It doesn’t depend on how it’s paid for. If I am a landlord and I know that my tenants now earn an additional $600/mo, and every other tenant in my market is also earning an additional $600/mo, I would be an idiot not to raise my rents by $600/mo, and so would every other landlord.
"Well, I'm a [store, café, bar, gym, etc] owner and I know that my customers now earn an additional $600/mo, and every other customer in my market is also earning an addition $600/mo, I would be an idiot not to raise my prices by $600/mo, and so would every other owner."
"Oh, also, I'm building a new set of apartments and I discovered that when I set the rent to today's price + $300/mo then suddenly everyone was interested since everyone else on the market now takes +$600/mo."
Yes, inflation is a real concern which should be discussed, but "duh, all the money will just go to X" is far too a simplistic argument.
Store, cafe, bar, gym owners will try to raise their prices, and they’ll succeed (obviously not everyone independently by the $UBI amount).
But then ya know what will happen? The store, cafe, bar, and gyms’ landlords will raise their rent accordingly and eat approximately all of the gains that came from their price increases.
Why on earth do you think rent is so expensive near high-productivity? The buildings aren’t better. The land itself isn’t higher quality. The landlords aren’t better. It’s more expensive because it can be due to the market’s productivity, and corollary ability to pay high prices.
True, instead of just the low-income earners dropping out now that they have an unconditional deposit in their bank every week, now you also have a significant number of middle and high income earners consciously choosing to earn less because of the crushingly high taxes.
Well, you have the UBI increasing incomes at the lower end of the economy, which does apply upward pressure on lower-cost rents. But on the other side, you'd be decreasing the income/wealth at the top, which applies downward pressure at the high end of the market. The ultimate effect is not a straightforward calculation. I think the total size of the money supply is probably the most significant factor, and that wouldn't change if the UBI is funded by taxes.
I'm talking about the effects of wealth redistribution vs. money supply expansion. Redistribution doesn't necessarily increase prices since the total amount of purchasing power in the market doesn't change. It's certainly not as simplistic as "rent gets increased in proportion to the amount of the UBI" as you're implying.
Taking into account redistribution, the story is even more bleak, not less. Lower income housing prices will rise faster than higher income housing prices.
Again, it’s not clear that they’d be able to charge more given that less purchasing power for high income earners would push real estate prices (and therefore rents) downward.
In the study you posted, it’s not possible to isolate the variable. Many things could have affected the (minor) changes in rents. Not a good analysis.
Minimum wage increases purchasing power for the employed workers, but also increases unemployment, which has the opposite effect on prices.
The decreased purchasing power at the high end 1) is a consequence of taxes, not UBI itself, and 2) wouldn’t push prices down for lower income housing writ large. At the absolute margins, a high-income earner who is being taxed into lower-income housing is increasing competition among tenants for the same low-income housing, which will increase those prices.
If you want to tax high-income people into lower-income housing then just increase their taxes. What does UBI have to do with any of that?
It’s not possible to “isolate the variable” in any economic study ever, so I suppose both of us will have to argue from conjecture. My conjecture, as a landlord, is that if incomes go up in my market, that is unambiguous signal that I can increase my prices. Your conjecture is “you won’t be able to,” but I already know I’m able to. That is how I’ve already set the price I charge.
The best possible news for me, an absentee landlord, is a big company with high salaries opening an office nearby. Same as every other landlord.
A distinction without a difference imo. My point is that how you pay for it is what determines the impact on prices, but I think we’re basically rehashing demand-side vs. supply-side economics at this point.
> I already know I’m able to
You don’t decide the market rate by yourself. And I don’t think you’re properly accounting for how UBI impacts this in aggregate.
No, how you pay for it doesn't change UBI's effect on pricing. UBI has exactly the effect I'm describing. Separately, a tax scheme may have a different, countervailing effect, regardless of whether or not it's related to UBI. That countervailing effect could arguably overcome UBI's positive pressure on prices, but it's a totally separate effect from a separate policy and even still your explanation of the mechanism looks totally incoherent.
Please explain how taxing high-income people into low-income housing doesn't increase the prices of traditionally low-income housing.
"No, how you pay for it doesn't change UBI's effect on pricing."
I'd disagree as I think it obviously does. I doubt any economist would agree with this statement.
You're saying I'm "incoherent", but from my perspective all you've done in this conversation is confidently assert your conclusions. You're clearly very certain of your beliefs, but that's not going to convince anyone (if you care about that at all). I'm willing to reconsider my views if someone makes a compelling argument, but I haven't found yours to be convincing fwiw.
I think any economist would be able to separate the policy in question (UBI, a stipend paid directly to people) from the funding of that policy (potentially a high marginal tax rate, potentially increase in money supply -- two options you yourself identified, but there are infinite more ways to do it).
All of the downward pressure on housing prices you have theorized are coming from (one of) the proposed funding methods, not UBI. UBI doesn't have to be funded in this way, so it should be self-evident that this pressure isn't coming from UBI itself. You would get the same (alleged) effect that you're mentioning if you don't do UBI at all and instead just more steeply increase marginal tax rates. You would not get that effect at all if you implement UBI but fund it by a method other than steep marginal tax rates. So the proposed effect is coming from the tax scheme, not from UBI.
