The one question about UBI I haven't seen a satisfactory answer for is what's stopping landlords from raising rents to match the UBI? If everyone suddenly has an extra $1000/month, what's stopping my landlord (together with every other landlord in my city) from raising my rent next year by $1000/month? It's very plausible this would not show up in small scale pilots where only a small percent of a population received income, but would show up at scale when everyone does.
Unless UBI comes with a massive overhaul of zoning restrictions and a shift of the housing supply, I don't see how this doesn't end up as an indirect way of increasing income inequality by routing the UBI from poorer tenants to wealthier landlords.
Unless we decide to print money, not everybody will end up with an extra $1000 / month. The money that would be paid out in UBI will either come from taxes or from efficiencies gained by dropping the patchwork of benefits programs.
My expectation is that if I receive $12k / year in UBI, my tax burden will likely also increase by about $12k / year - maybe less, probably more. I don't think UBI would have any significant effect on me unless I lose by job (or decide to quit, which is an advantage of UBI).
I think the scenario you describe might affect poorer people, though. It really depends on how much the other social programs are walked back under UBI. If a poor family gains $1k in UBI but also loses $1k in other welfare programs, then landlords will likely not be able to raise rent without also losing tenants.
> The one question about UBI I haven't seen a satisfactory answer for is what's stopping landlords from raising rents to match the UBI?
Collectively? Anti-trust law. Individually? Competition among landlords. Also, for some tenants in many places, rent control.
> If everyone suddenly has an extra $1000/month,
Everyone doesn’t, unless the government is just printing money for UBI and also not replacing other programs. If it's borrowing, that money came form somewhere. If it's taxing, it came from somewhere, too. And UBI proposals tend to involve replacing, either in part (for some transitional models) or entirely means-tested welfare, which also means a bunch of money came from somewhere (from recipients and, and this is a major motivation for UBI, from the administrative infrastructure that means-tested programs have.) Compared to before the policy, the result is nothing like “everyone has +$UBI/month”.
What’s stopping anyone, anywhere from raising their prices by some arbitrary amount? There are lots of examples of inelastic goods that most people would continue to buy if the prices went up. Why aren’t the prices on those things higher? Generally the answer is competition, and there is still competition among landlords even if everyone suddenly has more disposable income.
There are plenty of cities with plenty of housing going vacant. In Baltimore, for example, it is a city designed for a million people with about 600k in residence. Houses go vacant, neighborhoods loose value, and the city dies. Why?
A large part of it is the lack of financial resources that the residents have. The lack of financial resources is directly related to redlining and the fact that Baltimore is a majority black city. But whatever the reason, money is what is required.
At $1000 a month, someone could take that UBI and spend half of it on a loan of $100k (30 years). That's a lot of capital and it could provide an individual with a home in Baltimore. A family would have even more capital to work with. This gives a great deal of flexibility and a lot of resources in neighborhoods without any. Further development would take place, giving these neighborhoods the kinds of businesses that wealthy white neighborhoods take for granted (such as grocery stores and banks).
What the UBI does is not just provide some financial amount right now, but a guarantee of future payments regardless. The risk of default would be far, far less and the promise of sustained financial reward for investment in these areas, without booting out the current residents, would be far greater.
If one also couples the UBI payments with a more aggressive tax on the wealthy, particularly on the ownership of multiple residential properties, then one could really damp down prices. From what I have read, several cities with massive housing price increases such as Vancouver and NYC have vast amounts of essentially vacant places because wealth has flowed into these places as wealth investment instead of living investment. But that policy is a separate one to consider, to be sure.
This country has plenty of resources. If we give people a minimum amount of money, those resources can start to be divided up much more equitably (peacefully, profitably) without the overt (and corrupting) hand of government deciding who gets exactly what.
Supply and demand. Prices would likely go up, and you're right to point out that a chunk of it would go to landlords - but unless there is collusion, these landlords are competing with each other to find the fair price in the market.
UBI is generally trickle-up economics, and I think that's a good thing. That extra money is most important to the least wealthy people, and they will naturally spend it in their communities.
It encourages people to get out of the damn cities!
There's a reason why it costs a king's ransom to rent a hovel in a city: finite space. Nothing you do -- not density, not UBI, not anything -- can create unlimited space out of thin air. Fortunately, we've got plenty of space, just not in urban centers.
We need to learn how to use space rather than let it use us.
