STUMP » Articles » Selling Universal Basic Income: Life is a Game! » 9 September 2019, 17:33

Where Stu & MP spout off about everything.

Selling Universal Basic Income: Life is a Game!  


9 September 2019, 17:33

As I’ve been busy & tired, I’ve let drafts of posts build up. If you ever wondered why so many of my posts are super-long:

1. I start by amassing links and articles, many of which I link over at the Actuarial Outpost in one of my many watch threads. Or I just start in a blank post.
2. And I wait til I have time to make some comments.
3. You have to pay me if you want me to keep it short (I write and am professionally edited every month at work.)

So eh, let me start pushing some posts out the door. Or delete them.


From presidential candidate Andy Yang running for the Democratic nomination:

I will give Andrew Yang one thing – he’s a bit different. He has still qualified for the Democratic debates, but I figure I need to post this before he drops out of the race. There’s already been a few to drop out.

People have questions/comments about the UBI:


Andrew Yang’s $1,000 A Month ‘Freedom Dividend’ Is A Major Tax Grab

Presidential candidate Andrew Yang cheerfully touted his “Freedom Dividend” during last night’s debate. We will save our economy and Americans by gifting them with $1,000 a month! WOOOO!

According to Yang, robots (whom CNN just touted as racist because robots are typically white) have taken over industries and caused unemployment to rise. His grand idea? Fork over $1,000 a month to everyone and our communities will be saved. Sounds great doesn’t it? I mean seriously, who wouldn’t want $1,000 a month arriving in your bank account – supposedly tax free? Easy money is GREAT!
Well, guess what? That money WILL hurt us. Here’s a breakdown of his proposal.

Only adult citizens will get the money. Thus if you are counting on a $5,000 per 5 person (2 adults, 3 kids) household, you are out of luck.

If you receive government benefits, you will be required to chose between those benefits and the Freedom Dividend. Would military veterans/spouses benefits be included or excluded from that choice? It isn’t clear since currently the only benefits listed include SSI, SNAP, and WIC.

Who will foot the bill for all of this largess?

A 10 percent VAT
A tax on financial transactions
Taxing capital gains and carried interest at ordinary income rates
Remove the wage cap on the Social Security payroll tax
A $40 per metric ton carbon tax
A metric shit ton of taxes because of course.

Woo! Party time!


I always love measuring taxes by metric shit ton. Gotta use the correct units.


Now, I’ve written on universal basic income before, and various experiments going on. Here’s a few:

Here’s one I didn’t know about in Jackson, Mississippi.

Washington Post: $1,000 a month, no strings attached:

A Mississippi program giving low-income mothers a year of “universal basic income” reflects an idea gaining popularity with Democrats even as restrictions on public benefits grow.

JACKSON, Miss. — Cheryl Gray had sat through so many presentations about programs to lift herself out of poverty that she could practically recite all the advice. But the one she heard last November seemed too generous to be true.

A nonprofit organization was looking to give 20 African American single mothers living in public housing $1,000 each month for a year. They’d be able to use the money in any way they pleased.

“I could do anything?” Gray, a 25-year-old single mother of two, recalled thinking, because this was not the way assistance programs typically worked.

For decades, Republicans and Democrats alike have tried to push families out of poverty by adding restrictions to government welfare programs. There were work mandates, time limits, benefit caps — rules aimed at pointing families toward what the government thinks are good choices.

Now, there is increasing interest in trying out the reverse. Here, in the cradle of the South, the women would be a part of one of the first pilot programs in the country to assess a seemingly simple solution to systemic poverty: giving people money — no strings attached.

Okay, fine. But there are issues, and it’s not because I think the expenditures are “unworthy” per se.

In Jackson, Gray just wanted to escape poverty. She had grown up poor and was pregnant at 16, which is when she started hearing people say she’d “never become nothing.”

“I wanted to show I could do it all on my own,” she said.

She tried to defy the stereotypes by staying in school and going to Jackson State University. Her bachelor’s degree in social work led her to $40,000 in student loan debt, a busted car and a cleaning job that paid no more than $11 an hour.

