[tdrgabi]

I'm sorry if this has been answered many times in the past. I didn't find the answer anywhere else.

If everyone gets 1000$ extra, why wouldn't rent increase by close to 1000$. If you're not willing to pay it, someone will. I don't understand how giving all of us X amount of dollars would help. The number of goods are the same, they would become more expensive through inflation.

[hedora]

With UBI and a flat tax, you end up paying:

tax_rate * income - ubi

to the government. Tax rate has to go up for UBI to be revenue neutral. So, it is not inflationary. It just provides safety net for low income people.

Note that this formula would greatly simplify the tax code (especially if income included capital gains and maybe excluded donations), and is also actually progressive (your effective tax rate increases monotonically with income), unlike the current US system.

[brendanyounger]

The current US federal tax system already is progressive in this way. Your first $X are taxed at 0%, the next $Y at 10%, etc. up to 37%. Your UBI in your formula is basically the standard deduction in the current system. But you still need to work or invest to make the first $X which are federal tax-free.

[mvdtnz]

US income tax is already progressive and therefore increases monotinically with income. There's no reason to believe UBI and increased income tax brackets would result in a simpler tax system or removal of the various carve-outs - that's a totally separate issue and a poltical landmine.

[dgfitz]

So, when hundreds of millions of people got checks because covid, that wasn't inflationary? Sure feels like it was. UBI is the same thing.

[KaiserPro]

> why wouldn't rent increase by close to 1000$.

prices are dependent on demand/supply rather than how much money people have.

It might increase rental prices, but the people that are reliant on UBI tend to be on some sort of rent control mechanism.

The biggest hurdle though is that people getting jealous of "money for nothing" despite interest being literally that.

[azornathogron]

That doesn't seem like a full explanation. Sure, prices are tied to supply and demand. But demand is tied to how much money people have, so that just brings you right back to the original question.

[mike_hearn]

> prices are dependent on demand/supply rather than how much money people have ... [UBI] might increase rental prices

Which is it? You can't have it both ways. The right answer is that if you print new money prices go up. If UBI is funded by taxes it's not a UBI (some people will end up giving back more in taxes than they "receive" in UBI, so it's net negative for them). If it's funded by borrowing it's not sustainable. If it's funded by money printing then prices will rise and the effect is eliminated.

> the people that are reliant on UBI tend to be on some sort of rent control mechanism

The argument for UBI is it lets you get rid of other means tested welfare systems. If you're going to introduce a category of people who really need UBI vs other people who don't really need it, and have special rules for the former, it's just a rebranded welfare system and those already exist.

[echelon]

> prices are dependent on demand/supply rather than how much money people have.

That's not the full story of how the economics of demand work.

Demand increases as the money supply increases, but supply remains constant. This is inflation. More dollars chasing the same basket of goods.

Another way to look at it is as the money supply increases, the cost of money and the cost to borrow decreases. This leads to an increased desire to spend. It's an aggregate demand increase across businesses and consumers.

We recently saw the impact of this when the money supply was increased during Covid. It led to one of the largest jumps in inflation in our lifetimes.

[schmorptron]

This applies less for basic human needs like a roof over the head, especially in a supply constrained market like we've been in for quite some time in many places around the world

[HDThoreaun]

Rental supply is fixed in the short to medium term. Rental prices are wholly decided by demand on that timescale. Giving everyone money would obviously increase demand

[bradlys]

We’ve already seen that the market is not like that. Rent collusion already exists with landlords.

When it comes to a necessity like shelter, it doesn’t follow supply/demand curves all the time.

[splix]

I think you're referring to the Winston Churchill's "on Land Monopoly".

I don't remember exact details and may miss something, but the work is very short so please check it. In short, he described, I believe, a real situation when a major of people in a town got extra extra money because a toll on the bridge to the fabric was eliminated. But in a short time the town's rental cost grew up by exactly this amount.

[K0balt]

Because presumably the money doesn’t come from increasing the money supply but rather by the redirection of tax revenue.

