Seriously there is NO WAY in the world an UBI will cover the rent - even the rent alone - in any place where it makes sense starting a business.
I would imagine an UBI will be mostly used by people to exclude themselves from active workforce to "retire" in low-cost destinations. Because that will be the only thing it will really allow doing.
Say you impose a super huge 30% income tax (anything above that will cause a revolt in the middle classes, and mass exodus in upper classes), that will only give an equivalent of a minimum wage to everyone (ok 20% above national minimum wage but some states have it higher)... how far does that get you?
> Seriously there is NO WAY in the world an UBI will cover the rent - even the rent alone - in any place where it makes sense starting a business.
You can get a one bedroom in Austin for less than $800/month, to say nothing of arrangements that involve roommates or shared facilities or couples who would then have a second UBI.
> I would imagine an UBI will be mostly used by people to exclude themselves from active workforce to "retire" in low-cost destinations. Because that will be the only thing it will really allow doing.
You're forgetting the possibility for supplemental income. Combine the UBI with a part time job and you could live just outside of New York City and spend the other half of your time on the business for as long as it takes until it makes enough for you to quit the part time job.
There is also a whole lot of work that really doesn't care about location at all. You can do software development in Kansas if you want to, as well as anything else that involves selling your product over the internet.
> Say you impose a super huge 30% income tax (anything above that will cause a revolt in the middle classes, and mass exodus in upper classes)
The marginal rate isn't what causes revolts, it's the effective rate. Middle class people don't care about paying $12,000 in tax if they also get a $12,000 UBI. Upper middle class people aren't going to revolt over a difference between the two of an amount similar to what they pay already for the existing welfare system we would no longer need.
And the whole point of using VAT is that billionaires and international corporations can't avoid it.
True, if only people in Austin got a $1000 UBI then many people would want to move there for the UBI and rents there would go up by supply and demand.
But if everybody in the country gets the same UBI then people are going to move from where to where exactly?
If the answer is from places with higher housing costs to places with lower housing costs, I think you're going to find that there's more than enough empty space in the middle of nowhere to satisfy all of that demand without significant rent increases.
You’ve misunderstood. I’m not suggesting that the rent would go up because of the increased demand for a living in Austin. I am suggesting that the rent would go up because everybody has at least $1,000 per month of free money, on top of whatever income they earned.
By what mechanism does that cause the rent to go up?
The entire reason people are setting up shop in Austin is that it's so much less expensive than San Francisco. If landlords in Austin tried to raise rents then people would go to Kansas City or Buffalo or Louisville.
Some of the landlords would figure out that it's more profitable to have tenants at lower rents than higher rents and no tenants.
> If landlords in Austin tried to raise rents then people would go to Kansas City or Buffalo or Louisville.
In the real world, most people can't just relocate their life on a whim, and the majority of citizens are more-or-less locked into a specific area for long periods of time, for a whole bunch of reasons. (Employer, Spouse, Children, Extended Family, Networks, etc)
It's not impossible to relocate or anything. But most people can't do so, and the few who can usually can't do so easily. It's not like window shopping for cars or clothes, these markets are effectively soft-Monopolies.
If landlords in Austin raised rents, most people would just have to eat it, unless it got to dystopian levels that forced them to relocate.
They still can't, because they're not even local monopolies.
There are a thousand local landlords. If they all decided to double rents, maybe only 5% of the local population would move out, but then 5% of the landlords would have empty properties. They're individually better off to get someone in there at a lower rent than have an empty unit, so they advertise a lower rent and take one of the tenants from a landlord across the street. Now that landlord has the empty unit and they do the same thing.
Which means Kansas City is competition for Austin even if 95% of the people there would never actually move. (Assuming cities where the job market, amenities and so on are similar.)
Also, when rents are higher, there is incentive to build new housing to capture the profits.
Rents only get high when they're not just eager to arbitrarily raise rents but somehow colluding to constrain supply, which is hard for thousands of landlords to do except through zoning. But that's completely independent from how much money the local people have. There are cities that have the same median income and higher rents because the local government imposes housing supply constraints.
The reason it goes up if you give everyone $1M/month is that $1M/month of money for everyone in the country doesn't actually exist. That's ~$330T/month. You couldn't collect that amount in taxes because nobody has it to collect it from; or if you did then nobody would actually be getting $1M/month since they'd just all be paying ~$1M/month in taxes to fund it.
The implied way to do it is, of course, by printing the money. Which would indeed cause inflation in not just rents but everything. But how does that apply to the real case when the money doesn't come from printing it?
> Rent prices are still governed by supply and demand
This is not accurate. Rent prices have little to do with supply and demand, and are primarily driven by how much money tenants have (or more accurately, how much tenants can be bled for before they give up and leave).
This is why rent rises even when supply is greater than demand, and why rents rise even in places where demand is falling dramatically.
Rent prices have everything to do with supply and demand. One of the reasons they're so high in San Francisco is that it's surrounded on three sides by water, which restricts outward supply expansion. And then zoning restricts upward supply expansion. You have much the same issue in Manhattan, which is an island.
