This is a guest article by a friend of mine named Christian
Fernandez. I figured he had a good idea worth discussing so I encouraged
him to write an article about it on my blog. Check it out:
If you’re reading this, you probably already agree with or are at least aware of the concept of a universal basic income. It can be implemented in many different forms, but all of these have one problem in common: uncompetitive markets. The amounts can be as high or as low as you want, but at the end of the day, they’ll all amount to nothing if they’re eaten up by things like sub-par housing and internet (for those in the US). Even if there’s no inflation, certainly you’d see a problem in effectively handing over taxpayer money to an absentee landlord whose only claim to it is offering a bad apartment in a bad part of town for hundreds more than anyone is reasonably willing to pay. A guaranteed income alone simply isn’t enough to ensure a standard of living for all. Certain markets need to be pushed up from beneath; their low ends need to be absorbed completely before any real change can come.
I think the most important place to begin is with housing. The rent is just too damn high in some places. It can be the single largest expenditure per month for many households. A UBI can potentially worsen the problem by flooding an already bad market with even more demand.
The fix? Universal housing. Now I say “universal” but I really only mean enough to cover a fraction of the population. If you ask me, I’d go for a sensible 2% of the population in the US, which comes in at around 6,280,000 people. Enough to cover all the homeless and still leave enough to give the rest of the population a real choice in the matter.
Now something like it has been done before. The infamous public housing projects of the past imposed income and disability requirements. While the idea was noble, all it did was concentrate the poor, the old, and the ill in one place. This has to be different.
If this is going to work, they need to be, as you’d imagine, unconditional; they need to be rented out to people for free, and they need to be in packed densely at a good location. They need to be two story micro apartments. Small, but free. In making them you finally set the bar for landlords and real estate developers.
If one moves out of these, the new home must inevitably be at its market value. This is because considering how micro apartments give people the ability to say no, any home purchased via the market will offer the mix of amenities, cost, and location to justify its pricing. Simply having landlords compete with each other isn’t going to help the situation. The product they sell is absolutely essential. They need to be nudged the only way they can understand: competition. Real competition.
Now the obvious question is how much something like this would cost. Nomad micro homes go for about $30,000 each. Land is the smallest factor in all of this. If the homes are small enough (I’d say 13 ft. cubes), you can fit a surprising number of people in a high-rise complex. Even if the plot of land ends up going for a million, you’d only need to fit 100 people (Which seems fairly low considering the presumptive size of the apartments) to bring the cost down to $10,000 per head. So let’s say an even $40,000 a home as a worst-case scenario. This comes in at around $251,200,000,000 in total.
Now that all seems like a lot until you realize a few things: This can’t be done all at once. Even if we went and picked out the perfect locations to put all of the high rises, it would still take time to gather together the labor, to use eminent domain, draw the plans, etc. Really, the cost is spread out over time just due to the logistics of it all. And at the end of the day, 250 billion over a few years is still a small investment to make the multi-trillion a year UBI work more efficiently.
On that same note the same can be done with Broadband connections. A basic level of service can be offered free of charge to the general public through no significant cost to encourage proper competition. This service can be set to adjust upwards gradually to reflect the FCC’s definition of broadband and discourage price gouging.
We can’t talk about guaranteeing people any standards of living by just offering them money and hoping for the best. We need to take measures to ensure any progress made isn’t eaten up by inflexible demand. If a market can’t exist without the desperate trying to take up any product put out, regardless of its quality, then it doesn’t deserve to exist at all. The government is for the essentials; the market is for luxuries. And with these extra nudges, I think we can make sure our respective countries move in that direction.
If you’re reading this, you probably already agree with or are at least aware of the concept of a universal basic income. It can be implemented in many different forms, but all of these have one problem in common: uncompetitive markets. The amounts can be as high or as low as you want, but at the end of the day, they’ll all amount to nothing if they’re eaten up by things like sub-par housing and internet (for those in the US). Even if there’s no inflation, certainly you’d see a problem in effectively handing over taxpayer money to an absentee landlord whose only claim to it is offering a bad apartment in a bad part of town for hundreds more than anyone is reasonably willing to pay. A guaranteed income alone simply isn’t enough to ensure a standard of living for all. Certain markets need to be pushed up from beneath; their low ends need to be absorbed completely before any real change can come.
I think the most important place to begin is with housing. The rent is just too damn high in some places. It can be the single largest expenditure per month for many households. A UBI can potentially worsen the problem by flooding an already bad market with even more demand.
The fix? Universal housing. Now I say “universal” but I really only mean enough to cover a fraction of the population. If you ask me, I’d go for a sensible 2% of the population in the US, which comes in at around 6,280,000 people. Enough to cover all the homeless and still leave enough to give the rest of the population a real choice in the matter.
Now something like it has been done before. The infamous public housing projects of the past imposed income and disability requirements. While the idea was noble, all it did was concentrate the poor, the old, and the ill in one place. This has to be different.
If this is going to work, they need to be, as you’d imagine, unconditional; they need to be rented out to people for free, and they need to be in packed densely at a good location. They need to be two story micro apartments. Small, but free. In making them you finally set the bar for landlords and real estate developers.
If one moves out of these, the new home must inevitably be at its market value. This is because considering how micro apartments give people the ability to say no, any home purchased via the market will offer the mix of amenities, cost, and location to justify its pricing. Simply having landlords compete with each other isn’t going to help the situation. The product they sell is absolutely essential. They need to be nudged the only way they can understand: competition. Real competition.
Now the obvious question is how much something like this would cost. Nomad micro homes go for about $30,000 each. Land is the smallest factor in all of this. If the homes are small enough (I’d say 13 ft. cubes), you can fit a surprising number of people in a high-rise complex. Even if the plot of land ends up going for a million, you’d only need to fit 100 people (Which seems fairly low considering the presumptive size of the apartments) to bring the cost down to $10,000 per head. So let’s say an even $40,000 a home as a worst-case scenario. This comes in at around $251,200,000,000 in total.
Now that all seems like a lot until you realize a few things: This can’t be done all at once. Even if we went and picked out the perfect locations to put all of the high rises, it would still take time to gather together the labor, to use eminent domain, draw the plans, etc. Really, the cost is spread out over time just due to the logistics of it all. And at the end of the day, 250 billion over a few years is still a small investment to make the multi-trillion a year UBI work more efficiently.
On that same note the same can be done with Broadband connections. A basic level of service can be offered free of charge to the general public through no significant cost to encourage proper competition. This service can be set to adjust upwards gradually to reflect the FCC’s definition of broadband and discourage price gouging.
We can’t talk about guaranteeing people any standards of living by just offering them money and hoping for the best. We need to take measures to ensure any progress made isn’t eaten up by inflexible demand. If a market can’t exist without the desperate trying to take up any product put out, regardless of its quality, then it doesn’t deserve to exist at all. The government is for the essentials; the market is for luxuries. And with these extra nudges, I think we can make sure our respective countries move in that direction.
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