Comment by TheOtherHobbes | Hacker News Reader

Comment by TheOtherHobbes | Hacker News Reader

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UBI will be useless unless rent seeking is eliminated with it, because the price of any good or service that profits rent seekers will be inflated almost instantly to maintain differentials.

Income inequality is a problem of massively unequal political and economic power, and of insider knowledge and class-cultural arbitrage - not a problem of income.

If - hypothetically - all the jobs required to provide food, shelter, and other basics were taken over by robots, there would be no reason at all not to provide them for free, and give everyone the political and economic freedom to do whatever they wanted.

It's a fair bet that while most people would do nothing much of interest - including most of those who are currently rent seekers - there would still be enough competitive drive to inspire a decent chunk of the population to excel in art, music, science, math, and other productive activities.

That would be real freedom as a birthright - not as the freedom from economic slavery that can only be earned by contributing to that slavery, as now, but as a true inalienable right.

> UBI will be useless unless rent seeking is eliminated with it, because the price of any good or service that profits rent seekers will be inflated almost instantly to maintain differentials.

I've heard this concern before, but what's the assumption that is being made? That UBI will drive more people to cities and increase demand? That landlords would simply increase rent knowing renters have a larger income? That people's long term expectations of inflation changes?

> That landlords would simply increase rent knowing renters have a larger income?

This one seems a serious problem. Home sales too, since sellers know people could make larger mortgage payments.

Is there a good argument for why this will not inevitably transfer much of the money to landowners?

>>Is there a good argument for why this will not inevitably transfer much of the money to landowners?

I regularly rent out the guest bedroom in my house. When I do so, I do not run complex formulas to figure out what a particular tenant might be able to afford. I simply look at rents for similar units in the area, and bump it up or down slightly based on the various features and amenities the room has. I don't charge a corporate executive higher rent than I charge a college student. Their ability to pay is not relevant.

You might be thinking "okay, but what if everyone's income went up in an UBI scenario?" Honestly, unless literally all the landlords in a city came together and colluded, you wouldn't see much increase, because we would have the same level of competition we have today.

>Honestly, unless literally all the landlords in a city came together and colluded, you wouldn't see much increase.

The market is all the collusion necessary.

Say every landlord followed your approach, except a single one that raised the rent due to the new income.

> I simply look at rents for similar units in the area

Iterate that and the rents rise until they reach a new, higher global equilibrium.

> I simply look at rents for similar units in the area

? Do you think these rents are set by God or something? The fact that it's a dynamic system doesn't change the fact that the equilibrium (and thus prices) are set through supply and demand.

What about this type of scenario, is this something you could see playing out:

People receive UBI, more people are able to move out and buy/rent an apartment or house, landlords are getting more applicants and apartment buildings start filling up, some landlords increase price to compensate for increased demand, average rent for an area goes up, the rest of the landlords increase their prices to match the market

The term "rent seeking" as economists and the parent poster use it isn't about leases on apartments and offices per se, but rather capturing surplus- an example could be if you live in a house which requires leaves to be raked, your having more income might incentivize "big lawncare" to get laws passed saying you can only use a particular brand of rake in the city limits, one which can't be bought outright and has a monthly license fee attached.

The notion being put forward here is that the more money Joe Sixpack has, the more things will crop up to extract some.

That's been happening already across the board: medical costs, housing costs, etc. anywhere where demand is fairly inflexible.

because the price of any good or service that profits rent seekers will be inflated almost instantly to maintain differentials.

Which is why I'd prefer to see UBH (Universal Basic Housing).

Cool, Judge Dredd.

Universal Basic Housing just sounds like ghettos with extra steps.

So don't build ghettos. A modest proposal: make every builder donate a proportion of the flats/houses they build to local government, but decide which ones are to be donated by random lot after building work is complete.

> because the price of any good or service that profits rent seekers will be inflated almost instantly to maintain differentials.

Only if there is insufficient competition to keep prices down and the market is already broken, which is the case in some areas but not most. In the more notable cases like housing UBI still helps by freeing people to live anywhere instead of cities with plentiful jobs, and even that is largely an artificial problem in developed countries with birth rates below replacement levels.

I was worried I would read the entire thread without finding the only sound answer. Thanks for proving my worries unwarranted. UBI is a farce. Redistribution of basic commodities like housing and healthcare are the answer.

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