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Comment by willjp | Hacker News Reader

I'd be much happier if UBI proposals were higher. Living on ~900$/month nowadays would be difficult.

20 years ago I was able to split rent for a tiny concrete windowless-basement-bedroom for 450$/mo, trimmed my grocery/cleaning bill down to 100$/mo by eating nothing but rice, beans, and frozen vegetables, 120$/mo for a phone and internet (which I consider essential), and another ~80$/mo in bus tickets. That's ~750$/mo.

Nowadays, when two bedroom appartments in small remote cities are going for 1600$+, I'm guessing splitting rent is much closer to 800$. That doesn't leave enough money for food, transportation, and communication methods. Heaven forbid you get injured or sick.

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The solution to your housing costs isn't increased payments, but cheaper housing. Housing prices are spiraling out of control almost everywhere because we refuse to build more of it through asinine zoning restrictions.

High housing costs have such ripple effects on the cost of everything else that it's incredibly frustrating to see everything else but cheaper and more available housing be proposed as a means to help the less well off (This isn't a jab at you in particular).

I kind of agree with your idea that we should work to decrease housing prices, but the problems with housing are not as simple as remove zoning and building restrictions and watch prices fall. One example. Energy prices are the base input to everything including housing, so if you want to make housing cheaper then better energy policy might be a good start.

Energy is a large portion of the cost of aluminum ingots or tanker cars full of ammonia. It is not a large portion of the cost of constructing new housing. I wouldn't start with energy prices if I were trying to figure out how to make housing affordable. I'd try to contrast e.g. Tokyo, where housing is reasonably affordable, against the city of New York, where it is much less affordable. Japan doesn't have cheaper energy than the US.

It’s not just zoning. It’s things like urban growth boundaries, which arbitrarily contain available land and encourage more dense housing, both of which drive up prices. All so that we can “conserve” an extremely plentiful commodity: open land.

Also - giving people money is likely to increase the cost of housing.

You could give everyone $1 bajillion dollars a month. The cost of housing would go up until a lot of people are still homeless.

> The cost of housing would go up until a lot of people are still homeless

That’s true if building enough housing to meet demand continues to be illegal.

The effective purpose of a UBI (why the ruling class likes the idea) is to constrain risky tendencies of a highly financialized economy that depends on a large supply of dirt cheap labor without too much inflation.

With UBI, gainful employment will be an elite luxury only accessible to those with existing wealth. Everyone else will be a reserve army of cheap labor that serves to bare the weight of the financial ebbs and flows of the mighty dollar in the global market, similar to the function of America’s current lower class, but intensified. Rent prices in rural, small city, and slum neighborhoods will be saran wrapped to the UBI amount, and escaping those areas will be practically impossible because rents in the cities will be affordable only to the elite.

In other words, sure, you’re probably right.

> With UBI, gainful employment will be an elite luxury only accessible to those with existing wealth.

Gainful employment is when the product of your labor is worth (much) more than you are willing to sell your labor for. If you’re not rich and you want to become rich working for Google at $200K a year is clearly superior to a UBI of $40K a year. Even with an arithmetically impossible UBI[1] like that there are still many people who would like to be rich, but just middle class.

[1]US average household income per capita is under $60K.

Those people won’t have access to jobs at Google, partially because Google would be a much smaller company if we had UBI because the number of people with disposable income would be minuscule and the internet would be scummier than ever before it gets shut down, which would absolutely happen if we implemented UBI in the U.S. because you simply can’t have a 2-tier society with free discourse.

Realize the economic problems that UBI would address are caused by transitioning our economy from creating value to collecting rents over the past 40 years. Tell yourself whatever you need to sleep at night, but the fact that advertising does not create value for our society (or any society) is not a moral claim. It’s one of the cold realities that put us into this situation. Financialization has allowed us to deny the facts for a few decades and UBI will be the neoliberal New Deal, but without any of the good parts of the New Deal. It will effectively serve as a method of control. The contradictions of capitalism laid bare.

This is terrifying, and has a ring of truth to it. I still think it's better than the alternative though.

> we refuse to build more of it

We also refuse to move to cheaper places. I still think from time to time, "what's stopping 10k smart young people from just moving into empty land?"

In one word: Infrastructure. Roads and water and sewer and electrical lines are expensive.

The better question is: What's stopping those same 10k smart young people from moving to Detroit?

Land taxes

It's easy to be the ten-thousandth, it's hard to be the first.

I think Madison Avenue style advertising is far more effective than commonly given credit for. Even if you personally avoid the brain washing, it’s not just you, it’s your family, friends, partners etc. All encouraged to live a more expensive lifestyle.

