UBI isn’t likely going to work out in the long-term.
UBI would ‘inflate’ the economy, it wouldn’t grow it. Growth (i.e. ‘productivity’) is more stuff being made. There’s no reasonable argument that the physical quantity of goods/services would increase. In every reasonable scenario, UBI gets inflated away through the supply-side of the production curve.
If your landlord knows you’re getting an extra, say, $5,000 per year in UBI, do you really think your rent isn’t going up? Do you really think AT&T isn’t going to increase the cost of your cell phone bill? Do you really think food is going to magically stay the same price? Gasoline? Clothes? Restaurant prices? And you can continue all the way down the line.
UBI is essentially a transfer mechanism from [insert how it’s funded] to the sector of the economy that produces goods and services to lower income people. In the case of UBI being funded through a VAT, it’s just a closed loop. The people that ‘don’t’ benefit are the lower income people. If you remember Yang’s Presidential bid, even he couldn’t address this. When he was asked directly about it, he just handwaved it away, despite the fact that was a glaring hole in the dead center of his keystone policy piece.
Remember your supply and demand curves from Econ 101? Giving everyone $1,000 a month increases demand for just about everything, with a weight towards the people who spend most all of that $1,000. Whether or not prices go up is a function of the ability of supply to respond. Imagine a world where there are only 2 items: potato chips and your apartment. There are a ‘ton’ of varieties of potato chips, and you can always choose to just not buy potato chips. Your apartment on the other hand, is mandatory and you have to incur a significant cost to move (e.g. it costs money to get a truck, plus you will have to move further from work, and you might have to move to a different apartment, you get the gist).
The potato chip company probably can’t really raise prices you’ll just switch brands costlessly. or you’ll just not buy chips. Your apartment on the other hand is different. I’m not saying your landlord would raise your rent $1,000 instantly, that’s not how that works. Instead, he’d bleed you out. Your rent would go up $250, which you’d be pissed about but you’d pay because you still have $750 from UBI. Next year it’s going up $300, which you’d be pissed about but you’d pay because you still have $400 from UBI and so on until you get pissed enough to actually move. Now you are going to move to a cheaper apartment, but you have to remember that someone else, before UBI started, was paying a lot less than your ‘new’ rent post UBI. In other words, the landlord’s captured it. Notably, this is exactly what we saw with real estate prices as women entered the workforce. It takes about ~10 years or so, but a huge chunk of the extra income went into real estate. Its hard to imagine how UBI would be any different.
Rents in many places have gone up massive amounts in the last few years anyway. Sometimes doubling in a single increase. All without a UBI. Rents increases aren’t tied to an tenants income like you sugest.
Also, your inflation would only be short term. Long term, after prices spike due to with sudden increased demand, the high prices will incentivize more supply, bringing prices back down into balance.
And there’s nothing to say the UBI needs to be implemented all at once any way. It could start as small as $50/month, then ramp up over the course of a decade or two. That smother transition would allow the markets to adapt without major waves.
There have been wider, longer studies, and what your describing doesn’t actually happen.
Gentrification is extremely local, tied to a specific area. UBI is tied to people. All people. In all locations. No mater where they go. The dynamics are couldn’t be more different.
Your rent would go up $250, which you’d be pissed about but you’d pay because you still have $750 from UBI.
Or, alternately, you’d look around the rental market to find a unit that hadn’t arbitrarily gone up in price.
The scenario you describe only works in a very tightly constrained scenario where supply and demand are highly inelastic. In the real world people build new housing when demand rises, so prices don’t spiral ever upward. Most of the places where there’s currently a housing crisis hare having that problem because they’ve made bad zoning decisions due to NIMBYism and other such miscalculations.
I would expect this to happen if you just give everyone UBI with no changes anywhere else, but that wouldn’t make any sense. Why do we not consider a setup where we set UBI to X, then reduce everyone’s wages by X?
UBI isn’t likely going to work out in the long-term.
UBI would ‘inflate’ the economy, it wouldn’t grow it. Growth (i.e. ‘productivity’) is more stuff being made. There’s no reasonable argument that the physical quantity of goods/services would increase. In every reasonable scenario, UBI gets inflated away through the supply-side of the production curve.
If your landlord knows you’re getting an extra, say, $5,000 per year in UBI, do you really think your rent isn’t going up? Do you really think AT&T isn’t going to increase the cost of your cell phone bill? Do you really think food is going to magically stay the same price? Gasoline? Clothes? Restaurant prices? And you can continue all the way down the line.
UBI is essentially a transfer mechanism from [insert how it’s funded] to the sector of the economy that produces goods and services to lower income people. In the case of UBI being funded through a VAT, it’s just a closed loop. The people that ‘don’t’ benefit are the lower income people. If you remember Yang’s Presidential bid, even he couldn’t address this. When he was asked directly about it, he just handwaved it away, despite the fact that was a glaring hole in the dead center of his keystone policy piece.
Remember your supply and demand curves from Econ 101? Giving everyone $1,000 a month increases demand for just about everything, with a weight towards the people who spend most all of that $1,000. Whether or not prices go up is a function of the ability of supply to respond. Imagine a world where there are only 2 items: potato chips and your apartment. There are a ‘ton’ of varieties of potato chips, and you can always choose to just not buy potato chips. Your apartment on the other hand, is mandatory and you have to incur a significant cost to move (e.g. it costs money to get a truck, plus you will have to move further from work, and you might have to move to a different apartment, you get the gist).
The potato chip company probably can’t really raise prices you’ll just switch brands costlessly. or you’ll just not buy chips. Your apartment on the other hand is different. I’m not saying your landlord would raise your rent $1,000 instantly, that’s not how that works. Instead, he’d bleed you out. Your rent would go up $250, which you’d be pissed about but you’d pay because you still have $750 from UBI. Next year it’s going up $300, which you’d be pissed about but you’d pay because you still have $400 from UBI and so on until you get pissed enough to actually move. Now you are going to move to a cheaper apartment, but you have to remember that someone else, before UBI started, was paying a lot less than your ‘new’ rent post UBI. In other words, the landlord’s captured it. Notably, this is exactly what we saw with real estate prices as women entered the workforce. It takes about ~10 years or so, but a huge chunk of the extra income went into real estate. Its hard to imagine how UBI would be any different.
Rents in many places have gone up massive amounts in the last few years anyway. Sometimes doubling in a single increase. All without a UBI. Rents increases aren’t tied to an tenants income like you sugest.
Also, your inflation would only be short term. Long term, after prices spike due to with sudden increased demand, the high prices will incentivize more supply, bringing prices back down into balance.
And there’s nothing to say the UBI needs to be implemented all at once any way. It could start as small as $50/month, then ramp up over the course of a decade or two. That smother transition would allow the markets to adapt without major waves.
There have been wider, longer studies, and what your describing doesn’t actually happen.
And I remember people made similar remarks about gentrification. I remain confident that you’ll see it with time.
Gentrification is extremely local, tied to a specific area. UBI is tied to people. All people. In all locations. No mater where they go. The dynamics are couldn’t be more different.
Or, alternately, you’d look around the rental market to find a unit that hadn’t arbitrarily gone up in price.
The scenario you describe only works in a very tightly constrained scenario where supply and demand are highly inelastic. In the real world people build new housing when demand rises, so prices don’t spiral ever upward. Most of the places where there’s currently a housing crisis hare having that problem because they’ve made bad zoning decisions due to NIMBYism and other such miscalculations.
I would expect this to happen if you just give everyone UBI with no changes anywhere else, but that wouldn’t make any sense. Why do we not consider a setup where we set UBI to X, then reduce everyone’s wages by X?