How else do you explain housing costs being lower in Austin (available land, less restrictive zoning) than New York City despite Austin having a higher median income?
You're making the mistake of assuming that rents are dependent purely on renters' ability to pay them. Whereas the fact of the matter is that the market is driven largely by housing supply and demand, as it always has been. A $1,000 monthly check is unlikely to move the numbers much.
But it is already a fantasy for >99% of those trying. Competition is too tough and most people are absolutely unprepared and can't be prepared - it means competition with mega corporation and the insane amounts of data and brains they have to optimize themselves. Will be even more of a fantasy if new tens of millions will join.
But there will be less injection that now right, in case UBI is implemented? No "new" money will appear (unless you suggest printing more and more trillions). This is the same money taken away as taxes. Except now it goes to those in need, instead it will go to everyone: now almost all of that money is consumed and so is indeed a "cash injection", instead the portion of the money - that goes to those already doing OK - will be saved.
Providing a "cash injection" doesn't require the UBI. It only requires taxing the rich. But the rich - yes, they mostly CAN actually leave the country to escape taxation, and operate from elsewhere, they can move their assets - increasingly virtual such as intellectual properly - onto offshore entities too... So there's really no option of taxing the rich.
How, or have, you considered that if everyone gets an extra $1k/mo that a huge swath of Americans will just spend it every month? When they spend that money it does not disappear. Some goes to taxes and gets redistributed there. Some gets taken by the service providers (grocery stores, gas stations, cable/cell companies, etc) some gets vacuumed up into the murky world of private equity, some flows into the black market, etc, etc, etc. That money keeps flowing and keeps generating tax revenue. This is economic velocity.
The question I have is how have you examined this effect and found it to be unlikely to spur an increase in quality of life for tens of millions of Americans?
The pretty obvious solution would be for more nominal taxes to be collected. It would also replace a very large fraction of existing government spending. Or you might have a one-time election between receiving the UBI and receiving social security, and a lot of people in or near retirement would choose social security and then not have to be provided with a UBI, and everyone else wouldn't have to be provided with social security.
Doing the accounting in a naive way is also misleading with a UBI, because it's effectively a tax credit. If you paid $15,000 in taxes and received a $12,000 UBI, you're really in the same situation as if you paid $3000 in taxes and had no UBI. The fact that you're nominally paying $12,000 more in taxes doesn't actually affect you because you get all that back.
There are plenty of places in the US with rents in the $100s and you could start a business whether that business is a hotdog stand or a software business.
> Seriously there is NO WAY in the world an UBI will cover the rent - even the rent alone - in any place where it makes sense starting a business.
Wrong. UBI financed by monopoly taxes makes rents go rock bottom. High uncompeted markup prices - Rents - are by definition caused by some kind of monopoly situation, because they are not competed away. You need to tax monopolies and not call it tax but a 'privilege fee' and reinvest the money into infrastructure or resistribute as dividends - which is UBI basically.
There is NO WAY anything like UBI would ever work without curbing monopoly pricing because any money raised by income tax, VAT or any other means freely given to people will end up rising up rents and monopoly prices even higher.
But you need to destroy democracy in order to be able to do that? Isn't that a too high price to pay? Also it will mean leaving tens of millions of largely elderly or at least 55+ people, bankrupt and destitute, and having to deal with the problem of feeding like 50M+ elderly people, instead of the same amount of young people who now can't afford rents? Is that REALLY worth the trouble? See it's not some imaginary "world jewry" or someone like that who owns all the apartments, it's the same ordinary American people, just older ones. Why forcibly taking money from one large demographic to another - from one who can't really change things for themselves much anymore to those who can - by destroying democracy in the process - is supposed to change anything at all for the better? And how is it even basically 'fair'?
To me it feels both politically impossible, morally unjustifiable, and socially bullshit. "Get too many people very angry for no benefit at all".
No need for melodrama. People often sell a big house and buy a small house when they retire and then use the difference to live on, but reducing housing scarcity makes both costs go down. Which means the reduction in the difference (surplus) is less than the total reduction in the price of the housing, and is a net benefit to the country overall. Meanwhile housing costs have knock on effects for all other costs, so they go down too. Having lower costs is a major benefit for people on a fixed income.
Reducing housing costs helps the indigent elderly at least as much as it does the average person. Who it hurts is the affluent elderly who own a big mansion and would get whacked harder than usual by a reduction in its value, but I'm not sure why I'm supposed to have a lot of sympathy for rich people trying to profit from artificial scarcity.
I would imagine an UBI will be mostly used by people to exclude themselves from active workforce to "retire" in low-cost destinations. Because that will be the only thing it will really allow doing.
Say you impose a super huge 30% income tax (anything above that will cause a revolt in the middle classes, and mass exodus in upper classes), that will only give an equivalent of a minimum wage to everyone (ok 20% above national minimum wage but some states have it higher)... how far does that get you?