Infrastructure, jobs, coordination, state and local regulations, capital. The list goes on.

Your comment is a particularly egregious example of, "I could do that in a weekend." Internet commenters tend to blithely assume hard things are easy.

I definitely couldnt do it in a weekend. But I have been wondering how new cities are born, like not a suburb beside an existing city, but the ones that are in the middle of "no where". And what would stop a few thousand people from having a mutual interest to start something in the middle of no where?

Most of the jobs could be remote save for the ones that support the citizens themselves.

maybe this would fail for the same reason those preplanned cities in china failed? IDK. I'm definitely not implying it's dead easy, just that maybe it's easier than fitting 1M more people in a city that is already dense and full of NIMBYs?

It would fail, or at least be hard, for the reasons I listed.

What if those 10k people put up capital kinda like buying a new build home?

Like what if we somehow sold 10 thousand condos at $100k each. If I didnt make a mistake thats about $1B of capital to prepare the place for them to live. If China can build a prefab hotel in 36 hours, I would think we could pull it off too...

There is no evidence that building more housing has ever reduced housing prices or that it will do so into the future.

I agree. To me it seems as though a small handful of corporations owns a large percentage of multi-tenant housing and an increasing percentage of single tenant houses and is able to set prices algorithmically and that other landlords price similarly.

A handful of corporation own most of the grocery stores, but grocery prices remain reasonable, nowhere close to as insanely priced as rent.

The difference is real competition: there's only so much land that exists, and localities only allow so much housing on that land. Demand goes way up, supply goes up only feebly, the result is predictable.

Rent is not ownership.

...okay?

This is the opposite of true. The evidence that building more housing decreases prices is overwhelming: https://www.lewis.ucla.edu/research/market-rate-development-...

> To be clear, this debate is not about whether new housing can reduce housing prices overall. At this point, that idea isn’t really in doubt. There’s good reason to believe that in regions with high housing demand, building more housing can help keep the prices of existing housing down. In their Supply Skepticism paper from 2018, Vicki Been, Ingrid Gould Ellen, and Katherine O’Regan offer an excellent introduction to the broader question of how market-rate development affects affordability. Citing numerous individual studies and reviews of dozens more, they conclude that “the preponderance of the evidence shows that restricting supply increases housing prices and that adding supply would help to make housing more affordable.”

Because of course it does. Demand doesn't exist in a vacuum, it's a number judged against supply.

If you want to see the real world impact, look at rents where the rules make it easy to build housing. For a city of its size and national importance, Tokyo has dirt cheap rent compared to the states: https://www.numbeo.com/cost-of-living/compare_cities.jsp?cou...

Where I live they have not been able to build new housing fast enough to keep up with rising population over the last thirty years. The prices increase directly proportional to the current velocity of new housing availability at any given moment. If they continue to build new housing at this rate my city will become one of the 10 largest US cities within the next 15 years and the value of my house will boom to more than 3x what I paid for it.

Why? Fixed assets exist outside the supply/demand cycle of high school economics. You can’t make more land but you can always build more houses irrespective of demand. Aside from conjecture and speculation there is no evidence (data) linking house price reduction (not rent) to new housing availability.

> Where I live they have not been able to build new housing fast enough to keep up with rising population over the last thirty years.

Yes, because rules in the US handicap new housing growth.

> The prices increase directly proportional to the current velocity of new housing availability at any given moment.

Yes, because they have the same cause: demand increasing.

Imagine that every car maker was heavily constrained in how many cars they could make. As demands for cars rise, they find every angle to try and produce more cars, but the price keeps going up. Did the new supply cause the price to rise? No, they just have the same cause.

There have been myriad studies on this, almost every economist finds that new housing in booming areas makes housing prices less bad than they would be otherwise.

> You can’t make more land but you can always build more houses irrespective of demand.

This isn't true. Zoning severely handicaps more housing in the places people want to live.

Well, except for Houston (sorta), and indeed, rent there seems substantially lower than other major cities in Texas like Dallas and Austin.

None of that is evidence of houses going down in price.

Yes, we have many studies for that.

> Tokyo has dirt cheap rent compared to the states

You can rent small two and a half tatami sized apartments in Tokyo that wouldn’t even be legal to let in most of the west. Is that what they mean by reducing zoning rules?

Also, by basically mandating that all housing be rebuilt every 20-30 years, Tokyo effectively prevents speculation on residential real estate (housing depreciates as it gets older, negating land appreciation to some extent).

