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by laughing_man
22 days ago
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Just because there's more money available doesn't mean people are willing to spend more on a particular item. There are always substitute goods -- in the SF Bay area you can commute from the East Bay, for example. Beyond that, rents can reach a point were people are not willing to take jobs in a given area, which will relieve the pressure. I just don't think your contention giving everyone more money necessarily means they'll spend it all on rent. Why do you assume people don't already have money they could spend on rent if the wanted to? |
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It doesn't work for everyone - some will be worse off if they either a) move (lower wages - small town retail vs in the city) or b) commute (costs will be too high - fuel, working shorter hours), or c) they already live in the cheapest accommodation
Such people obviously exist - they live 'paycheck to paycheck' and make up a large minority of the population. They do not have money they could spend on more rent! In fact, they rely on welfare for necessities like food and medical care and yes even rent https://home.treasury.gov/policy-issues/coronavirus/assistan...
Now everyone gets their $100/week. The bottom 1%, with few accommodation options, accept paying higher rents. This means the people slightly closer to the city can't move further out, without paying the extra $100/week. Following this chain, eventually people in East Bay mostly accept the $100/week increase, and hence so do the people in SF. This isn't exact - the new equilibrium might not be quite X + 100, but history shows it will be very close.
What if the fairy took $100/week? Now landlords must decrease rents in the outer areas as people can't pay, and hence the rent decrease also propagates to the inner suburbs, else people would take advantage and move further out. These inner suburbs residents get the discount even though they had more than $100 week spare in the first place.
This argument is straight out of classical economics