[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?

[lejalv]

You might be interested to check out the Viennese model - Approximately 220,000 municipal flats and 200,000 subsidized dwellings form the backbone of Vienna's housing system, housing about 50% of the population.

Prices in Vienna are so much more affordable than in comparable European cities - Munich, Hamburg, Berlin to speak of Germany, not to say Madrid, Paris, Barcelone, Milano.

[pizza]

In Singapore it seems 80% of people live in public housing https://en.wikipedia.org/wiki/Public_housing_in_Singapore though I can't speak as to what the effect is on its housing market

[clarkmoody]

Own nothing, be happy

[t0bia_s]

UBI is perfect tool to make citizens obey to state. You'll always vote for your breadwinners.

Why, instead of centralised planned economy that failed ans killed millions people many times in history, not just lowering taxes and let people to decide how spend their capital individually? Game theory applied on UBI sounds really like an ugly idea.

[EGG_CREAM]

UBI is the opposite of centralized planning. Instead of the state deciding what resources people need, and who “deserves” help, it leaves it up to individuals to decide how best to divvy up resources, and everybody gets it.

As for tools that make citizens obey, the government already has the best one: a monopoly on the legitimate use of violence. Everything else is child’s play compared to that.

[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.

[EGG_CREAM]

I kind of lost the UBI plot, to be fair. I don’t really understand what UBI actually had to do with this exercise fundamentally, the exact same thing happens with or without it, it’s just that the floor of what “affordable housing” is gets risen. Unless you think that an unfettered, UBI-less economy doesn’t produce expensive housing? Which, I think we have many real world case studies in almost every major city in rich countries to disprove that assertion.

I do see what you mean, I think, now that I’m rereading and contemplating. A monthly stipend probably does more to raise prices than anything useful, unless you also pair it with regulation to stop the wealthy and powerful from taking it all for themselves. And at that point you could have just done those regulations without UBI. Hmm.

Do you think a few lump sum payments over a citizens lifetime would have the same effect? Maybe some large sum paid when you reach age of majority and then again at retirement?

[estearum]

> A monthly stipend probably does more to raise prices than anything useful, unless you also pair it with regulation to stop the wealthy and powerful from taking it all for themselves. And at that point you could have just done those regulations without UBI.

Yes largely correct, but more specifically than "wealthy and powerful," I am referring directly to the landed class, wealthy or not. This type of infusion will ultimately be baked into the cost of land, which will propagate up to rent, then up to wages, then up to goods. The gains will accrue almost entirely to the landed class in the form of higher land rents with no symmetrical increase in costs because land itself does not incur costs.

> Do you think a few lump sum payments over a citizens lifetime would have the same effect? Maybe some large sum paid when you reach age of majority and then again at retirement?

It wouldn't have the same effect but it'd have an analogous effect in the localized markets in which those subsidies are applied. For example, you'd expect the price of land (and so rent → wages → goods) to increase where retiring people congregate. But it'd be less harmful to the exact degree that the subsidy itself is less broadly "helpful."

[Izkata]

> And at that point you could have just done those regulations without UBI. Hmm.

Rent control is already a thing, and typically good short term but bad long term: renters don't move out because they can't get such low rent elsewhere, and landlords can't afford repairs so things are left broken. It's a great way to create slums over a few generations.

[rickydroll]

https://www.kuntarahoitus.fi/en/news/affordable-social-housi...

[PaulDavisThe1st]

Por que no los dos?

[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.

[rybosworld]

I was not conflating the two - I literally meant that there are incentives in place to encourage landlords to develop new homes. I am not referring to groups whose primary interest is to develop and sell - but to develop and own.

I know a lot of landlords think they are a persecuted class that is providing a necessary service - but that largely isn't true.

Broadly you can imagine two scenarios for simplicity sake.

1) Housing supply is abundant. Landlords have to compete on service superior maintenance, better units, better locations, etc.). Renting a home behaves like any other service industry that we come to know and love.

2) Housing supply is constrained. The situation plaguing much of the modern world. Land is limited. Landlords earn a higher IRR from jacking rents than they do from buying additional units. The landlords profit from control of the access to a scare resource rather than from providing anything of value.

Plainly: rent-seeking is evil.

[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?

[PaulDavisThe1st]

Because UBI is largely orthogonal to those things. It's a way of taking productivity gains and ensuring that the entire population benefits from them.

[estearum]

But... without those other changes... UBI doesn't benefit the entire population, as we've just established.

It benefits landlords.

[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?

[PaulDavisThe1st]

In response to what is deemed to be unreasonable and/or undesirable landlord behavior ... such controls would not stop landlords from continuing to earn from their properties.

[estearum]

"Unreasonable behavior" is just "setting market prices."

Correct it wouldn't stop landlords from continuing to earn from their properties but it would destroy the incentive to produce additional housing, so nobody wins.

[UncleMeat]

Not everybody who buys a home is a landlord.

[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.

[LightBug1]

Maybe, but I had a good laugh at the implication, and now how you've stretched your reasoning, so I'm ok with it. Thanks.

[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.

[cogman10]

> Competition between landlords is almost nil

In fact, collusion with the likes of yeildstar is the name of the game. Everyone is setting prices based on what the algorithm tells them to set prices and they all benefit from that uprise in prices because there's basically no competition decreasing the price.