I’m talking about comparing 1br’s to 1br’s.

Japan tearing down building after 20-30 years is, as far as I’ve seen, greatly exaggerated. You see apartment complexes all over the place obviously older than that.

A two and a half tatami is a one bedroom, just a very small one. Are you comparing square meter to square meter?

Also, https://www.rethinktokyo.com/news/2019/02/12/whats-lifespan-...

47 is the max, rebuilding is possible. Regardless, older structures are cheaper than newer ones. From:

https://thetokyofiles.wordpress.com/2016/02/25/in-japan-home...

> “half of all homes in Japan are demolished within 38 years — compared to 100 years in the U.S. There is virtually no market for pre-owned homes in Japan, and 60 percent of all homes were built after 1980. In Yoshida’s estimation, while land continues to hold value, physical homes become worthless within 30 years. Other studies have shown this to happen in as little as 15 years.”

I’m all for a similar culture in the USA, it would cut down on rampant and pointless residential real estate speculation.

Here is a nice video explaining housing affordability in Tokyo:

https://www.youtube.com/watch?v=iGbC5j4pG9w

Notes:

* No one thinks of residential housing as an investment, so there is no speculation.

* Building codes are such that residential can be built almost anywhere. Japan has zoning, it is just really simplified.

* There is no resistance to rebuilding, so it is done a lot (why houses last only 30 years, the market demands new housing).

* Housing can be built on really small lots, only 2 meters of clearance is required.

* A $300k low end house is around 6-700 SQF, which might not make sense from an American context.

That isn’t a solution either, because individuals and businesses with the money will simply snap-up the real estate.

Discouraging multi-ownership and preventing residential ownership by business mes needs to happen as well.

Discouraging investment in housing will have exactly the opposite effect that you intend.

Would you mind explaining?

Upfront investment by building-out to provide supply is the policy that we need.

Yet current policies favor rent-seeking and parking-funds in desirable areas, leading to properties that owned but actually vacant (e.g., most of London or Vancouver Island).

A larger secondary market leads to more capital being available in the primary market that directly funds new construction that adds housing stock and renovation that prevents its depreciation.

>>but actually vacant (e.g., most of London or Vancouver Island).

Most of London and Vancouver Island are not vacant.

> A larger secondary market leads to more capital being available in the primary market that directly funds new construction that adds housing stock and renovation that prevents its depreciation.

I don’t buy this. The speculators who make-up the secondary market are not the ones who make money by tearing down and building new properties.

There’s no value added to these speculators and is akin to domain squatting.

https://dailyhive.com/vancouver/empty-homes-vancouver-report

Vacancy is a problem in most areas of Vancouver.

London also had similar issues.

The higher the price, the more potential projects are cost-effective to move ahead on. The secondary market generating demand in the primary market is a universal property of all markets.

>>The speculators who make-up the secondary market are not the ones who make money by tearing down and building new properties.

The investors who tear down and build new properties are motivated entirely by the market price that a unit can fetch on the market, which is largely determined by the speculators in the secondary market.

>>Vacancy is a problem in most areas of Vancouver.

The article says the vacancy rate is 8.2% in Vancouver, which is a far cry from most houses.

> The investors who tear down and build new properties are motivated entirely by the market price that a unit can fetch on the market, which is largely determined by the speculators in the secondary market.

But how is this at all related to the secondary market speculators?

People who make a living by holding on to properties and flipping them on a price increase.

This only exacerbates the lack of supply.

>>But how is this at all related to the secondary market speculators?

Speculators inject capital into the real estate market. They often bring outside capital into it, and then keep it in the real estate market instead of taking it out. Housing prices are simply a matter of the interplay between the supply of capital interested in housing, and the supply of housing, i.e. supply and demand in housing, and more speculators pushes up the demand side of the equation, leading to higher prices.

In fact, that's what the critics of real estate speculation always point to as to why it should be discouraged: they push up prices (which is a bit simplistic: the increase in prices in multi-dwelling units is temporary as long as zoning doesn't prevent developers from building more dense developments. Only the price increase in single family homes is permanent).

What the critics miss is that rising prices is what funds supply expansion. Ceteris paribus, a market with more speculators will have higher SFH prices, more units, and lower rental rates, and rent is the true cost of housing (the purchase price is the cost of investing in housing).

Injecting capital doesn’t magically increase the supply of real estate.

If my goal is to hold on to a single family house and sell it for a profit later as is or with just some touch-ups, it’s still a single family residence. The speculation just increased the cost of the land.

If my goal is to tear down the single family home and replace it with a two-family home or a small apartment; that increases the supply.

