Comment by v64 | Hacker News Reader

Comment by v64 | Hacker News Reader

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> A person that couldn't afford a car can now. I person with a $1k beater car can now buy a $5k car.

Wouldn't car dealers raise their prices some value up to $1k because they know anyone coming in that month to buy a car also just received a $1k check from the government?

> Someone that was living paycheck to paycheck can now take a breath, buy a TV and a Netflix subscription.

Netflix may raise their prices knowing everyone has a little extra cash to spend, and that people would rather pay a dollar or two more than cancel.

If your streaming subscriptions, phone bill, and everything else goes up incrementally because companies begin to factor UBI income into their pricing, then without making any lifestyle changes, you'll see that overtime you're spending an extra $1k a month due to higher prices (of course it won't work out exactly like that, but the point is that some portion of your $1k UBI will go toward paying for things you were already buying, but that are now more expensive as a result of UBI-aware pricing.)

If you believe that companies won't act that way or that other market forces (such as increased competition) will renormalize prices, I can see the argument, but I don't buy it personally.

> Wouldn't car dealers raise their prices some value up to $1k because they know anyone coming in that month to buy a car also just received a $1k check from the government?

There is still competition between car dealers, so I doubt this would happen.

It would absolutely happen. When I was in the military, the town I lived in had to pass laws preventing landlords from changing your rent based on your rank because everyone's pay information was public. It's naive to think dealerships would try to undercut each other instead of colluding to all get more money.

Charging rent based on rank would be a form of discrimination... also this is anti-competitive behavior. It is pretty well understood that regulation should exist. It is just a question of how much and how to regulate.

In America, this is the problem that has to be addressed before we can consider rolling out projects like UBI. I agree with you that regulations have to exist for this to work, and we simply don't have the regulations in place right now to enable it widely.

I was suggesting that regulations have to exist in general. Over the entire market. But what you said just flat out confuses me. That we shouldn't implement something because we currently don't have regulations for it? Why would we? We haven't implemented it. I mean with that kind of attitude we can't get anything done.

Do I expect hiccups and bumps in the road? Yeah, why wouldn't I? Humans aren't perfect. Never have been, never will be. But just because there are speedbumps in my neighborhood doesn't mean I should never go to the store. I still need to eat at the end of the day.

> That we shouldn't implement something because we currently don't have regulations for it? Why would we? We haven't implemented it. I mean with that kind of attitude we can't get anything done.

I think before implementing UBI, we have to address the broader issue of anticompetitive behavior in American business, due largely to decades of ill-advised deregulation, coupled with regulatory bodies who refuse to prevent anticompetitive mergers. Once we have undone the damage of deregulation, then I believe it's prudent to start putting UBI proposals on the table, but not before. Otherwise we risk making the situation worse for consumers and better for rent seekers.

I mentioned something similar in another comment. But I'm confused why everything is becoming an "or" conversation. We're a pretty rich nation, we can have more than one cake. There's lots of talk about regulation, we don't have to focus on only one topic at a time.

I agree with you generally, but believe this is a case where the two events have to occur one after the other.

Putting UBI on the table today without already having a reformed regulatory framework in place from day one will result in a failed project, IMO. Opponents of UBI will use this to say that UBI is broken, instead of pointing to the real problem, that regulation is broken.

Colluding to prevent competition is and should be illegal in a market economy. We can't say we can't implement a viable and beneficial social policy because people will break the law. We should enact the policy and ensure the culture, norms and laws are in place to make it effective.

I disagree. Policy should be pragmatic. As an extreme example, self driving cars shouldn't ignore the possibility of jaywalking.

I don't think there would be this sudden collusion at such a large scale though. Would be pretty obvious and begging for a crackdown IMO.

> Wouldn't car dealers raise their prices some value up to $1k because they know anyone coming in that month to buy a car also just received a $1k check from the government?

Why would they. They just got more customers. They already have a surplus of supply. In fact, you could make the argument that they could reduce car prices because with more customers you can operate on smaller margins. This is literally operating at scale. But it is hard to say, I'm just pointing out that the exact opposite could happen.

> Netflix may raise their prices knowing everyone has a little extra cash to spend, and that people would rather pay a dollar or two more than cancel.

Or look at Netflix's strategy. It is to corner the market. The classic Silicon Valley strategy. Corner the market, hemorrhage money, and then make a profit. More customers works into their plan perfectly without raising prices. In fact, now they have more competition. If every streaming service raises prices then people will have less of them and pirate more (this is already starting to happen). Even a lot of companies outside SV run a loss in the beginning, until they reach scale.

TLDR: More customers doesn't mean prices go up. Frequently it means the opposite. Scale.

For people who can afford cars today -- Why wouldn't they?

I'm not convinced economy of scale applies the same way in this case. Cars (and mattresses, etc) are large and infrequent purchases dominated by preference. Dealerships make most of their money through sketchy financing and tricks.

There's a large class of financially illiterate people who routinely make massive mistakes like monthly income spend planning. Given an extra thousand per month, two hundred more on a car is both feasible and justifiable. Lifestyle creep.

I would agree if the topic was commodities like eggs or rice -- sure, I purchase by efficiency. And I'm not sure about the SV strat and dealerships. It could work in theory, but as of today dealerships are basically fungible and signal the same way as each other. I have no idea how a dealership could signal their lower marginal costs, especially survive in an industry with insane scaling costs.

Because you're only applying economy of scale to a single market. What I tried to illustrate is that different classes would spend the money differently. So it isn't just everyone buying cars. Come on, that's idiotic and unreasonable. But what I'm saying is that new people are entering MANY markets. Not a single one. That there are so many markets and that we are no where near full market capture (this is the important part) that thinking just rent would go up is also an unreasonable assumption.

They would raise prices because their costs just went up, with a huge emphasis on rent.

Also, this has nothing to do with operating at scale

How did their costs go up?

> They just got more customers. They already have a surplus of supply.

Um, wouldn't that be increased demand? More customers with more money. That's the definition of more demand.

Economics 100 forecasts a price increase under those circumstances.

I too think naive models are the most accurate. Linear fits for everything.

But seriously, no. I literally gave you examples of this strategy happening. Here's some more companies doing it: Venmo, Move Pass, YouTube, Google, Amazon (store), Facebook, Robinhood, Vanguard, need I continue?

Simple models are great to get the basics, but if they worked for most things in the world everything would have a O1 solution. Frankly the world is more complex and can't be explained in a 10 minute lecture. That's why we have experts in subjects and why basic knowledge is drastically different than expertise knowledge.

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