Okay, I’m having an issue with that student loan debt amount. There are loads of problems with debt not dischargeable in bankruptcy (that never should have been allowed).

If the loan had to be actually underwritten like other loans, there’s no way she would have been able to amass that amount of debt. And it sounds like the “asset” of her degree was worthless, as she has a job that does not require any degree whatsoever..

With the new money, she figured she could pay for graduate school so she could get a job with decent hours. Maybe she could find a new place to live.

Graduate school?!


Does she even know if such jobs exist? In her area? At all?

For all the résumé writing and programming that the Springboard to Opportunities workforce development program does to launch its clients into the middle class, its chief executive found that mothers still had one continual need.

“My mothers need cash,” said Aisha Nyandoro, also helped to establish the Jackson-based program.

This search for cash — not politics or job-sapping technology — is why she said she sought out a fledgling foundation co-chaired by Facebook co-founder Chris Hughes called the Economic Security Project, which is sponsoring guaranteed-income projects in Stockton, Calif., and Chicago.

Trying the experiment in conservative Mississippi, though, made the program inherently different.

The women live in a state with some of the most restrictive social service systems in the country. Minimum wage is $7.25. And a 2018 study by the National Conference of State Legislatures showed that Mississippi had the harshest penalties in the country for recipients not meeting work requirements for food stamps.

And yet, in an area where jobs were scarce and transportation options were lacking, the social safety net was the most secure source of income clients had. Some worried about how much their benefits would be cut if they took the monthly checks from Nyandoro’s program, and about the bureaucracy that might be involved if they needed to reclaim those benefits.

Of the 110 women eligible to be a part of the program, only 38 applied.

The 20 women selected for the experiment in November 2018 earned an average of $12,000 a year at the time. Fifteen of the women were working. Twelve had reported being so short on cash that they had used an emergency lender in the preceding six months.

The women started receiving the checks in December. Many of them kept their participation secret because they were afraid that neighbors and relatives might ask for money. To protect their privacy, Nyandoro held a meeting in a place that people in their community rarely ventured: a gourmet ice-pop shop in an upscale neighborhood about a 10-minute drive away.

Some of the women talked about their gift-filled Christmases and sported new hairstyles. Some said they took a sick day for the first time. They began paying off overdue electricity bills and high-interest loans.

Kira Johnson, a social worker, asked how much money the women had saved.

“I blew all of it,” Gray recalled. “It only took a weekend.”

Most of the women said the same thing. In a month, nearly all of the money had vanished.

The situation exposed a truth about poverty. The women knew how to make minimum-wage paychecks stretch, Johnson said, but they had little experience with discretionary income.

“Then, they asked if we were going to hand them the next check,” Johnson said.

When Johnson heard the request, she realized something else: Before the program, most of the women had not used a bank account.

And this gives one an idea why one cannot simply hand out money.

Here is the problem: it’s not merely having some cash that makes people middle class. It’s knowing not to blow all the cash on a big party, for example.

I remember being in college, trying to get away from freshmen in the dorms, because they did completely idiotic things like getting drunk the night before the final exam. Guys, the booze would be there tomorrow. Take the exam and THEN booze it up. Jeez.

But similarly for money issues: a lot of people, even with relatively high incomes, have troubles. Because they have no clue of all the things one needs to set aside money for.

I got into a really involved discussion re: retirement savings with people recently, and rather than recap that, the problem is that if you don’t learn the lesson, by the time you realize it, it’s pretty much too late to do anything about it. Many decisions are cumulative in effect. You amass a lot of debt now and never save any money… by the time you have fallen apart and cannot work, you are going to be dependent on Social Security. Period. And Social Security really doesn’t pay much.

The discussion at the shop exposed another truth for the women: Receiving money would not be enough on its own to lift them out of poverty. If they were going to save anything, the women said they would need a little more guidance and support about how to do it. Johnson set them up with a financial adviser who taught them about savings accounts, interest rates and building credit.

