Will ‘basic income’ become the California norm?

StocktonAfter months of planning, Stockton is sending debit cards loaded with $500 to a select group of residents starting Friday as part of a closely watched experiment in universal basic income, the first led by a U.S. city.

Stockton, once dubbed “America’s foreclosure capital,” was the largest city to seek bankruptcy protection before Detroit’s 2013 filing. During the recession, unemployment soared toward 20 percent, and violent crime rose. Today, one in four residents lives below the poverty line, according to the U.S. Census Bureau.

Now, as the city slowly recovers from financial disarray, officials and advocates look to the Stockton Economic Empowerment Demonstration, or SEED, to provide insight on whether a long-term basic income program is a viable creative approach to lifting residents out of poverty.  …

Click here to read the full article from the Sacramento Bee

Stockton to test universal basic income plan

StocktonStockton, California, will soon become the first U.S. city to experiment with a universal basic income program, granting 100 residents $500 a month with no strings attached.

The project is being backed by Silicon Valley titan Chris Hughes, whose Economic Security Project gave $1 million toward the effort.

The goal, supporters say, is to ensure that the embattled city’s residents can stay out of poverty and the experiment is designed to assess whether or not the program could be rolled out on a wider scale.

“We’ve overspent on things like arenas and marinas and things of that sort to try to lure in tourism and dollars that way,” Stockton Mayor Michael Tubbs explained, according to Fox News, believing that the model can be used to bolster quality of life in the struggling city – and others like it.

Stockton in recent years has been known as the “foreclosure capital” of the country and drew headlines in 2012 when it declared bankruptcy, becoming a flashpoint for Americans suffering during the Great Recession.

The concept of a universal basic income has gained traction in the Bay Area amid concerns that automation will increasingly displace workers. It’s been propelled by major CEOs like Mark Zuckerberg and Elon Musk, who argue that so-called “free money” may be a necessity as technological advances alter the labor landscape.

“We should explore ideas like universal basic income to make sure that everyone has a cushion to try new ideas,” Zuckerberg said in his Harvard commencement address in May 2017.

Other similar efforts have been rolled out in places like Finland, which announced in April that it was ending its trial run to explore alternative welfare programs instead. The full results will be disclosed next year.

While some experts argue that universal basic income can be a way to lessen poverty by creating a guaranteed income floor, others explain that such a framework is impractical given the current entitlement and welfare state.

“I would be in favor of this if it meant eliminating all other welfare programs and requiring work,” economist and Heritage Foundation fellow Steve Moore told CalWatchdog via email. “The only way out of poverty is a job not a government handout.”

Overall, the experiment will look at how the residents spend the money and the potential economic impact it could have on the city, something that the young 27-year-old mayor is optimistic about.

“We trust that people are smart and resilient to make the best decision for them and their families with the money,” Tubbs said in a CBS News interview back in February.

Stockton’s effort is expected to begin in early 2019.

This article was originally published by CalWatchdog.com

Universal Basic Income: A Progressive Experiment That’s Doomed to Fail

Universal basic incomeIf the states are supposed to be laboratories for democracy, where new ideas that reflect regional attitudes can flourish, then cities are like micro-laboratories. Local governments can try out ideas that would never get statewide traction. Unfortunately, some California cities are more like laboratories run by Dr. Frankenstein, where frightening concepts are given life — and local residents have few other choices than to flee to other places.

Most conservatives are familiar with the goings-on in San Francisco, where stringent rent-control laws have — I know you’re surprised by this — led to the least affordable rents and most unaffordable home prices. Parts of the “City by the Bay” resemble an open-air cesspool, given the homeless problem caused by myriad public policies. It’s magnificently beautiful, though, so the city remains a magnet despite its officials’ best efforts to destroy it.

But what happens to a city that has few natural advantages, a less-desirable climate and nothing in particular to draw people to it? Apparently, Stockton — an historic San Joaquin Valley agricultural and port city 80 miles east of San Jose — is trying to cram every conceivable bad experiment into its 64.75 square miles. The latest idea is to offer a “universal basic income” to a few dozen residents to see what happens when you give people money for nothing.

KQED News pinpoints some of Stockton’s enduring problems: “Wage stagnation. Rising housing prices. Loss of middle-class jobs. The looming threat of automation.” We can add some others: A dreadful violent-crime problem, trash-strewn streets, a vacant downtown that could be a movie set for a third installment of Blade Runner, crumbling public services, overpaid public employees, high taxes, and a troubled city budget.