That's technically true, but horizontal space can be parceled out somewhat independently, vertical space can't, and that's a big deal. You're right that it's a political stumbling block rather than a physical stumbling block, but city housing is expensive everywhere, so it seems appropriate to treat it as an empirical law rather than something that can just be hand-waived away.
I'd support efforts to build vertically in a heartbeat, I just don't have high hopes for them.
Cities are economically efficient. If your praise for UBI is that it reduces economic efficiency (reducing your ability to pay for UBI) then I think you're going off course.
No, paying poor people to compete with each other for city space is not efficient. In terms of efficiency, it's about on par with stacking cash in a pile and burning it.
City space is finite. We ration it for a reason. We could ration it differently, but we'd still have to ration it. Increasing density doesn't make it affordable to pack everyone in a single place (see: NY). Pretending the problem doesn't exist and throwing money at housing projects doesn't make it affordable to pack everyone in a single place (see: SF). The only way to make progress on the actual problem is to figure out how to deal better with being spread out.
Increasing density helps a lot. The US mostly has lost the skills and will to do density. New York mostly stopped building enough to keep up with demand.
Look at Asia to see how to tackle these problems better. Eg Singapore.
Yes, it's not completely clear whether they'll have the political stomach to actually go through with letting the leases lapse at the end of their life.
It would probably have been better to use Land Value Taxes instead of relying on limited leases.
Great question. This is THE show stopper for UBI as presented by any proponent today.
The only way to implement it is by stopping the runaway rent inflation by implementing a counter-force to rent price increases. One such technique is battle tested Land Value Tax which was responsible for massive successes of Asian Tiger economies such as Singapore.
This problem has been understood more than 100 years ago by then popular economics movement following economist Henry George who almost made it to mayor of New York and whose book (Progress and Poverty) coined the term Progressives (in the original anti-trust meaning).
They realized that after you curb the ever inflating rent prices, people can finally be freed up of all excess income being eaten away by land monopoly (city landlords) and other monopoly businesses of that era.
Once you have the money necessary to fund UBI through Land Value Tax for example (which is able to raise more than current tax system with ZERO negative impact to the economy), you then realize that the main problem you were designing UBI for (massive rents eating away your paycheck) went away. So as a government you then reinvest the so to be UBI money into eg. infrastructure, such as city development, roads and networks so that private business can thrive on top of that. Congrats you've now become the economy #1 in the world (this is how asian tigers got so successful).
The only country successfully implementing this at scale today seems to be China, although more so for their expansion in Africa than domestically
(eg. acquiring prime city land by helping constructing subway systems in key metro areas).
An optimist would predict that some people will spend the extra $$$ on a car and a move to the suburbs; others will choose not to work at all, moving to cheap areas to live frugally; and others will find house building much more profitable as rents rise, motivating them to build more.
A pragmatist would say you're completely right, based on my country's many failed attempts to lower house prices by handing out money to house buyers.
Not just rent either. Prices will rise across the board. The thing no one ever seems to mention when talking about wealth redistribution in purely financial terms is that there isn’t some untapped reserve of housing, groceries, transportation, or any other good that’s just waiting for more money to buy it. If we give people more money to buy these things, it might spur more production for some things that have an elastic supply, but it’s more likely to inflate prices. Billionaires don’t use their wealth (generally) to consume millions of times more bread than the average low-income person.
If you give more people money to buy things, it’s more likely to spur production than raise prices in most cases. If there’s more demand for groceries, it will probably be met with more supply rather than higher prices.
That assumes no supply-side restrictions. With housing in big cities it's often supply-side restrictions that cause the rise, like zoning.
For instance: affordable housing. If there were fewer zoning restrictions on micro-studios, housing developers might be able to pack more units in to get the same amount of profit per sq-ft. Instead zoning means that you get the most $ per sq-ft building luxury apartments.
One thing UBI has over housing vouchers is if it's not tied to location people can live where it's cheaper.
What currently stops landlords from raising rents such that no renter has any disposable income? Surely my landlord isn’t simply convinced that I am paying them every cent that I could possibly afford to pay them.
As much as it has been tortured and mutated there are still market forces driving things. Supply of housing stock, supply of renters, their ability to pay at all levels of the economy from jumbo mortgages down to section 8 housing are all factors driving the marketplace.
Unless UBI comes with a massive overhaul of zoning restrictions and a shift of the housing supply, I don't see how this doesn't end up as an indirect way of increasing income inequality by routing the UBI from poorer tenants to wealthier landlords.