FWIW we have had a form of UBI in the USA for decades: the earned income tax credit, which for many people amounts to a significant subsidy over and above their tax burden. Nobody stopped working, and prices didn’t go up.

[gruez]

>FWIW we have had a form of UBI in the USA for decades: the earned income tax credit, which for many people amounts to a significant subsidy over and above their tax burden

How is a tax credit that you only get if you're working, and scales up depending on how much you earn (to an extent) an "universal" basic income?

>Nobody stopped working, and prices didn’t go up.

Nobody stopped working because you had to work to get the tax credit.

[radpanda]

I’ve always seen UBI as part of a post-scarcity sci-fi future. Once the robots run the farms and deliver the food and build the buildings and so on, and there just isn’t enough work to go around for humans, of course the fruits of this productivity should be shared with the wider population (both morally and to prevent uprisings). Sure, in this sci-fi future you can live in your basic pod and eat basic food for free or you can work a little or a lot to try to upgrade your situation.

But I don’t think we’re there yet. We do have a lot of industries that rely on shit jobs that people would rather not do. If we, IMHO prematurely, try to institute a UBI now we’d be in for a world of pain along the way as the prices of basic services skyrocket without robots being ready to step in.

[K0balt]

“Of course”

But, that’s not where we are headed.

Instead, automation will make money irrelevant in the “we don’t need to make money because money ultimately only can be used to pay wages, and nothing else” way.

Since automation means you don’t pay wages anymore, you only need natural resources and energy.

When corporations no longer see (external) money as useful, but only as a way to apportion resources internally to stakeholders, that makes everyone outside of that system into ants.

It’s grey goo, just on a macroscopic scale.

[yorwba]

If you make the "basic pod" a tent, wealthy countries could probably afford this sci-fi future today. But "enough money to live like a homeless person without having to beg or steal" doesn't sound so great as an aspirational goal, does it?

If the "basic pod" is supposed to be something more durable, probably the first step would have to be building enough homeless shelters for all the UBI recipients without another source of income.

[insane_dreamer]

> of course the fruits of this productivity should be shared with the wider population

we're quickly getting closer to that stage with the promises of AI-increased productivity; and yet, there is not the faintest signal from those building and profiting from AI that the fruits of the increased productivity will be shared; quite to the contrary it will be captured almost entirely by shareholders -- why are investors pouring hundreds of $B into AI otherwise?

[cscheid]

Presumably because one of the two things are true:

- there's competition, and so if it's possible to rent for less than 1000-eps and still profit, someone will

- there's no competition, which is a cartel, the kind of thing that civilized societies ought to frown upon

[vasco]

Do you know the adage location location location? The competition for good locations is among renters, not landlords. Seller's market vs buyer's market. Doesn't have to mean there's a cartel, it also doesn't mean there isn't one but it's not a guarantee.

[gruez]

Rent is expensive because all the jobs are in expensive metros, so people are forced to move there. With UBI the idea is that some fraction of people won't have to work (or can do part time remote work), and therefore can move to a random town in North Dakota with cheap rent.

[vasco]

Other cool things cities have is police stations and hospitals, but I guess since there's no jobs you just get treated by a robot in the woods?

But then if people are creating art or working on their theater play or whatever, they'll want other people to show it too. I don't see cities existing only because of jobs.

[bradlys]

Ah, yes. Famously people only like cities cause there’s jobs there. They’d otherwise live in a place where the population density is 5/mi.

[PleasureBot]

Because you can buy anything with that $1000. Some people will buy clothes, others a new computer, others will travel etc. The demand for any one specific thing (apples, rent, netflix, etc.) will only increase a tiny fraction.

[bryanlarsen]

UBI will lower rent.

The most common criticism of UBI is that landlords will raise their prices to capture all of the gains. I disagree, I believe that a properly implemented UBI will lower rent prices.

