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Basic income and rent

(Michael Hrenka) #1

What can it be guaranteed that once a basic income is introduced, rent seekers won’t increase rents, until all additional income from UBI is used up by the increased prices of basic necessities like food and shelter?

The following video addresses that question, but doesn’t answer to it.

I’ve read the claims made by Gerogists that with a land value tax, it shouldn’t be possible to extract the basic income via increased rents. But why should that really be the case?


the speaker asked the question : “what´s stopping them, other than policy or other mechanisms to raise the rent exactly 1000 Euros?” (14:40 min)

this question implys, that landlords today believe that renters have less than 1000 euro and they have to be generous and take less. what keeps them now from increasing the rent to the maximum someone could pay, because many people with jobs have more than 1000 euros ( without a job people have no chance to become renters - and without a home they would not get a job: the typical trap for homeless people) ? to apply for a rental you have to prove your income with your payroll, so usually every landlord knows about the income of the renter.
the talker wants to exclude “policy or other mechanisms” (maybe he refers to something like rent control which we have since 2015 in germany), but why?
i appreciate his general idea to examine every economic system without idealism and to look whether it could work or not, but i could not see his point concerning rent.

  • why should it make a difference for landlords if people have their money from an employer or a social security system?
  • why should the market dictate to take “as much as people can afford” ? (14:54 min) because then everybody would have to pay individual rent related to their income, today. but this is not the case.
  • why is it important for him to exclude “policy or mechanisms” as a solution? because nowadays it is a solution, when housing scarcity caused increased rents.


from my point of view the talker is wrong, when he claims we live in a mixture of capitalism and socialism.

We are living in pure capitalism. Welfare state only exists so far, as capitalism needs a reserve army of unemployed workers. Another reason is that an apprenticeship is an investment for the state, so the state doesnt want to just throw people with knowledge away.

Now with the globalisation of capital this reserve army is less and less needed. Automatisation will also make alot of apprenticeships redundant.

So alot of people would like to get an UBI. However, the capitalist wont give a shit what people want. If the state (which is a tool of capitalism) thinks these people are redundant the state will treat them as redundant.

You can draw other conclusions yourself.


Landlords should just get their lazy asses up and and look for work. :smiley: Owning things that already exist since a long time and charging people for using them isn’t a job.

(Eric Hunting) #5

This is a well known, and very crucial, issue for the planning of UBI. In the US, which retains an entrenched cultural contempt for the poor, exploitation by the market in poor neighborhoods has been a chronic problem. It was long common practice for the stores in poorer neighborhoods to raise prices at the same time of the month that welfare checks were distributed. And since banks would commonly refuse basic service to people below certain income levels, check cashing stores became common in poor neighborhoods, charging people to use their welfare money. In most every way, the poor pay more. This is why state governments began issuing EBT cards disguised to look like normal credit cards as an alternative to checks, staggering welfare disbursement across different times of the month so unscrupulous shopkeepers couldn’t exploit their poor customers and they wouldn’t need unscrupulous banks and check cashing stores to access their money.

Many fear this same kind of exploitation with UBI unless similar or other methods are used to curb this behavior by somehow making disbursement difficult to predict. When, in the mid 20th century, Louis Kelso proposed a system of UBI in the form of the Capital Homesteading Act the strategy was to base UBI on the annual dividend of a national mutual fund that every citizen had a individual account in and could choose to save or spend from as they wished. Merchants and landlords might know when dividends were disbursed, but month-to-month they would have no idea what people had in their individual accounts as the collective dividends would vary with the national productivity and people could save, spend, or roll-back into more fund shares whatever they wished.

In the Georgist context, a Land Value Tax is said to prevent landlords from passing taxes on to renters because the amount of property is fixed and the taxable value of the property is keyed to the rental value --ground rents. The more they charge in rent, the more they increase their property value and the more they are taxed on that value. Georgism is concerned with the capture of economic rents, that is unearned profits on the intrinsic value of exclusivity of a natural or socially-created resource rather than production. Use of a LVT encourages equilibrium and economic efficiency in real estate. It discourages the speculative holding of unused land, because that land will continue to be taxed whether or not the holder is making money from it, resists gentrification by discouraging property value inflation through cyclic recapitalization, and drives rents down by keying taxation to rent income. So even if landlords know they can extract a certain minimum amount of money from renters because of a UBI, the more they try to exploit that by inflating rents the more they’re taxed because they’ve inflated their property values.