Free cash for everyone? Stockton, Calif.'s mayor plans to see if it works

1 year 3 weeks 2 days ago Friday, October 27 2017 Oct 27, 2017 Friday, October 27, 2017 1:06:24 PM CDT October 27, 2017 in News
By: Lydia DePillis, CNN 
Stockton's mayor

NEW YORK (CNNMoney) - As a kid growing up in Stockton, California, a little extra money would've meant the world to Michael Tubbs' family.

Tubbs' mother worked long hours as a cashier at a Discovery Zone and still had to borrow from check cashing places to get by. "If we had $300 a month, life would be less stressful, or we could move into another neighborhood," Tubbs says. "Maybe she would've been able to go back to school and get her BA, or pursue a passion."

Today, Tubbs is Stockton's 27-year-old mayor. Last week, he announced the launch of an experimental program that will give people like his mom about $500 a month, with no strings attached.

Stockton will likely become the first city in the nation to test out a version of universal basic income, an economic system that would regularly provide all residents enough money to cover basic expenses, with no conditions or restrictions.

Stockton hopes to launch its program next year and enroll several hundred of the city's residents for at least a couple of years, depending on the availability of funding.

The concept of universal basic income - or UBI - has been around for decades. Martin Luther King advocated for it in 1967 to create a minimum standard of living. Up until recently, it has mostly been a subject of discussion among academics. But universal basic income has started to gain traction as poverty has grown and fears of automation killing jobs have mounted.

Large-scale trials began this year in Finland and Canada to test whether the program improves outcomes like health and employment.

In the U.S., the movement's epicenter is Silicon Valley, where inequality is stark and labor-saving technologies like self-driving cars seem just around the corner. Tech leaders, from Facebook's Mark Zuckerberg to Tesla's Elon Musk, have endorsed the idea as insurance against a jobless future.

Now, some of them are putting serious money behind it. YCombinator, the tech incubator known for minting high-profile startups, is hosting academics who'll research the idea using a control group and a random selection of approximately 3,000 participants in Oakland, California starting next year.

Meanwhile, a recently launched non-profit called the Economic Security Project has committed $1 million to the Stockton effort, with funding from donors that include Facebook co-founder Chris Hughes.

"There was not significant money in the space before" these groups got involved, says longtime advocate Jim Pugh, a robotics PhD who runs a tech and analytics firm that serves progressive causes. "It was definitely a significant uptick."

Rather than a research paper, Stockton is planning a media campaign featuring program participants talking about their experiences. "Alongside the data, we need stories," says Natalie Foster, a co-founder of the Economic Security Project.

Backers hope larger cities and states will eventually adopt universal basic income programs, much like they've passed higher minimum wages and paid family leave laws while federal action has stalled. The hope is that, pressure would build to take the program nationwide.

There are some wrinkles in this plan, however.

In its purest form, every American would receive a basic income, which some estimates peg at about $10,000 per year. In the aggregate, that would add trillions to the budget annually.

Policymakers could lighten the burden by scrapping the rest of the U.S.'s targeted anti-poverty programs, like the Supplemental Nutrition Assistance Program (known as food stamps) and Medicaid

That approach has attracted support from libertarians, who see a single-payment safety net as less bureaucratic and more market-friendly than the current alphabet soup of government programs. Conservative political scientist Charles Murray, known for his "bell curve" theory about the relationship between intelligence and income, is among UBI's leading proponents.

But many on the left see the idea as a Trojan horse for eliminating benefits that currently lift millions of people out of poverty.

"The risk is high that under any UBI that could conceivably gain traction politically, tens of millions of poor people would likely end up worse off," wrote Robert Greenstein, the president of the Center on Budget and Policy Priorities, in a blog post last month.

Left-leaning supporters insist that universal basic income should be an add-on to the existing safety net, not a replacement. But that assurance hasn't firmed up support across the aisle.

Joe Biden, former Obama Council of Economic Advisors chair Jason Furman, and Center for American Progress president Neera Tanden have all opposed the idea for another reason: They say giving people enough money to live on will drive them out of the workforce, and that having a job is essential for emotional health and social status.

Basic income proponents disagree.

"That seems to rest on a thin theory of how one develops a work ethic - that it takes either hunger or suffering or poverty or fear," says political scientist and Economic Security Project co-founder Dorian Warren. A recent review of decades of research on basic income-like programs in the U.S. and Canada found that, in most cases, participants reduce their work hours only slightly.

Within a couple of years, the Stockton experiment may shed more light on that question. Tubbs thinks that participants might use the extra income to take a break from work in order to advance their careers through education, or invest in their kids.

"My constituents in Stockton are incredibly resourceful, intelligent and hardworking," he says. "And oftentimes all they need is an opportunity."

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