So, I can see that current welfare systems can be difficult, but the point is that one still needs to provide advice, etc. It does not necessarily need to be a government function, obviously. I know that the United Way often has programs like this, as they detail in ways they help people with economic mobility. Yes, getting money is really important, but understanding how to get the most bang for one’s buck – and how to protect against contingencies – once you’ve got that money is really key.

Many women who were employed found better jobs. But, despite Yang’s prediction, the number of women who were in the workforce did not change. Similar results were reported from a guaranteed-income study that took place in Finland.

Eyitayo Onifade, who is the director of the Center for Children and Families at Clark Atlanta University who is evaluating the Jackson program, said wages were so low in the city that there was not much incentive to choose employment, particularly for single mothers.

That makes sense. And no, the women don’t want to move elsewhere, because probably all their social circle is in the one place.

The problem is that simply giving people money doesn’t help them with actually getting into the habits of making the money get you lasting benefits.

It’s one of those features that pops up in the Wall Street Journal from time to time, when it has to do with the children of rich folks, having to learn how to deal with trust funds. The NYT tends not to run these sort of things, though I’m willing to be the NYT has some much richer readers than does the WSJ.

The point is: people have to be taught how to deal with money. It does not necessarily require an allowance, fwiw. But there are important lessons like: how not to spend money you don’t have. How to spend money so that you’re set up to have higher earning power. There is a reason debt is a constant subject of 19th century literature (obviously Dickens, but it’s all over the place, and the debt is often for stupid stuff, like gambling).

The WaPo piece has a few pointed comments on this profile:

Bwinlr wrote:

This article is uplifting and disheartening at the same time. Ms. Gray has a “bachelor’s degree” in social work, and has difficulty reading to her son because she doesn’t know the meaning of the words? And, that “degree” put her $40,000 in debt? The school should be ashamed.

The fact that she’s learning about simple finance and budgeting is wonderful, though. And, getting a home is, too. I really hope that, after the monthly income ends, she’ll be able to continue her upward path. It won’t be easy, though.


The son didn’t know the meaning of the words.

There is a problem here, though. Some college “sold” this woman a $40k social work degree that didn’t lead to a job. Social work is a normal middle class profession that does require a college degree (and usually a master’s to get the better jobs). So those jobs should be available, but I’m guessing the school’s program didn’t line up with the employment needs of the community it serves. We need to stop selling people dreams, and start selling reality.

The issue was probably there are social work jobs… but not where she wanted to live.

This is something I’ve had to tell people looking into actuarial work: it’s really location-concentrated. Unlike being an accountant, which you can do anywhere, actuarial jobs are concentrated around a handful of cities.

[re: the son not understanding the words — it was poorly-written on the part of the author. Other commenters mentioned it took them a couple of times to understand the sentence.]

One of the benefits of being in the social welfare system (and, mind you, I’m in it due to my autistic son) is that you get a social worker. In some places, the social workers can be really helpful in finding resources for particularly difficult situations.

StressedOut wrote:

I really love the concept. But, it will take a village to make it work, and I’d love to see this village become real. The stipend would help ease that always needing money to pay the bills and never giving these people the opportunity to actually plan a future. So, no, you don’t throw money at them and allow them to use the lack of information and knowledge that keeps them in poverty, but allow them the stipend and the support to learn new things.

So here’s another problem with throwing money at people.

These people become targets. This is one of the problems with all sorts of cash transfer programs, such as Social Security. Note the earlier quote, where it was mentioned that the women kept quiet about getting the money, because they didn’t want others asking for it. They were somewhat protected, because others didn’t know.

But if you’re an old person, people will bet you’re getting that monthly Social Security money.

Loads of people on Social Security are financial scam targets because:

- as people get older, they lose executive function, and the ability to detect scams
- they’ve got a steady monthly check that can be siphoned away

People with an uncertain flow of funds are less attractive as long-term scam targets.

