If everyone gets a basic level of income no matter what, won't the base level just be pushed up higher? So instead of a flat costing for instance $500 a month, it will cost $1000 month because everyone can afford the $500 flat.
I can't see a scenario where a government doesn't have to increase the UBI every year.
In this scenario, presumably all businesses raise their prices to the total UBI amount. But now people on UBI who could previously afford multiple goods and services no longer can, because each business demands the entirety of their UBI, participation in the economy is infeasible. Therefore, most of those businesses go under, being unable to actually sell anything and make a profit (bear in mind that this inflation also applies to business owners, and any costs of doing business as well.)
This won't happen for the reason renters don't ask for your income and simply demand 100% of your income as rent nowadays - economics isn't that simple. No one is going to buy a flat if they can't also afford utilities and food while living there.
I think OP has a valid point; similar things happened after the influx of high income tech workers in SF, or for instance in some European countries after governments gave tax advantages to house owners.
Higher taxes mean that it's harder for rich people to consume a lot. So they would no longer be able to afford a mansion, and the building manager would convert it into 10 apartments and one luxury apartment. The rich person would still be able to afford the luxury apartment, but there would also be 10 more "normal" units available to people relying on basic income.
The problem is that rich people don't consume in proportion to their wealth... most is usually invested. So high taxes don't necessarily free up consumable resources very effectively, and could have consequences for future tax revenue.
Money that is invested doesn't vanish, the companies they invest in use that money to produce more goods. Assuming the cost of labor goes up with UBI, less of the profit will go to the investors and more will go to the employees, effectively taxing their investments.
Say I earn nothing, then a UBI of $100/month comes in; I have increased my income by an infinite percentage.
Say I earn $10,000 and the same UBI comes in, I have increased my income by 1%.
This results in a general flattening of the income v. population percentile curve, effectively flatting out income differentials and promoting equality.
Things do go haywire if the governing thought is "everyone should get enough money to buy an X" in some scenario where there are Y people and (Y-1) Xs floating around. It doesn't matter how much money people have if there are not enough goods.
If some people can live with $1,500/month, how come other receive so much and for what?
I guess it's related to "capitalism", "liberatism" or whatever. But please can someone explain to me like I'm five ?
Some people might be happy living a simple life, some may want the fancy house and car, or want to travel whenever they can.
Of course, plenty of people get money in ways that doesn't align with this ideal, but as an entrepreneur, that's the way I think about things and I have no problem with receiving $1m a month if I do so by saving others money and/or providing them with goods or services that they choose to purchase and that makes them happy.
Those who have a monthly mortgage payment of $9000. Substract $500 (or more if the government doesn't help you with their costs) for each child in your household.
But there are some items that are in oversupply that would always be affordable so giving someone money to buy it will probably help. I can only think of virtual goods as goods that are always in oversupply. A place to live is not one of those items.
The biggest problem I can see is housing, if housing supply is constrained then I suspect any UBI will just end up in the pockets of landlords. Perhaps universal housing would be a better idea.
People bitch about farmer subsidies but without them, farming would be a much more volatile business and farmers would be much more unlikely to be in the business. Thus cutting supply and making food much more expensive.
I wouldn't classify it as being naturally oversupplied. It's a result of the way governments manage the food production.
I see, that the trend to increased rent prices balancing out UBI would apply to in demand regions, but not at all in areas that would otherwise go unused. Most countries do have an extreme oversupply of living space, even before a population decline.
The places with highly desirable real estate and high prices (e.g. SF and Manhattan) are already unaffordable to people making less than $80,000. So UBI would not increase the ability for residents to pay rent in those areas. Rather, it might actually decrease their net income, so by GP's argument it might lower rents in those areas. But in small towns (like City You've Never Heard Of, WV) with a low median income, UBI would increase net income. So it might increase rents there except those small towns are already emptying out as people leave to seek high-paying jobs in big cities, as you said.
So I think UBI would lead to rental/COL costs homogenizing somewhat rather than simply going up. It seems like this could solve several problems at once.
So if you raise loan allotments and grants more people are now eligible to go to a very restricted and finite pool of schools, especially "top" ones, the first response will be a price rise because the supply of admissions into desired schools doesn't go up at all.
What should happen in a naive sense is that with more money available for quality education top schools would expand their enrollment and more top schools would emerge, but respectively for the former there is a strong NIMBYism in making a school less "exclusive" and for the later go ahead and try to found a new Ivy League University in 2019.
With UBI the market for most of the goods a UBI is meant for, in particular food, power, and amenities are all much more responsive markets. Prices go up for a moment but higher prices means more profits per unit which attracts competition and scaling up production to meet increased demand.
The exception of course is housing because the housing market is anything but a free one, especially in the US. But in the same way addressing the university "gatekeeping" epidemic of prestige and exclusivity cannot be solved by jamming money into those without access you similarly cannot just dump money on the poor and expect housing to arise without fixing why the economy is jammed when it comes to meeting demand for housing.
UBI isn't a panacea to decoupled problems in the economy. It only works for goods actually operating in a free market where the increased demand can attract investment and growth to meet it. A lot of things, including medicine, housing, infrastructure, and education do not operate in a free market and thus adding or subtracting money from any given group to try to get it for them isn't going to work. But it can work for things like furniture, clothing, etc.