Comment by AnthonyMouse | Hacker News Reader

Comment by AnthonyMouse | Hacker News Reader

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> 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.

> You can get a one bedroom in Austin for less than $800/month

... because there is currently no program in Austin whereby residents each get $1,000 of free money month.

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.

Perhaps the reason is not obvious because of the scale, so lets exaggerate the numbers to make it more obvious:

If everyone in the US was given $1 million per month, do you think that rent in Austin would go up in absolute terms?

If yes, by what mechanism can you imagine this effect is caused?

If no, I don’t know what to say.

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?

> 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.

Rent prices are still governed by supply and demand (modulo some rent control), not by how much money the tenants have.

Supply and demand happens on both sides of the equation; when it supply increases on the money side, we call it inflation.

> 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?

how much tenants can be bled for before they give up and leave

That's demand.

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.

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