That one knows that everybody is getting a certain income, no strings attached, every month….and some people are not good with handling money… yeah, I can just imagine all the schemes to take advantage of this.


California city tests buzzy campaign idea for income

Democratic presidential candidate Andrew Yang wants to give cash to every American each month.

Susie Garza has never heard of Yang. But since February, she’s been getting $500 a month from a nonprofit in Stockton, California, as part of an experiment that offers something unusual in presidential politics: a trial run of a campaign promise, highlighting the benefits and challenges in real time.

Garza can spend the money however she wants. She uses $150 of it to pay for her cellphone and another $100 or so to pay off her dog’s veterinarian bills. She spends the rest on her two grandsons now that she can afford to buy them birthday presents online and let them get the big bag of chips at the 7-Eleven.
Stockton, once known as the foreclosure capital of the country and for one of the nation’s largest municipal bankruptcies, is a step ahead of both candidates. In February, the city launched the Stockton Economic Empowerment Demonstration, a pilot program spearheaded by a new mayor and financed in part by the nonprofit led by Facebook co-founder Chris Hughes. The city chose 125 people who live in census tracts at or below the city’s median household income of $46,033. They get the money on a debit card on the 15th of each month.

I think poverty is immoral, I think it is antiquated and I think it shouldn’t exist,” said Michael Tubbs, the city’s 29-year-old Democratic mayor.

Tubbs’ personal story includes a cousin who was killed, a father who is in prison and a mother who, as a teenager, raised him with the help of multiple jobs. He found his way to Stanford and public service, where he persuaded his beleaguered city to sign on to a provocative new idea: guaranteed cash.

Stockton residents, who have elected Republican mayors for 16 out of the last 22 years, were skeptical, worried about encouraging people not to work. Tubbs said he calmed their fears by noting the money came from private donations, not taxpayer dollars.
A team of researchers is monitoring the participants. Their chief interest is not finances but happiness. They are using what they call a “mattering scale” to measure how much people feel like they matter to society.

The idea of a guaranteed income dates back to at least the 18th century and has crossed ideological and cultural lines.

In the 1960s and 1970s, Republicans Donald Rumsfeld and Dick Cheney oversaw four guaranteed-income experiments scattered across the country when Rumsfeld, later a defense secretary, was director of President Richard Nixon’s Office of Economic Opportunity and Cheney, the future vice president, was his deputy.

The program had some hiccups, including a woman who spent all the money on alcohol and a man who went into debt buying expensive furniture for his government-subsidized apartment, according to a 1970 New York Times story. But the experiment concluded that the money did not stop people from working and led Nixon to propose expanding the program, which ultimately did not pass Congress.
Other critics note that the programs can chip away at the social safety net. Yang’s plan requires recipients to decline food stamps and some other government assistance.

There’s also the question of how to pay for it.

Stockton’s program, giving 125 people $500 per month for 18 months, will cost just over $1.1 million. Harris’ plan, which covers working families making up to $100,000 annually, would cost about $275 billion per year, according to the Tax Policy Center. To pay for it, she says she would repeal some of the 2017 GOP tax cuts and impose new taxes on corporations.

Yang’s plan, which covers every adult in the United States, would cost $2.8 trillion per year. He would impose a new tax on businesses’ goods and services while shrinking some other government assistance programs. Representatives for Yang and Harris did not respond to interview requests.

The Stockton experiment runs through July 2020. Researchers expect to release their first round of data this fall, when the presidential campaigns are preparing for the Iowa caucuses and state primaries.

Well, that’s something to look forward to, but given its focus on “happiness” … I’m not sure I’m going to find much of anything that’s useful.

I don’t see “happiness” as a governmental mandate.

It’s also not the government’s business to teach you finances (given the state of local, state, and federal finances, I don’t really think they have credibility to do so).

But one of the joys of being in government is that shit ton of government money (a.k.a. other people’s money) they get to play with.


And if Yang wants to sell his idea by referring to Monopoly, he needs to remember:


And that’s all I have to say about that.


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