Friday Foolery: Stockton Tries Universal Basic Income... Maybe
by meep
I’m letting stupid taxes off for right now (oh, I’m sure I’ll get back to them).
Just thought I’d highlight something that Stockton, California is experimenting with. The not-that-long-ago bankrupt town of Stockton, that is.
UNIVERSAL BASIC INCOME
Mayor Michael Tubbs, from Stockton, California, announced last October the launch of a basic income experiment in his home city.
The 27-year-old mayor wants to show Stockton can become a cutting-edge city as it recovers from its 2012 bankruptcy.
Tubbs first learned about basic income in college, reading Dr. Martin Luther King Jr., and he hopes the Stockton experiment will lay the foundation for future US studies.
Stockton, California made national news last October when it announced it would host the first US experiment in basic income, a system of wealth distribution in which people receive a standard salary just for being alive.
The plan, spearheaded by Stockton’s 27-year-old mayor, Michael Tubbs, will likely begin sometime in August 2018 and involve at least 100 people of varying income levels getting $500 a month for three years.
Let’s be blunt: 100 people ain’t terribly impressive. Neither is $500/month. That’s $6000/year.
TRIED IN FINLAND: BUT DOES IT WORK?
Basic Universal Income has been a concept bouncing around for the last few years. It’s been tried out in Finland:
One year on: Is Finland’s free money experiment working?
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Ruusunen was among 2,000 unemployed Finns randomly selected from across the country for a trial testing universal basic income. Each month for two years he would receive 560 euros (roughly $670) from the government, tax-free. He was free to spend the money however he liked.“I’m not accustomed to that kind of bureaucratic freedom,” Ruusunen said.
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Finland’s universal basic income experiment launched January 1, 2017 and will run until the end of 2018. Official results from the trial won’t be released until it concludes. Experts said it’s not surprising the Nordic country known for its generous welfare benefits, like universal free education, is at the forefront of a new economic experiment.…..
A key goal of the Finland experiment is to give unemployed people incentive to work by providing them with financial assistance even once they’re employed. Researchers chose the 560-euro monthly amount because it roughly equals the current level of unemployment benefits.“One main idea behind this version of basic income that we are testing is that it would replace the basic social benefits or at least basic unemployment benefits,” Simanainen said.
Fair enough. But many people don’t get unemployment benefits…. because they’re never been employed. But hey, let me not impose U.S. systems on the Finns.
Supposedly others have tried this, but why this is supposed to work different from other welfare programs with no work requirements… not quite sure. Yes, there’s no disincentive to work (unlike welfare programs that cut benefits when you start working), but… that’s about it.
BACK TO STOCKTON
Basic income is just part of the solution
Tubbs wants to approach his city’s economic troubles from several directions — basic income is just one solution. Recently, his office received an anonymous $20 million donation, which Tubbs has directed toward a program called Stockton Scholars. The program awards a total of $4,000 in aid to four-year college students in the Stockton Unified School District and $1,000 to 2-year students.
The program will make higher education tuition-free for “the vast majority” of Stockton students who attend college in the California State University system, according to the mayor’s office. Over the next five years, Tubbs is pushing the city to help raise a total of $100 million for Stockton Scholars.
“We want to triple the number of Stockton students who are ready, willing, and able to go to college,” he said. “It’s really about changing the narrative of this city. This, in tandem with basic income, really shows Stockton is on the cutting-edge of public policy with a real focus on human capital.”
I’m sorry. But college is not the solution, I think. Getting work experience is far more important than useless degrees.
Or hey, help setting up businesses!
As someone who has taught college math, and has fancy degrees… I’m saying it shouldn’t require the level of stuff I did for people to get decent jobs.
ON STOCKTON’S BANKRUPTCY
Let me remind you: Stockton declared bankruptcy in 2012 and exited the process in 2014.