Rent rises quickly because both supply and demand are inelastic and renters are relatively price-insensitive. Any market with relatively fixed supply and demand experiences large and quick price changes. The most prominent example is oil -- a small change in supply causes a large change in price because demand is inelastic; people don't stop buying gas just because the price went up. But oil experiences quick price changes in both directions. Rent only seems to increase.

Housing is a necessity. If there are more families needing housing than there are houses, families will pay as much as they are able to ensure they're not the ones without housing. So when supply exceeds demand, price rises rapidly. The converse is not true. Most landlords are not as desparate to rent their dwellings. When supply exceeds demand they have the ability to say no, they can and do choose to leave the dwelling empty rather than accept a lower price.

But prices do eventually come down when supply exceeds demand. For example, the rent for 1 bedroom apartments in Toronto is down 10% in the last 12 months.

If implemented poorly UBI could definitely be inflationary. If UBI is paid for by money printing rather than through taxes it will be inflationary. But if it doesn't increase the money supply and is constant across the country UBI will lower rents rather than raising them.

Why? Becuase it makes demand elastic. Right now people are moving to the expensive cities because that's where the jobs are. They don't really have a choice. UBI gives them a choice. You can move to San Francisco and work 2 jobs to be able to afford rent, or you can move to West Virginia and pay your rent out of UBI and not need a job. Some people are going to do that. Not many, but likely enough.

There's a saying. "100 supply, 101 demand; price goes up. 100 supply, 99 demand, price goes down". Small changes on the margin can have a large impact on prices.

Keep in mind that any UBI that is fully tax supported is going to necessarily be very miserly. US average income if $40K. So if you set tax rates at 100% and spent every penny on UBI then UBI could be $40K. Obviously neither assumption is going to be true. Tax rates will have to be significantly less than 100%, and we'll spend money on our military, etc. A UBI of more than $1000/month seems highly unlikely without money printing. And there are basically only three ways you can live on $1000/month: Move to a low cost of living region like West Virgina, live on the street or live in highly shared accomodation. All three of these scenarios reduce housing demand in expensive cities rather than lower it.

[msgodel]

What kind of idiot would work for free and pay taxes when they could work on their side project for free, use UBI for rent, and not pay taxes?

Probably not the industrious and productive kind I'm sure.

[squeegee_scream]

I don’t think _everyone_ gets an extra $1,000, just those at the bottom. I’m pretty sure there are different ways of implementing UBI, and some of them only provide a certain amount to the lower income folks. So if you are making plenty of money, whatever plenty means in your location and context, you would not receive any additional income.

[hn8726]

UBI by definition is paid to everyone, regardless of their income. That's contrasted with GMI, guaranteed minimal income, which supplements your current income to some minimal level, which would work as you described

[RedNifre]

The point of it being universal is that you still have a good incentive to work, since every dollar earned is a dollar more in your pocket (initially, before you reach the income level where you need to pay taxes).

Compare that to non-universal social help, where every dollar earned gets subtracted from your social pay, so the first $1000 you earn are effectively taxed 100%, creating an incentive to not start working.

[kajumix]

If it's not for _everyone_ it's not _universal_ basic income. It's just welfare for poor in that case, and that's already very common

[purerandomness]

That's not UBI (the universal part), that's state subsidies, which already exist today all over the world.

[jghn]

The "U" in "UBI" is "Universal"

[RiverCrochet]

- If more money is available for rents (increase demand), more people will build apartments to get that money (increase supply). This will introduce competition and keep rents reasonable. This won't work where housing supply is artificially limited.

- I might live with a relative instead of paying $1000 extra, and can now afford the car to get to and from my job instead of living with them without a job or deepending on them for a ride.

- I might put that into a mortgage payment instead of rent. UBI if done correctly is always there so it's something a bank could count on as a reliable asset.

- "The number of goods are the same, they would become more expensive through inflation" - If there is more money to buy goods, people will find a way to produce more goods, if allowed. If people aren't producing more goods then your problem is there - transportation to markets could be an issue.