This is also part of the argument for basic income. Having a stable source of income allows people to take risks like starting their own business or joining a small startup.
It makes more sense in a country that already has a social safety net; I've read somewhere (citation needed, I know, I'm not very deep in the subject) that the cost and overhead of assessing and paying the individual cases of unemployment, long term sickness, disability, homelessness etc is more expensive than just giving everyone a basic income.
But yeah, #2 is what I'm afraid of too. Paraphrasing a cartoon villain, if everyone is wealthy, nobody is.
Besides, in the past decade, cost of living / housing / rent has gone up so much that even a $1000 / month basic income can't give you anywhere decent to live anywhere. In addition to basic income, we need basic housing - which is dangerous, because it invokes the USSR's rows of depressing and substandard apartment buildings. But everybody should be able to live comfortably at a standard of living. Everybody should be able to have access to and afford a two bedroom house or apartment on a single income, or the social safety net if they are not employed.
1) So you're saying that giving people $1000/month would open up zero new possibilities for people?
2) It's not that simple because different goods will respond differently. Certain goods will get cheaper because the increased sales will allow for more economies of scale.
Housing is the big one mentioned, and it does not allow for any further economies of scale than already exist. Rent rises based on the prevailing salary of the area -- house prices as well, since they represent the years of rental income. It's not even necessarily a supply issue, since Seattle has more empty houses than it has homeless people! Prices simply rise to whatever the market can bear. So under the current system, any absolute increase in money will likely simply be swallowed by landlords.
Housing is a normal economic market that is responsive to changes on both the demand and supply side. The major problem with housing in this country is that restrictive policies have put a damper on housing supply so that it is not able to keep up with demand. Seattle has a normal amount of vacancies in it. It could have 2X the housing (and thus have a lot more people living in Seattle paying lower rents) and still have the same percentage vacancy. It's not a real or valid argument to say "look there's more vacancies than homeless people, so supply must be fine".
A "normal number" of housing vacancies would only make sense if everyone was housed. Housing isn't a voluntary good, where you'll expect some unsold stock and you'll expect not everyone to buy one -- everyone needs a place to live, and will spend as much as they have to in order to get housing of minimal quality. The entire concept of a "normal" number of vacancies doesn't make sense here.
There absolutely is a "normal" amount of vacancies because it takes time for a house to sell, for someone to move out and then someone else to move in, for a new lease to be signed, etc. It's exactly the same dynamic with employment; there is a "normal" amount of a unemployment (a low single digit number) that is impossible to improve past, simply because it takes time to find a job. Housing is no different.
Also, most of the homeless are unhoused because they either can't afford a home or they have mental illness/drug addiction issues that makes them incapable of earning money in order to be able to afford a house. It doesn't matter if housing is vacant if you don't have the means to pay the rent, or if they won't even consider you for a lease anyway because you don't have a reliable source of income.
It seems pretty complex to design a version of a lax unemployment policy that eliminates steep cliffs that might disincentivize working, is fair, and also doesn't let anybody slip through the cracks. How do you handle someone quitting voluntarily, or retiring early, or starting their own business which doesn't pay them yet, or only paying themselves a small amount, or working a part-time job on the side while focusing on something else, etc.
The income tax code already exists and has to solve some of these problems, so it seems easier to give everyone the money and then tax it back from the highest earners later (or implement it as a negative income tax, but that has its own hurdles as well, i.e. imagine a homeless person needing to wait until tax season and then getting paid for the whole year, it would be a big hurdle and they'd still need other assistance programs the rest of the year if they didn't budget the money well enough).
I agree it is complex, I have no answers. Certainly though if the requirement for unemployment is that you have to be actively looking for employment ... sort of nixes it for the want-to-be entrepreneurs.
> 2) rent goes up $1000/month nationwide so it is an even emptier gesture
Do you also expect food, transportation, entertainment, and technology costs to go up $1000/month nationwide?
Rent goes up due to a lack of available apartments or houses in the area. If public policy is geared toward allowing development of sufficient housing for the people wanting to live in a place, that will have a far bigger impact on rents than UBI.
Not an economist. I liken it to the cost of tuition having gone up, perhaps because of the availability of student loans and the willingness (need?) of students to borrow to get a higher education.
Rent is the one you are sort of locked into. Food, etc, you have choices ... moving, much harder to shop around.