Here are pieces on the bankruptcy I noticed at the time:
- 3 Oct 2013: UPDATE 1-Stockton, Calif. city council backs plan to exit bankruptcy
- 16 Oct 2013: Bankruptcy about politics rather than math
- 4 Nov 2013: Stockton sales tax plan set to end bankruptcy, pensions spared
- 11 May 2014: Trial starts Monday to determine if Stockton can exit bankruptcy
- 12 May 2014: Stockton’s Rare Creditor Fight Presages Detroit Showdown
- 11 May 2014: Staying out, not leaving, is trick with bankruptcy
- 30 October 2014: Judge approves Stockton’s plan to repay creditors, leaving pensions intact
So here’s the deal: Stockton still has a ginormous debt hanging over its head, in the form of underfunded pensions.
From that last piece on Stockton’s official exit from bankruptcy:
Advocates for pension reform, however, said Thursday’s ruling approving the reorganization plan was a mistake because it allows Stockton to exit bankruptcy without dealing realistically with its obligations to CalPERS, which total around $29 million a year.
“Only time will tell if the city of Stockton can continue to provide services without relief from their unsustainable pension obligations,” said Dan Pellissier, a political consultant who has worked to reduce public pension costs. “They’re betting on rosy (financial) assumptions.”
Wall Street also took note of the ruling. Standard & Poor’s Ratings Services said Klein’s decision is a first step “to enable the city to recover its institutional health and standing in the credit markets.”
Universal Basic Income is unlikely to keep the pensions from pulling the town into insolvency again. The people getting the UBI money are economically marginal, and while may eventually be economically productive, it’s not necessarily going to help with Stockton’s real pension debt overhang.
STEVEN GREENHUT COMMENTS
I’ve seen two Steven Greenhut pieces on this idea.
First one: Stockton’s basic income plan diverts city from its real duties
I own a bungalow in Stockton and know the city well. Indeed, Stockton officials have been models for doing things the wrong way. Over the years, they’ve dumped redevelopment subsidies in fancy downtown projects, which remain surrounded by run-down neighborhoods and blocks of largely vacant buildings. The city also spent lavishly on compensation for city workers, which helped drive it into bankruptcy.
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Furthermore, it’s foolhardy for individual cities to embrace these programs, especially since it eventually will involve oodles of public funds. Stockton’s budget is crumbling under the weight of misguided past financial decisions. It can’t even provide a decent level of public services as is — let alone after it starts handing out payments to people. And incentives matter. If the city subsidizes its residents, then Stockton will become a magnet for people who most want such subsidies.Realistically, 500 bucks a month isn’t much to live on anywhere in California. If this idea takes hold, it will be followed by demands to increase the payments. I can envision the “Living Wage Coalition” that would rise up to demand more money from City Hall, the Legislature or Congress. It’s dangerous to make larger swaths of people dependent on the political process to secure their living. This already is the case to some degree, but this idea will make it far worse.
But my biggest fear is what it will do to the already eroded concept of work. Many people prefer to do nothing if someone else will pay their bills. “A UBI would redefine the relationship between individuals, families, communities, and the state by giving government the role of provider,” wrote Oren Cass in a National Review article last year. “It would make work optional and render self-reliance moot.” It’s one thing to provide a safety net and another to reward sloth.
Second piece – A Progressive Experiment That’s Doomed to Fail:
If 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.
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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.
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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.
$50,000 probably wouldn’t create a lot of sloth. It would create a hell of a lot of inflation, because the only way to “fund” somethng like that would be to actually print money and devalue the currency.
Here’s the key part of his second piece:
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.
UBI ain’t going to draw businesses to Stockton.
IS THERE ACTUALLY ANY MONEY FOR THIS PROJECT?
Now, I’m not actually against this experiment in basic income with somebody else’s money. I highly doubt it’s going to grow, because this is one case of “other people’s money” where that money is extremely limited. Hey, if a private org wants to try this out — why not? But before you start one of these projects, one needs to be able to say you’re willing to say the experiment was a failure… or even indicate what would constitute success.
Wait, they’re trying to fund the project now? Do they not have the money already?
This is what the donor list looks like right now:
Nicholas Thompson
19 hours ago
$25
MG
Michael Godina30 days ago
$40
Anonymous
2 months ago
$100
HK
Hannah Krier2 months ago
$25
It’s not the amounts I want to point out — it’s the timing on these donations. Are they just doing empty PR for a project they don’t even have money for yet?