Both involve speculators, but only the latter increases the supply. Why shouldn’t policy discourage the former—a market inefficiency, but a very sane local maxima—and encourage the latter?

>>Injecting capital doesn’t magically increase the supply of real estate.

It's not magic. It reliably increases supply by raising the return on investment from building new units, and thus increasing the number of potential projects which find investors.

>>Both involve speculators, but only the latter increases the supply. Why shouldn’t policy discourage the former—a market inefficiency, but a very sane local maxima—and encourage the latter?

I fully support encouraging the latter and discouraging the former. I would support utilizing a land tax to discourage, and eminent domain to outright prevent, the former.

Then you’re taking the same position I am.

Put in anti-vacancy laws with a sufficiently punitive penalty. Then all that property goes on the market regardless of who snapped it up.

Are anti-vacancy laws easy to enforce? If I'm out of the country for a year, but I want to retain my rental because of the location am I out of luck?

I feel that would cause more problems than it would solve.

That's a good question about the enforcement. You'd really only care about the most trafficked dense areas to live in, so gated communities should be less of an issue unless the whole city is made of urban sprawl neighborhoods. If it turns out to be hard to catch, the penalty should take into account the likelihood of getting caught, such that the expected reward from cheating is still negative.

If you're out of the country for an entire year and you want to keep your house empty during an housing crisis, you seem like exactly the kind of person this tax should be levied on. Either rent your home to someone else for the year, or pay the penalty for contributing to the housing crisis.

> If it turns out to be hard to catch, the penalty should take into account the likelihood of getting caught, such that the expected reward from cheating is still negative.

That already puts a red flag. How do parties prove/disprove vacancy?

Far better to discourage (not forbid, mind you) multi-ownership in the first place.

> If you're out of the country for an entire year and you want to keep your house empty during an housing crisis, you seem like exactly the kind of person this tax should be levied on. Either rent your home to someone else for the year, or pay the penalty for contributing to the housing crisis.

As long as it’s a penalty and not a forced eviction. If I’m taking a one-year sabbatical and then coming back it’s a bit much.

There’s a perverse set of incentives for a city/town to try and mark someone as “not residing”, which makes me question this vacancy approach even further.

It’s just ripe for abuse.

There are plenty of places in the USA with loose zoning rules, the problem is not many want to live in those places for some reasons. Why are strong job markets correlated with stricter zoning rules?

$900/mo. is near the high-end of the feasible UBI range. If you want to live on your UBI, it's pretty much expected that you'd move to the lowest-cost feasible area, and content yourself with a somewhat dignified subsistence. UBI has by far the most potential as a supplemental income to low-skilled, entry-level or low-intensity work. The key aim is to make it seamless for people to enter or leave the job market as they choose, which removes the threat of exploitive "wage slavery".

If you doubled federal individual income taxes for everyone in the US, you could pay each adult US citizen around $750/mo in UBI with that increase.

If you doubled ALL federal income taxes in the US, you could pay each adult US citizen ~$1500/mo in UBI.

And of course, the higher you set UBI, the less point there is to work like a chump and pay 2x current tax rates so other people don’t have to, so fewer people would work (which is one of the promises of promoters of UBI), meaning taxes would have more than double to make the payments.

The math is daunting because the number of people is so high.

I wonder how many businesses could survive doubling the federal income tax?

Probably a higher percentage than middle and upper middle class taxpayers could sustain doubling their federal taxes.

Given that businesses are taxed on profit rather than gross, probably nearly all of them. But most would move their headquarters to other countries where they can simply dodge those taxes (like many have already).

Likely not the very business owners that would benefit from UBI the most.

Thereby likely forcing those business owners to rely on UBI entirely for income, thus removing their upward mobility.

"Doubling income taxes" sounds scary, but a large portion of the working population would roughy break even as the increase in taxes would simply be offset by the UBI they receive.

A negative income tax is probably the best way to implement a UBI as it would require only distributing money to those that are below the income threshold, and it would prevent political opponents from trotting out big scary numbers on how much it would cost, while ignoring the necessary accounting required to truly estimate the financial impacts.

there is no feasibility limit for UBI. The limit is inflation and that is decided by the component costs of products.

For example if you put $30T into UBI, and everyone saved it, you wouldn't have any inflation.

Inflation isn't a limit on UBI either...

Look, UBI isn't for living comfortably. UBI is just a knob for producing more negotiating power for laborers. It's the means to quit a job and look for a new one. It's not about living a happy work free life. That doesn't make any sense.

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