Hacker News Reader

Comment by ndriscoll | Hacker News Reader

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.

View on HN

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.

Reply on news.ycombinator.com