How does giving people more money lower rents though? If UBI became likely, I’d expect investments in the low-end of the housing market to do better based on the prospect of a rising rental market and more steady payments of rents owed.
I see this line of thinking a lot, but it's a bad one. It's understandable that people think like this in a place like SF where landlords have grabbed up a lot of salary increases, but it really doesn't work that way.
If it was true, rents would keep climbing to 90+% of incomes but they don't. It would also imply that any other income income increases or redistribution (widespread pay rises, social security, etc etc) were pointless, you might as well give up on any kind of redistribution entirely.
Of course, if there was a UBI, there would be increased demand for stuff that low income people need like housing and food. That's the whole point of increasing equality! Shifting consumption from sports cars and chandeliers to food and shelter is the goal. But then supply would shift to compensate.
Another advantage of UBI is that even if you do wrongly assume it doesn't result in any net redistribution, it's still beneficial, because it smoothes income over the lifecycle, and a smoother income is much less stressful and unpleasant than a choppier income.
Or not. Because folks are hurting now. And with UBI they might be able to move to more affordable locations anyway, which helps solve the other problem right there.
I wonder about this in the UK, we have a constrained housing supply, people have to live somewhere so would the proceeds of UBI end up making landlords richer?
How would that relate to landlords? If everyone has UBI, then everyone has more money to compete for the better rental properties. The landlord would have to get their UBI directly, and that might still not be enough.
So what? If those few people provide services to a great number of people who freely choose to spend their (now increased) income on housing, those people have improved the lot of a large number of people and have earned that wealth (upon which they'll be taxed).
Indeed, if UBI becomes a significant possibility (but before it's a certainty), I think that buying low-end rental properties would be a good idea as I'd expect UBI to result in a net increase in household formation. This is literally giving people freedom and agency with which to live their lives in the way they choose.
Supply and demand. Prices would likely go up, and you're right to point out that a chunk of it would go to landlords - but unless there is collusion, these landlords are competing with each other to find the fair price in the market.
UBI is generally trickle-up economics, and I think that's a good thing. That extra money is most important to the least wealthy people, and they will naturally spend it in their communities.
There are goods and services with income-elastic pricing, like housing.
UBI indirectly and unfairly benefits only the people who control those goods and services. If everyone made $1000 more per month, housing prices would raise up to that amount for everyone. This means the majority of the UBI raise would go into just the landlords pockets.
This is why many welfare programs are expense- or need-dependent, because it maximizes the benefit to those who need it without impacting price inflation as much.
I think Mikushi's point would be that UBI gives both of you greater freedom to choose. It would probably reduce inner city housing costs a little as some of the people who currently are there only because they have no other way of getting an income decide to take their labour elsewhere where they can get more value for their contribution..
I don't see how UBI helps. It would help if home prices were low enough such that builders aren't incentivized to build, but high enough that people can't afford them. But that isn't the scenario. In the current scenario, UBI or any other form of rent subsidy is just going to go almost directly into property owners bank accounts.
> even if all the UBI money goes back into rent, UBI would equalise housing spend along the way, from rich to poor and from worker to non-worker, vastly reducing poverty
How would that be? If your rent goes up $1000 regardless of what you're paying now, someone who earns $0 and can't afford a $600 apartment now collects $1000 and can't afford a $1600 apartment while the guy who could afford the $600 apartment by earning $1500 now has a monthly income of $2500 and a $1600 apartment.
On the other hand, if UBI is constant across geography, it provides an incentive for the underemployed to move somewhere cheaper. It might take some of the pressure off housing in popular cities.
I forget what the conjecture is called in economics that UBI would essentially all be captured by rent and housing prices.
I don't have to think about it very long to see how obvious that is.
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