Does that happen with any other product? Are other consumer products priced based on calculation of consumers' incomes, or are they priced based on demand and competition in the market? I think rent in high-COL cities is more determined by high demand there than landlords' personal assessment of the residents' average incomes. With UBI, people would be more free to move away from areas with high rent. There could be more free competition on housing/rent across the whole country, which might drive down rents.
>I think rent in high-COL cities is more determined by high demand there than landlords' personal assessment of the residents' average incomes.
A landlord doesn't have to personally assess the average income of the residents. The high demand will roughly do the assessment for them.
>With UBI, people would be more free to move away from areas with high rent.
This is something UBI allows, but I'm skeptical whether people will actually do that. Remote work also allows people to do that, but until the virus it hadn't really been considered as a serious option in the vast majority of workplaces.
>Remote work also allows people to do that, but until the virus it hadn't really been considered as a serious option in the vast majority of workplaces.
Yes but the cruical difference is that now, if I ask for remote work to move and the company says no I have to choose between having and income and moving. With UBI they say "no" I say "ok" and have income to fall back on.
The key thing UBI enables is the ability to meaningfully make a choice to leave your current job if you want to without destroying your ability to keep yourself alive.
I would wonder what limitations UBI would require. What if people get UBI in US and move to a low cost Asian or African country to live princely lives with their UBI while American taxpayers pay for that lifestyle.
My personal guess is that it won't happen on a large scale. After all, most people feel connected to the places where they live and to the people around them. Moving to another country can be difficult if the divide (language, religion, customs, political system and its stability, law, personal and property rights, safety) is wide. This seriously limits the choice of places people would be willing to move to long-term in the first place. Historically, large-scale permanent migrations happened only if living conditions in the place of origin became hostile.
Also, where would people move to? Many destinations are developing countries and thus the cost of living there will rise in the long term. Also, these expats would be heavily affected by foreign exchange rates.
People might indeed cluster up in certain places, buy property there and live a leisurely livestyle. These factors would make prices rise and in the long term it would become less attractive to move there. This happened in Spain where property prices in premium locations have skyrocketed because of well-off people from other EU countries buying homes there. Depending on how much the goverments of the target countries care about this, they might think about countermeasures, such as restricting property acquisition to locals.
If the outflux of money becomes significant, it will affect relations with the target country as the origin country will seek to reverse the flow. Trade deals will be affected, and developmental aids, if there are any, might be reduced. If it works, the target country might make it more difficult for expats to stay long-term. But the most straightforward approach might be to limit the UBI based on residency, or make the expat lose perks such as voting rights.
higher education in ALL colleges is priced in a similar way. They've all raised their prices in accordance with the amount of money the government is willing to guarantee kids will have access to.
For the most part I agree, however community colleges usually offer very cheap prices, even more so if you are a resident of the state or country which it resides in.
> This is something UBI allows, but I'm skeptical whether people will actually do that
I am a supporter of the UBI theory but I have to say I am skeptical of the implementation. People are usually incentivized to move towards the places that provide opportunity - jobs, education, etc. UBI might dampen that incentive.
Given that most leadership systems are strongly influenced by the rich I have to wonder whether a system like UBI will be implemented in such a way that people are less dependent on the rich rather than actually becoming even more dependent.
demand for housing is somewhat inelastic though. It will only increase to the point where homeless people can now afford to rent a room somewhere. UBI would only significantly increase demand if it was so much money that a lot of people would be looking to buy second or third homes.
The problem, in the end, is the other side of that inelastic demand.
Everyone needs to live somewhere. Landlords only profit if their properties are occupied, but they can simply decide to all increase their rent by $1000 a month, knowing that eventually, the only choice for some people will be to pay it or be homeless.
I have no idea if it would actually work this way in practice.
Education is priced based on what rich international students can pay, then most domestic students get massive subsidies. I don't think it's a reasonable comparison.
Rent is based on demand and competition in the market, which is why it reflects consumers' incomes. That's the entire problem with UBI: it will just result in widespread inflation, in housing and every other market. The only way to keep rents from rising so rapidly is for people to be able to own the properties where they live.
(This does, indeed, fall under "some form of socialism" that the author deems magically "unworkable." Simply a tax code of affordable taxes for personal property - i.e. a home you own and live in - and high taxes for private rental property used to make a profit, with the intent that it should make financial sense to sell to an owner who will live in it.)
==That's the entire problem with UBI: it will just result in widespread inflation, in housing and every other market.==
Do you have any evidence to support this type of absolute claim? People have been screaming about inflation since the Fed massively expanded their balance sheet in 2007. The only things we’ve really seen inflate are assets (buying housing, stocks, etc.) we haven’t seen much inflation in non-assets (renting, commodities, consumer staples).
I think it's mostly location-based. NYC, Seattle, San Fran, Austin, Denver, Boise and more cities have seen significant rent increases. On the other hand, we have Rust Belt cities like Milwaukee, Chicago, Cleveland, Indianapolis, St. Louis, Detroit, Cincinnati, and more where rents haven't risen at the same rate.
Edit to add some specificity, although it's not "rent". Here [1] is a 3 bed/2 bath house in a very safe Chicago neighborhood for $325k. The local public elementary school is an 8/10 and the high school a 7/10.
If a significant number of readers here on HN click that link, driving traffic to that specific listing, I wonder if it would cause the agent to think there's more interest in the home than there really is, giving them the suggestion that they should increase the price.
It does have a "HOT HOME" banner on the first picture. Could that be from HN readers?
Let's implement income caps for all Bay Area tech company employees at $75k. Then landlords will lower rent and the housing price issue will be solved. /s
Max incomes and max wealth seem like excellent ideas. It should be gradual tho. I would like to see a basic income start at 50 or 100 bucks. That way we can see some of the effect and deal with it. It would at least reveal how hard it is to implement.
Sounds like a problem that you could also solve via things like universal rent control. Lock the rent of all units. If you're not happy with the rental income of a unit, you're free to sell it to someone who wants to buy a primary residence.
