economy to supply more staples, and fewer luxury goods.

The additional supply will eventually bring prices down, but end result is more people have more of the basics.

[shahmeern]

I don't think that line of reasoning has worked our particularly well for shelter.

[lotsofpulp]

Just because supply of shelter in certain locales has not kept up with demand for that specific locale, and/or is affected by numerous legalities regarding things like eviction and zoning codes and fire codes and animals, does not mean invalid the theory of higher prices incentivizing sellers to increase supply.

[nostrebored]

… why would incentivizing supply of staples be a good idea? If I make 2,000,000,000 more eggs you would expect that the vast majority of those would not be consumed, because people already consume staples at a near optimal rate. The sales of substitute goods would go down, but you’d almost certainly expect a rotating set of WICesque price fixing to combat the natural rise in price?

[AnthonyMouse]

> I'm UBI-curious, but surely inflation would be inevitable if everyone suddenly had $x more disposable income per year?

The money doesn't come from nowhere. It's a transfer payment. People who make a below average amount of money pay less in tax than they receive, people who make an above average amount still receive the UBI but then the UBI is less than the amount of taxes they pay.

The result is not that "everyone has $x more disposable income per year" -- it's $0 on average, because lower income people have a little more and higher income people have a little less.

Notice that the existing welfare system already does this, but in the process creates a bunch of perverse incentives and income cliffs (you lose your benefits if you take a job or work more hours), leading to de facto marginal tax rates that are often >50% on lower income people when you account for benefits phase outs and in some cases they're >100%, i.e. if you make more money you make less money.

> Landlords and grocery stores and everyone else would raise prices because they know people can afford it.

That isn't how competitive markets work. If people had more money and a grocery store tried to raise prices, people would go across the street to the other grocery store.

It only works like that for products with fixed supply, i.e. things you can't make more of if the demand for them increases, because then if people have more money they have to outbid each other instead of sellers just producing more of what people are buying. This is one of the reasons zoning density restrictions screw people so hard -- land has fixed supply but housing doesn't, because you can build more than one housing unit on a piece of land. Unless the government bans that and mandates one unit per plot. Then people have to outbid each other. But your problem then is that, not people having more money. Notice that the same thing happens there if people get more money for any reason, e.g. more people go to college or the economy improves. It's a major problem that needs to be fixed regardless of what you use for transfer payments or if you do them at all.

> Who decides who gets to buy the best properties on Earth if money is no longer a factor?

The premise of that has always been pretty ridiculous. You can reduce the scarcity of some resource by making it more abundant, and that's generally a good thing. Good luck removing all scarcity from all resources. That's not a real thing.

[skybrian]

UBI is not luxury communism, or at least not any of the proposals I've seen. A guaranteed $1000 a month would help a lot of people, but $12000 a year is not a high income and many people will want to keep working to earn more money than that. Maybe they'd be able to retire sooner, though?

As for inflation, a lot depends on how gradually it's adopted. As we saw in the pandemic, supply chains need time to adjust and bad things happen after sudden changes.