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Comment by ethanbond | Hacker News Reader

Why do you think SF housing prices have gone up x% over the last 20 years?

Are the buildings x% better to live in?

Are the landlords providing x% better services?

No. The people who work there are producing x% more capital, therefore landlords take that x% and call it “cost of living.” This is not a new phenomenon in any regard, and UBI proponents must answer for it.

If their solution is rent control, then rent control is a solution even without UBI. Which of course it’s not a real solution, because then you’re distorting the price of housing and not going to get your construction/maintenance needs met.

LVT is a tax scheme that lets the market set prices for what it’s worth to live in an area (land rent/ground rent), then recoups that as a tax upon the people who claim special privilege to decide what to do with that land.

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I guess I'm not following your counter argument. The reason SF housing prices have gone up so much over he last 20 years is because people need to live there to get the job they want. If you can live anywhere...wouldn't that mean only the people who need to life in SF to do their work would live there? People who don't need the service job money would just move out. I'm just missing the issue here. When you decouple housing from working, the equilibrium would simply move out; you would no longer have a force keeping people in.

The claim is that UBI eliminates people’s need for jobs or cities’ need for service workers?

“UBI lets all the poor people leave” is not convincing at all.

I wrote a big long article for you, but realized you’d counter with the idea that landlords will collectively decide to hike rents no matter what.

So, the simple argument that UBI will not increase minimum rents by 2k a month overnight with no improvement in living conditions: landlords will have to compete to get the UBI out of individuals hands. Right now, the lowest income housing isn’t in competition for individuals, it’s competing for government approval and integration. If everyone individually has 2k a month to spend, they have the luxury of shopping around.

>“UBI lets all the poor people leave” is not convincing at all.

The value proposition for service workers in high-COL cities like SF is probably already bad. How would UBI make it worse? At least it'd be easier to move away from those areas. Maybe cities would have to pay serivce workers more to make sure they stay.

Straightforward answer: It would make the value prop worse because the prices would go up.

Companies can go ahead and pay more to keep them. You know what happens then? Prices go up more.

Where is all this capital flowing to? Landlords. Who didn’t pay for UBI, didn’t build the infrastructure, didn’t employ those people.

I can't imagine rent prices in SF are determined by service worker wages at all at the moment.

Prices would go up for everyone, making the value prop worse for everyone.

Rents are high in SF because there is extremely high demand for those apartments at high prices, because they allow access to high incomes. The value of living in SF for a random serivce worker is not increased by them getting a $2k UBI cheque, it is decreased. For the tech workers driving the demand, $2k a month is not going to do much to change the value they assign to housing in SF either way. So I do not see how the UBI cheques would increase demand, and therefore rent, for housing in SF.

> UBI eliminates people’s need for a job.

Yes, see retired social security recipients as an example. But you won’t find these folk renting in SF on a social security check.

SF’s desire for (inexpensive) service workers is a separate matter.

"therefore landlords take that x% and call it cost of living" is even less convincing

Phrased another way: High productivity areas are high rent areas.

Do you dispute that?

If disagree with it. High income areas are high rent areas. Is a coal mine in West Virginia really "less productive" than a tech firm in SanFran?

Yes, in the economic sense of productivity, it is. Your high income = high rent is the same statement as what I’m saying.

The mechanisms are the same, though. Amazon putting HQ2 in a city causes rent to go up (higher productivity).

A coal mine developing a new, more efficient train to move coal around will also cause rent to go up (higher productivity).

1. You didn't provide any actual evidence or deeper claims than (putting something in parenthesis). I don't really believe the coal mine claim, as in reality we don't see that happening. Mining towns are still among the cheapest and poorest towns in America.

2. That's a really naive sense of economic productivity. Here is a thought experiment.

A) Let's shut down all of Amazon HQ1.

B) Let's shut down the dams that provide 86% of Seattle greater area's electricity.

Which one of these entities is ACTUALLY responsible for that "productivity" then? And I bet you rents in Seattle without electricity would drop far greater proportionally than they do out by the dams. Rent follows incomes, not productivity.

There is no deeper claim being made. We are saying the same thing. You can call it income if you'd like. A person's wages are some portion of their productivity. The distinction is irrelevant for this point.

The lack of offer to rent areas are high rent areas

You don’t think it’s the high demand for housing in SF, combined with limited supply to meet that demand, that allows landlords to raise prices?

I suspect you’re used to thinking of an information economy where supply is effectively unlimited and “best services command top dollar” is the principal factor in pricing.

Supply is not just limited, it is fixed. When you pay rent you are making two distinct payments wrapped up in one. First is for the actual accommodation/building/apartment and it’s maintenance. The second is for the mere footprint of the building. Sometimes these two payments actually go to two different people.

There is a problem with limited supply of units, yes, but in reality the majority of cost of living comes from the second type of payment: the fee for the ground rent. The ground is in fixed supply.

With perfect development policy, prices would still go up, ground rent would continue to be seized by people who had nothing to do with its generated value.

The schools, employers, and natural appeal of SF makes its ground rent high. Landlords did none of that.

>Why do you think SF housing prices have gone up x% over the last 20 years?

Draconian zoning laws dramatically restricting supply?

I love idiots screeching about big tech creating to much demand. Seriously? Too much demand is a bad thing? Hardly! How about reversing the crap zoning laws and NIMBY attitudes so supply can rise up to meet demand?

The SF housing crises was caused by a bunch of selfish people declaring through policy (zoning laws) that they have theirs and don't want where they are to change to accommodate others.

And this is supposed to be an enlightened leftist utopia? Talk is cheap until it can affect you personally is the real lesson of San Fransisco housing politics - playing out rather dramatically. Blaming landlords is laughable. San Fransisco has an embarrassment of jobs brought by the high tech companies in the bay area and instead of embracing them (by letting more housing be constructed) they resent them and blame everyone but the real root cause - severely restricted supply.

Rents do not eat up all income increases. Otherwise rents would be 90+% of incomes and all income increases (minimum wage increases, widespread pay rises, social security payments, etc etc) would be pointless.

Do we know that those things aren’t pointless (more specifically, temporary gains)?

For many people, rent + other compulsory costs do exceed or exactly meet income. That’s precisely the problem.

Yes. We know from eg the Nordic countries that bulk redistribution works.

You mean the ones with high LVT on natural resources like oil?

The Nordic countries do not fund their welfare states from resources, they fund it from general taxation.

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