Mayor Michael Tubbs, an enthusiastic 27-year-old Democrat, has shown a keen interest in trying “new” things in the city. Last summer, for instance, he proposed paying people not to commit gun crimes, and now he’s working with some Bay Area entrepreneurs who are providing the funds to give some families $500 a month with no restrictions on how they spend the cash.

The Economic Security Project is backing the Stockton Experiment, based on its belief that “cash is an effective way” to rebuild the middle class and fight poverty. “Automation, globalization, and financialization are changing the nature of work, and these shifts require us to rethink how to create economic opportunity for all,” the group explains on its website.

Some conservatives have actually pitched a guaranteed-income concept. The thinking, advanced by Nobel laureate Milton Friedman, is to “replace the ragbag of specific welfare programs with a single comprehensive program of income supplements in cash  —  a negative income tax.” Such an idea, he added, “provides comprehensive reform which would do more efficiently and humanely what our present welfare system does so inefficiently and inhumanely.”

This is one of those cases where the concept makes a certain amount of sense in the philosophical realm, while being borderline crazy in the real world. If California ended its generous “ragbag” of welfare and support programs — programs that can provide more than $35,000 in benefits a year — then simply giving the recipients a cash payment could potentially reduce the size of the bureaucracy. It would presumably provide additional incentives to work, given that most of these programs are income-based and fade away if recipients work.

In the real world, it would expand government spending. Bureaucracies never go away. I recall the cost savings that would ensue after California sensibly decriminalized certain low-level crimes, yet there have been few budget reductions in various law-enforcement agencies. And chalk it up to human nature, but many Americans are not about to do anything productive if it’s easy enough to get a living wage while playing video games and downing six packs.

In a recent column, I argued that these funds aren’t enough to live on even in Stockton and also quoted a critic who said that a universal basic income would reduce incentives for work and self-reliance. The Stockton Record’s metro columnist criticized me for “a contradiction in this argument: $500 is not enough to live on but people who receive it will become lazy layabouts.”

It’s not actually a contradiction. Stockton’s plan isn’t enough to live on, so it will lead to endless calls by recipients for more money. A full-blown guaranteed income would indeed destroy whatever is left of the nation’s work ethic. Basically, 500 bucks would cause a little bit of sloth, while 50,000 bucks would cause a lot of it. It’s all a matter of degrees. But it’s hard to see what kind of experiment the city hopes to run if it’s only providing a pittance in income and isn’t ending other government programs.

It is easy to spot an underlying reason that this idea is rearing its head again. Some thinkers, especially on the Left, argue that the burgeoning tech industry is creating a winner-take-all economy, and that eventually automation will replace too many low-level jobs. Apparently, they believe a large portion of Americans will be permanently unemployable and just need a stipend. This is nonsense. The tech industry is creating far more jobs and opportunities than it replaces even on the lower end, but that’s where some of the impetus is coming from.

Leave it to Californians to go down this road, when a simpler path is so much better. Note that our state has the highest poverty rate in the nation, according to the Census Bureau’s cost-of-living adjusted model. The reason is fairly clear, and it has nothing to do with the state’s refusal to be generous enough with its welfare payments.

Our current public policies have destroyed middle-class and manufacturing jobs through excessive regulation and high taxes. They’ve destroyed many low-income jobs by raising minimum wages and passing union-backed work rules. We’ve created an education system that graduates functional illiterates. The state’s slow-growth rules have driven up rents and housing prices, thus delegating lower-income people to squalor.

On the local level, Stockton went bankrupt in 2012 because of its misplaced priorities. For instance, it paid ridiculous compensation packages to public employees and “invested” public funds in showy redevelopment projects that remain surrounded by vacant buildings. Instead of reducing pension packages, as the federal bankruptcy judge allowed, the city raised taxes. So now Stockton has an even harder time drawing businesses.

Stockton is like many other California cities, only worse. It’s trying to show us what not to do. As a Stockton property owner and someone who really likes the city, I’m saddened by this kind of misbegotten experimentation.

Steven Greenhut is Western region director for the R Street Institute. Write to him at sgreenhut@rstreet.org.

This article was originally published by the American Spectator