UBI drives down prices

What Wilkinson fails to recognize is that the economy doesn’t actually need all those people to be living near those jobs. The people need the jobs, but the jobs don’t need the people. What if people had more freedom to live wherever they wanted without having to give so much consideration to the job market?

That freedom is exactly what Universal Basic Income (UBI) gives us. UBI is an unconditional income paid to every individual person. It solves the problem of how to get spending money into people’s hands. And it accomplishes this independently of the labor market. UBI is an income that’s not tied to any particular location.

By providing people more freedom to live in different places, UBI does the equivalent of flooding the market with cheap homes. That’s going to drive down rents in cities where housing is currently tight. It’s going to drive down real estate prices in general.

This is a good thing. Cheaper housing is better for people. Homes shouldn’t be treated as investments in the first place. If you’re invested in real estate and you think a UBI is coming, you might want to get out.

A city’s residents can always exert some control over the supply of housing in their neighborhoods. But there’s nothing they can do to overcome the drop in demand that a UBI will induce. They can restrict new development all they want, but housing will nonetheless become cheaper and more affordable.

When people first hear about UBI, they worry that landlords will respond by raising their rents. But this is backwards. The landlords can’t raise the rents. They can only ever charge as much rent as renters are willing to pay. And the higher the UBI, the less that people are tied down to a particular location, hence the less rent they’re willing to pay. In order to attract tenants, landlords would instead have to lower their rents.

Along with Will Wilkinson’s permissive zoning plan, the panel also featured a discussion of UBI. Sitting right in front of Wilkinson was the solution to expensive housing. He just didn’t recognize it. Universal Basic Income fixes what’s broken in the housing market — by crashing it.