I think you're clearly not willing to reconsider your views, which frankly I get since UBI should be a really great idea. And if it would work, I would fully support it (in fact I used to). But empirical evidence of similar policies getting baked into land rent is apparently outright dismissible, and there's apparently no need for evidence of your claim that higher marginal tax rates at the top end reduce rents at the low end?
Honestly I think you're being very pedantic about this. How it's paid for is a crucial aspect of UBI. It would literally be the largest and most expensive government program ever enacted and you don't think it makes any difference how those trillions of dollars are raised? Come on. There's no such thing as UBI independent of the funding for UBI and there are not "infinite" ways for a government to raise trillions of dollars. In the real world, there are two: taxes or the central bank.
I'm not actually convinced that UBI is a great idea. I lean towards supporting it but I also have reservations. The numbers involved are staggering and there would clearly be some major negative consequences. I think the benefits of unlocking so much human potential and defending against social instability created by mass AI job displacement probably outweigh those, but I'm open to counterarguments.
That said, your arguments here are just way too simplistic imo. They only work if you ignore or dismiss half the equation. Instead of addressing the argument that taxation has a very different impact on prices (including rents) than money supply expansion, you are playing word games to say "oh but that's not part of UBI".
I can see how this is opaque and totally inscrutable if one is inclined to just mix all the terms of the equation together, dismiss empirical evidence of specific components, and reflexively dismiss arguments for being "too simplistic."
Once again, I'm not ignoring or dismissing half the equation. I'm asking you to explain how the "tax" half works to yield the effect you're describing.
I did explain it dude. Taking trillions of dollars from the wealthiest would reduce real estate prices at the top of the market, offsetting (to some degree) inflation at the bottom of the market. It's not complicated. You're just hand-waving away this obvious implication of tax-funded UBI because it contradicts your argument.
Also, there is no empirical evidence supporting your argument. The one study you posted has zero statistical significance. Pretending otherwise is pseudo-science.
Got it: higher taxes on the wealthy will tax some people out of their 2nd and 3rd homes, bringing those units onto the market, and this will be a more pronounced effect on demand than UBI'ing 40 million people below the poverty line into the next rung up in the rental market, or the 80 million American adults who live with non-family roommates who will likely be seeking their own housing.
"Statistical significance," like UBI, is a very specific idea. It's not shorthand for "does it convince me." It is literally not true the study had zero statistical significance.
> higher taxes on the wealthy will tax some people out of their 2nd and 3rd homes, bringing those units onto the market
To fund UBI would impact a lot more than just super rich people with multiple homes. You'd have to tax into the upper middle class most likely to pay for it.
Do you not see the logical inconsistency in your argument? That adding all this purchasing power at the bottom of the market would have a massive impact on prices, but removing the exact same amount from the top has a only a narrow, insignificant impact.
> "Statistical significance," like UBI, is a very specific idea. It's not shorthand for "does it convince me." It is literally not true the study had zero statistical significance.
It's just a cherry-picked correlation in a massively noisy dataset, and a very weak one at that. Calling that study "empirical evidence" is a joke. You might as well cite astrological charts.
But people who have one home still need one home, right? So you're describing taxing wealthy people into competition with lower income people (lower-income housing), not taxing them out of it.
And no, there's no logical inconsistency with predicting different effects from the same purchasing power removed from the top as added to the bottom: those people have different marginal propensity to consume. As an example I've already mentioned, 80 million American adults live with non-family roommates. Those 80 million people aren't evenly distributed across income brackets, are they? Lower class people spend 30%+ of their income on their housing, often by pooling multiple incomes into a single unit. As you go up the income spectrum, roommates disappear and then % of income dedicated to housing goes down.
> It's just a cherry-picked correlation in a massively noisy dataset, and a very weak one at that.
At this point it's clear you haven't even attempted to read the paper. The data is neither cherry-picked nor noisy. The (independent) data source has 39 states in it. All 39 states are used in the study. The effect size is small, as you'd expect from small increases in minimum wage, but the correlation is extremely strong and almost certainly not due to chance.
> But people who have one home still need one home, right? So you're describing taxing wealthy people into competition with lower income people (lower-income housing), not taxing them out of it.
By this logic, if you could snap your fingers and make half of all wealthy people's net worth disappear (by some definition of wealthy), it would cause rents to go... up? You only need basic economics to know it doesn't work that way.
> And no, there's no logical inconsistency with predicting different effects from the same purchasing power removed from the top as added to the bottom
The effects would certainly be different, but how they would ultimately resolve in aggregate isn't even theoretically computable. Yet you're claiming to know what the exact impact would be. All we can say for sure is that there would be two massive countervailing effects.
> At this point it's clear you haven't even attempted to read the paper.
No I haven't because it would be a waste of time. Reading the abstract is enough to know that the premise is flawed and it can't possibly provide empirical evidence to support your hypothesis because there is no control. The same exact changes in default rates and rents could have easily occurred without the minimum wage increase due to countless other factors. It's pseudoscience.
