September 17, 2023

It seems this is a topic to return to periodically

This is a rework of an article I wrote almost three years ago, when I was just starting with blogging. It got some interest lately, apparently out of the series I did about the present Canadian housing crisis. I also write a lot about the Basic Income Concept.

I notice there has also been some activity on Reddit channels about Basic Income and rent. So it seems this article should be promoted again, but also needs some rework and updating. I originally did it as a final word in an online debate I was having with some BI advocates of the libertarian variety.

I can scarcely call the exchange a debate. It was more a contradiction with some people insisting that a Universal Basic Income will not cause any rent increases. Their arguments for this revealed much about what their underlying mentality was. 

They were the last people you would want advocating for a BI or anything else remotely social. They fit the definition of fanatic; just repeating the same line over and over, incapable of considering they might have it wrong. More recently, a different group of BI advocates have come up with a better response to the rent problem in UBI and I will get to them.

I recently spent some time going over the problems related to housing and the need for transition away from capitalism. You can find all this here and here. I thought I had pretty much exhausted the topic but I find the need to briefly connect it with Guaranteed Livable Incomes or UBI, by means of this revised piece.

There never was a cause more ill served by its devotees than the idea of a Basic Income. That is, the idea of just giving everybody a flat income, as explained here. The Basic principles of Basic Income are that the income must be for everybody, enough to live on, and without conditions.

Almost every BI ‘expert’ misses at least one of these points. The problem is that there is no real organization developing and promoting the idea. There are some half assed groups, mostly interested in abstract philosophical discussions, and disdainful of brain tanking; of actually integrating BI with other ideas and developing it into a coherent political economic theory.

As well, all public forums are jammed with self appointed experts on BI. Many of them use the idea as a trojan horse for other concepts they are really more interested in. But BI has become a hot topic these days.

I have been a proponent of a BI from back in the seventies. However, in recent years it has become clear to me that BI and capitalism, or any other mode of oligarchy, do not mix. It will become a passthrough subsidy for landlords and employers.

Much more sinister, it can be used to warehouse surplus populations in sacrifice zones.

However, in a post capitalist society, BI will still be essential to solving the ‘Work vs. Needs’ imbalance. Thus, I focus these days is getting the ‘Left/Progressive’ section of the public to integrate the BI concept into thinking about how a post capitalist society will work.

I also live in the centre of a major city in Canada. I have examined the causes of the housing crisis which is common throughout the “westernized” world. The matter has been well explained by people who know how to do actual research, whose thinking is fact based.

I can also see it in the neighbourhood around me. There is plenty of housing. Much of it is sitting empty.

Yet rents keep going up and the numbers of homeless people keep growing. Friends are having to move away, often with life limiting consequences and ends to careers. They became “surplus”, or “economically unjustified” people.

A building boom continues, despite recent increases in interest rates, even though no one is moving into many of these new places. Some construction industry people report that some of these places look like they are not even meant to be lived in. They are to be traded around as investments, like gold coins.

Some of the less clueless commentators are aware that very low interest rates were a cause of this speculation. They were, but raising interest rates will not solve the housing problem or bring down rents. The cause of the housing crisis in Canada is governmental failure.

That is, failure to build social housing, to catalyze cooperative and co owner housing, to mandate rent controls, to reform property taxes, and to build land banks and land trusts. This is due to capture of government by private interests based in libertarian ideology. The only lasting solution is a transition to a socialist system.

Basic Income is being touted as a cure for everything except obesity and erectile dysfunction. Oh, I think it has even been proposed to relieve one of those. But the folks who tout it as a remedy for high rents and housing shortages seem to come from one of two camps.

The first are the people who insist that raising incomes will not raise rents. This is simply stupid and not grounded in reality. At the low end of the housing market the relationship between rents, minimum wages, and program income is stark.

In single room occupancies in jurisdictions with no rent control, rents are often identical with welfare incomes. The landlord or its agent will often just have the tenant sign over the welfare cheque.

The proportion of a household’s income devoted to rents declines as income rises. Of course, the proportion of a Basic Income to total income would also fall as other income rises. Even at the higher ends of the rental market, the relationship between incomes and rents is strong.

The second camp is the people with the idea that with a Basic Income, people would be able to move to where rent is cheap. The high rent areas would be less crowded and rents would decline. This is also stupid, but in a more complex way. I focus on two points here.

First, people receiving Basic Income are usually not going to stop working. People will still want to live in cities where there is work, services, and recreation. Most people I know who moved to lower rent areas soon moved back into the city, if they could.

Second, this idea of people moving to where it is cheaper sounds like the flip side of another lovely idea we often hear in my city. That is, cities are only for elite people who deserve it and can afford it. The lesser mortals should be sequestered somewhere with cheap rents where minimal services can be provided.

In other words, let us create a lot of Banleiues everywhere. This fits with the underlying idea of the people I responded to, and referred to at the start of this. To them, UBI is a eugenicist idea for sequestering a section of the population the billionaire class does not want to bother with providing employment for anymore.

A UBI advocate I occasionally interact with recently dropped something on Reddit about Basic Incomes and rents. He is from the ‘liberal’ section of UBI advocates. He thinks in terms of the ‘net beneficiaries’ and the ‘net contributors’ to a UBI; those who pay in and those who take out.

He is also a fan of Land Value Taxes (LVT). He believes higher taxes will reduce real estate values and this will result in lower real estate prices. Somehow this will lead to lower rents.

As for net beneficiaries, he has no real answer to the propensity of capitalism to extract every possible dime from people, especially as rents. It is a “problem to be addressed”. It can be partly addressed by rent controls, but landlords have many ways of getting around that.

He also subscribes to the idea that higher taxes and reduced incomes for ‘net contributors’ will cause real estate values to decline and this will cause decreases in rents. There are plenty of missing links in this reasoning. However, the core fallacy is that increasing taxes will lead to a reduction in housing costs.

Property owners are most likely to further jack up housing costs to recover the extra taxes. A better solution is for government to start taking over private land and develop land banks and land trusts. This would enable government to better do urban planning, to control the uses land is put to, and control housing costs.

There is one other issue to do with UBI and rents which is worth addressing; higher and lower rent areas. The libertarians cited above are part right. You do not need low income people living in higher valued land.

The real solution for this problem is to build efficient transit systems. This enabled people to live in low rent areas and still get quickly and cheaply to wherever their work is. This is a much better solution than creating UBI ghettos and writing off the ‘recipient’ part of the population.

Of course none of this can happen as long as we live under oligarchic governance and a capitalist economy. A UBI is not going to work until we move beyond these conditions. That is my basic message for Basic Income people, and for housing reform people.