The motivating question is simple: in communities that are looking for a way forward amid disinvestment and shifting economic forces, can a guaranteed income unleash potential and provide needed stability?
The demonstration is animated by two core ideas: first, that a guaranteed income, in the tradition of Martin Luther King Jr.’s vision, has the potential to effectively and efficiently provide economic stability and dignity for individuals as they aim to thrive, and second, that we need to look to and learn from the experiences of recipients to determine if it works.
We will kick off the demonstration with a six to nine-month design period that will prioritize community engagement and feedback. In that time period, we will concrete the family selection process and identify research and storytelling partners (learn more about the request for proposals here). We will also identify research priorities that complement existing research on unconditional cash transfers in the United States and invest in storytelling that honestly and authentically uplifts the experiences of recipients.
That is labeled as being from the Stockton Team, October 10, 2017.
So… storytelling. Storytelling is going to be one of their success metrics?
I can tell you some stories for a lot less than $50K.
If you’re an academic or institution….
The demonstration will prioritize producing high-quality data that contributes to growing arsenal of evidence on cash. We are eager to work with academics and institutions that are interested in examining the impact of unconditional cash transfers on communities (and not just the individual recipients). We are looking for partners that excel at qualitative analysis alongside quantitative data, deploying methods that could include interviews, ethnographies, and participatory storytelling. We are now accepting Letters of Intent for parties willing to use the Stockton Economic Empowerment Demonstration to identify, design, and execute a research agenda that explores the potential impact of a guaranteed income. See submission guidelines here.If you’re a storyteller…
We believe that one of the most important perspectives — that of the potential recipients — is missing from the current debate on a guaranteed income. We are now accepting Letters of Intent from both individuals and institutions working in a variety of media including, but not limited to, podcasts, writing, video, interactive media, social practice, and oral storytelling. These proposals will be considered for grants ranging from $5,000 – $300,000. See submission guidelines here.If you’re a Stocktonian…
Mayor Michael Tubbs and his team are excited and eager to lead a rigorous and thoughtful community engagement process that will collect and respond to the needs and concerns of the community. If you are interested in sharing your initial thoughts or volunteering, please indicate here.
It sounds to me that grant recipients, whether for storytelling or research, will be getting more than $500/month for their efforts.
The “storytelling” part is just marketing/PR under a less professional-sounding name. So yes, they want research, but they also want somebody to help craft messages so that whatever comes out of this project looks good. I highly doubt they want people telling stories about how the UBI plan failed.
I am starting to be skeptical that anybody will be getting any UBI at all. But hey, let’s check about funding.
The Economic Security Project (ESP) is a network committed to advancing the debate on cash transfers and a guaranteed income in the United States. ESP funds research to inform the debate, campaigns to expand access to cash, and cultural initiatives to inspire the public’s imagination. Established in December 2016, they are co-chaired by Natalie Foster, Dorian Warren, and Chris Hughes. You can learn more about their efforts at ecomicsecurityproject.org.
The Goldhirsh Foundation is also providing funding by matching up to $250,000 in donations to SEED with aims to inspire and galvanize others to join them in supporting the exploration of a guaranteed income.
We will continue to seek support for SEED as we finalize the project’s scope and plan. If you are interested in being a part of our vision, you can donate here. 100% of the funds will go directly to Stocktonians.
Including storytelling Stocktonians.
Note that Goldhirsh will match. I assume there are people going out asking for corporate donations, so perhaps those sparse individual donations aren’t terribly meaningful with respect to them gathering money.
Because it’s not like Stockton can really afford to be ponying up extra cash for this.
Of the news stories I see on this page, and that the mayor of Stockton has his own highlight page…. this looks like PR for the mayor.
So, get back to us next year and let us know if anybody other than researchers and storytellers were given money. Because this is looking… questionable to me.
I had some other criticisms of this program, a la Steve Greenhut, but now that I’m not seeing much actual proof that there’s money there to fund anything, there’s no need for me to say anything. Yet.
