1) UBI is not UBI unless everyone gets it.
2) Any income surplus generated by UBI is rapidly consumed by middle people and rent-seekers. That’s how we get inflation.
2) Any income surplus generated by UBI is rapidly consumed by middle people and rent-seekers. That’s how we get inflation.
On #2 I think your claim needs evidence or support, I doubt that would be true for the most part (maybe to some extent).
Typical UBI proposals are funded, e.g., by additional progressive taxes, and so no actual income surplus is generated (in a first-order analysis), income is redistributed, compressing distribution.
At which point the proposal becomes a welfare system that pointlessly disburses and claws-back cash.
(1) Eliminates multiple sets of inefficient benefits/eligibility bureaucracy that duplicates functionality already performed as part of taxing authority.
(2) Eliminates a counterproductive incentives associated with typical means-tested benefit eligibility, which has clawbacks at low income levels and rapid marginal rate (sometimes exceeding 100% with marginal income when tallied across all means-tested programs; this effect creates a barrier to progress beyond a low income level. (While progressive income taxes may be raised from previous levels to fund it, when viewed as clawbacks these changes typically kick in at much higher income levels and lower marginal rates than typical means-tested benefit clawback.)
Your second point acknowledges that taxing away UBI through progressive tax rates is a clawback. As I read it, your idea is that the increased marginal taxation due to the clawback will occur at higher income levels than exist with current programs. Why not just change the existing tax rates instead of sending out cash and taxing it back?
The most recent that springs to mind is the elimination of most of the conscription-related bureaucracy post-Vietnam.
> Your second point acknowledges that taxing away UBI through progressive tax rates is a clawback. As I read it, your idea is that the increased marginal taxation due to the clawback will occur at higher income levels than exist with current programs. Why not just change the existing tax rates instead of sending out cash and taxing it back?
A baseline tax credit plus adjustments to existing rates is widely recognized as one mechanism for implementing a UBI, but even the there is often a desire to have an estimated advance mechanism, to avoid a delay of potentially more than a year from when people enter the UBI-covered population and when they start benfiting from it.
I was just thinking of that as an entrenched bureaucracy example but decided to focus things on an entitlement program. Despite having zero purpose for 49 years, Selective Service still manages to spend $26m/year [0].
> often a desire to have an estimated advance mechanism, to avoid a delay of potentially more than a year
The model for advance payments on an upcoming year's tax credits already exists [1]. I can see how this doesn't address downward change in income, but also don't see how that couldn't be added.
0. https://www.sss.gov/wp-content/uploads/2022/03/Annual-Report...
1. https://www.irs.gov/credits-deductions/advance-child-tax-cre...
Since they can afford higher prices, people will charge those higher prices. And you are back where you started.
UBI only gives everyone extra money if it is unfunded; typical UBI proposals are funded by either increased progressive income taxes or cutting other spending (which produces income to the recipient), and so is (in first order effects) zero-sum. (Typically, it replaces rapid clawbacks from means testing with slow clawbacks by progressive tax increases.)
UBI indirectly and unfairly benefits only the people who control those goods and services. If everyone made $1000 more per month, housing prices would raise up to that amount for everyone. This means the majority of the UBI raise would go into just the landlords pockets.
This is why many welfare programs are expense- or need-dependent, because it maximizes the benefit to those who need it without impacting price inflation as much.
Might as well start with:
- Removal/reduction in zoning
- Automate construction approval workflows
- Leverage eminent domain to aggregate land, and sell for profit to the builders.
Its just a win-win-win (given the views / property values would be reduced regardless without extra housing causing SF/LA/Seattle levels of homeless people):
- Homeowners get paid, by the city / local gov, at market rate or slightly above market rate.
- The city / local government has a new profit stream, to be used for more housing / services / reduced taxes. They would aggregate land, re-zone it, get approvals completed, and sell the whole package to the highest bidding developers.
- Developers reduce costs to aggregate land and due to interest payments while waiting for all the land + approvals.
- City gets to better plan the hosing market, i.e. superblocks, transit, etc.
- City dwellers get more access to housing (i.e. cheaper housing), and possibly reduced taxes. Also reduced crime and homelessness because the city is affordable for everyone.
There are ways to achieve all of the above that doesn't require destroying income-elastic priced markets. UBI is not a good solution.
UBI doesn't work well at all, like you stated, if there isn't a big increase in the supply of housing. For example, Seattle needs 10x more housing than it has today, and in 10 years it'll need 100x more housing than it has today. Ideally, all of these should be new luxury condo buildings, with 1000-3000 sqft condos, driving prices of all housing down by 10x. I would really like to see the city make this their only priority.
Seattle has about 740k people and about 370k housing units. 10 times the housing units would be enough for the entire state population at an average occupancy of 2 persons/unit. 100 times would be enough for roughly every US state bordering on or one state out from the Pacific Ocean.
Seattle pretty emphatically does not need that much housing.
Density also facilitates business and pulls in even more workers, who are also customers and it’s a positive cycle.
Seattle needs 100x more housing in the next 10 years if it wants to continue to be a competitive city. As a resident I sure hope it does.
In practice it probably depends on a lot of factors and would need empirical studies.
Of course it would. It's happening right now.