There's also been a steady consolidation of ownership of rental units which also artificially increases prices.

There's a reason nowhere in the country at this point has affordable housing.

[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.

[PaulDavisThe1st]

This just isn't true across the time and space of human cultures and civilizations. There are plenty of places, even in the USA within the last 50 years, that have had a housing surplus.

The current problems have tended to arise when desirable work is geographically limited which then leads to a much larger housing shortage in those areas despite the presence of sufficient housing across a broader territory.

[estearum]

> There are plenty of places, even in the USA within the last 50 years, that have had a housing surplus.

Yes, bad places at bad times.

Can you name good ones?

[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.

[estearum]

Sure, but if zoning etc didn't prevent you from doing that, the price of the land would just be far higher.

High enough again to make it hardly profitable (if you're lucky) to do what you're allowed to do on that land.

There are entire businesses that just buy lots, change their zoning, then sell them. It's all priced in.

[joe_the_user]

You are confusing marginal price (or profit-equalization) theory with numerical limits on the level of housing unit production.

If people were allowed to build as they wished, they'd build a lot of housing, much of the housing crisis would subside and then the profitability of building house would equalize with the profitability of other uses. But stable point would give a lot more people housing.

It's like... Taxation or similar things can reduce X use of resource Y. Remove taxation and eventually X use isn't any more profitable than other uses but a tautology of markets/economics, not an argument the taxation isn't limit the production involved in X use.

[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.

[estearum]

Yep — or aggressive subsidization of the inputs of housing production, or some other cost management of an input (such as a high LVT that discourages speculation and withholding of valuable land from use)

[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.

[gruez]

>There will always be a concentration of people in cities for these reasons.

That's fine. Not everyone has to move. As long as the marginal city dweller would rather have cheaper housing than "buzzing restaurants and art galleries", there will be downward pressure on housing prices.

[phil21]

All this would do is raise prices in the marginally cheaper places to live, in order of desirability. Sure it might reduce some prices in the core "superstar" cities, but not by a whole lot - since by definition those receiving a net-benefit from UBI are going to make less than average. Especially for a HCoL city.

Sure a few folks will drop out of the highly competitive professional job market to go homestead somewhere. They will be a rounding error, since they have already expressed revealed preference that "bare minimum lifestyle" is not enough. Someone capable of holding down a $350k/yr white collar job is already qualified to go make $70k/yr remotely in some random city anywhere in the US they want to live but they choose not to.

As we've seen with COVID remote work, the desirable "cheap" places to live will very rapidly have price appreciation because they are starting from such a low floor to begin with.

A $300/mo increase in some 30,000 population city in the midwest is a lot more material to the market than a $300/mo decrease for a $3k/mo apartment in a top 10 city core.

It also ignores the folks who want to live in the superstar cities but cannot currently afford to. If UBI is high enough to really matter, there will simply be a reshuffling. I'd expect upper-end to perhaps go down (largely due to increased taxes and thus less disposable income for the high earning group), but the lower-end to be raised eating up basically all the UBI surplus.

Also this totally ignores the third and fourth (and more!) order effects. If people are less incentivized to work, and work carries a much higher tax load (as it must for UBI to be worth even considering) - pay for high-end jobs must increase since working is going to have less net-benefit for an individual who now has a choice to totally drop out of the workforce and have others pay for everything. Who knows? Maybe prices actually increase in those superstar cities as they become even more winner-take-all environments?

[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.

[auggierose]

No, I am not interested in the motivation at all, and it plays no role. That is the logical error you make. You are trying to make an argument based on current data, but that current data does not include the fact that income is correlated to location, but UBI is not. So your current data is not a proof of anything, really.

In general I agree with your view though that UBI could be captured by landlords, and that landlords are a special case. So let's introduce special laws for that along with UBI. Problem solved.

Alternatively though, if that turns out to be too complicated with too many side effects, I think there is a good chance that UBI leads to people being able to spread out more evenly, away from expensive and dense cities. You tried to make an argument why this will not happen, but as explained, your argument is not conclusive.

[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.

[estearum]

No the argument is that the landlord will raise rents, but they will not keep them. The gain generated by UBI, by virtue of raising the value of the land underneath the unit, would be recouped by the LVT at tax time.

UBI is passed from the tenants to the landlord in the form of higher prices, but is recouped by the LVT, which cannot be passed in reverse from the landlord back to the tenant.

[SoftTalker]

I think that when most people hear "the landlord eats it" that does not imply that they raise rents but just pass the increase along to the tax authority and don't keep any of it for themselves. "The landlord eats it" implies that the landlord pays, accepts less profit, and the tenants pay the same as before.

[iso1631]

Currently landlords charges $15k a year for a property

LVT applies a $10k a year tax on a property

UBI gives everyone $2k a year extra

Landlord can increase rent by $2k a year to $17k, but not by $10k a year

Only way landlord can get back to $10k is to increase density, which increases supply, which introduces price pressure

From a moral point of view it gives every citizen an equal share in the country's land. If they use more than their fair share (a 0.5 acre lot in Manhattan), they pay more. If they use less (a 0.5 acre lot in Minnesota) they pay less.

That dividend could be distributed as increased public services, or lower taxes, or just as a dividend.