Comment by ndriscoll | Hacker News Reader

Comment by ndriscoll | Hacker News Reader

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Because people have more money, making more expensive things more affordable. Demand isn't a single number "I need one apartment." It's a curve: at $0/month I will live with my parents. At $800/month I will live with a roommate. At $1200/month, I will rent a 1 br. At $1500/mo, I will rent a 2br. At $2000/month I will not rent anything because I do not have $2000/month. etc. And actually, it's a curve representing how many people are willing to pay for a thing (or how many things they want) at a given level, not how many apartments do you, one person, need. Now give everyone $2000/month, and their ability/willingness to pay will increase. Maybe you figure now you can move out of that dodgy neighborhood into something nicer. Except the person who could already afford the nicer apartment pre-UBI isn't going to downgrade to the dodgy one, and they get UBI too, so they'll just pay more to outbid you (they would move upmarket themselves to make room, but it's turtles all the way down). Of course every sector of the economy knows this, not just landlords, so in reality prices of everything will rise rather than rent capturing it all.

This still doesn't make sense to me because people will often stay in the same place that they may not like that much specifically because the landlord hasn't raised rent that much, even if they can afford to move. They can't justify it. Or California landowners that don't sell because of whatever that rule they have is that figures property tax against original price or whatever.

It doesn't seem liquid enough to justify an increase in cost of rent the instant minimum wage goes up or UBI is implemented. My point is that a lot of these "markets" are really just price controllers setting price as they please, and landlords particularly feeling like they're special and get to lay claim to some arbitrary percentage of people's income. Which, for structural reasons, they can do.

The point is they can't set the price as they please; they can't set it higher than demand supports. If right now landlords all just agreed at raise prices by $2000, many units would go unfilled as people don't have an extra $2000, so under no circumstances could they possibly pay that (they may find alternative arrangements like roommates or parents or living on the street).

If you give everyone $2000, then landlords can successfully raise prices because now people can pay that much, and as mad as they'd be about their UBI going straight into the hands of businesses, they're unlikely to go homeless or stop buying food to protest it, so they'll pay it. That ability and willingness to pay is called demand.

Your argument is oversimplified. Landlords may be able to extract more money from people who net benefit from UBI, yes, but they will be able to extract less money from those who take a net loss from the policy. (I’m skeptical that landlords will actually be able to extract more because I believe most low income people who can afford rent now are likely unable to afford the means of subsistence in total, but this aside doesn’t affect the argument I’m making here.)

So the inflationary effect will probably be limited to low-income housing, which is already heavily subsidized by taxpayer dollars in the US, arguably even more inefficiently than the situation under a hypothetical UBI. It will probably be coupled with a deflationary effect at middle-to-upper income housing, depending on the nature of the benefit and the structure of the taxes used to fund UBI. If the policy is structured competently, there’s no reason that it is necessarily inflationary as a whole.

Well, sure, if you put enough tax pressure on the middle/upper-middle class, then that might have a counterbalancing effect of some sort, but generally speaking, the upper class aren't spending their money on things that people are worried about when they talk about inflation, so to the extent that it's "inflation-neutral," it'd be exactly the phenomenon people claim happens with inflation reporting today: "No, no, inflation didn't happen! See, rent and food and healthcare and education became more expensive, but luxury vehicles and McMansions are cheaper! For the overall basket of goods there was actually deflation!"

Anyway, my point was rather to address the fact that the other commenter didn't seem to understand what "demand" means.

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