“I am for doing good to the poor, but … I think the best way of doing good to the poor, is not making them easy in poverty, but leading or driving them out of it. I observed … that the more public provisions were made for the poor, the less they provided for themselves, and of course became poorer. And, on the contrary, the less was done for them, the more they did for themselves, and became richer.” – Benjamin Franklin
As most of you have doubtless heard, the city of Stockton, California, has decided to experiment with granting a Universal Basic Income, or UBI, to certain low-income residents, giving them $500 a month, no questions asked. Mayor Michael Tubbs explains it’s because his city is “ground zero” for issues like wage stagnation, rising housing prices and loss of middle-class jobs.
The source of funds for this experiment is the Economic Security Project, whose website states: “It’s time to end poverty and rebuild the middle class in America. We believe cash is an effective way to achieve that.” This organization is contributing $1 million toward the Stockton experiment. (They’re accepting donations, if you’re interested.) The goal of the grant is “to gather data on the economic and social impacts of giving people a basic income.”
In addition to tracking what residents do with the money, the project “will be monitoring how a basic income affects things like self-esteem and identity.” (It’s unclear whether purchases of pot, alcohol, or tobacco will be included in that monitoring.)
Stockton just emerged from bankruptcy. According to Mayor Tubbs, the bankruptcy occurred because the city “foolishly” racked up millions in debt on development projects in the past. “We’ve overspent on things like arenas and marinas and things of that sort to try to lure in tourism and dollars that way,” he said.
So – apparently abandoning proven strategies like improving the business climate – “Stockton may discover it gets more economic stimulus by giving money to its citizens rather than corporations it hopes will bring in jobs and tax revenue.”
That’s nice, but if Stockton’s big issue is the lack of jobs, wouldn’t it be better to lure in businesses that will supply employment and contribute to the city’s tax base? What am I missing here?
So let’s do a little math. Stockton has a population of about 320,554 people with a poverty rate of 21.8 percent (compared to an overall U.S. poverty rate of 14.7 percent). One million dollars divided by $500/month, divided by 12 months, equals (rounding up) 167. In other words, this high-profile grant will give 167 people (or 1/20th of 1 percent of the population) a baseline income of $500 per month for one year.
If we provided a UBI for everyone in Stockton below the poverty line, that would be 320,554 x 0.218 (the percentage below poverty) x 500 x 12 = $419,284,632 – nearly half a billion bucks.
Since “Universal” Base Income implies money for everyone (not just the low-income), let’s go crazy and imagine everyone in Stockton gets a UBI of $500 for one year. The cost for this would be 320,554 x $6,000 (which is $500 x 12 months) = $1,923,324,000. So there you have it: Nearly $2 billion to supply a universal basic monthly income of $500 for one year to ONE medium-sized city.
Heck, we could go even crazier and imagine a UBI of $500 per month for one year to every U.S. citizen. America’s population is currently about 325,858,248. Multiply that number by $6000, and the result is $1,955,149,488,000. That’s almost $2 trillion.
That’s a huge amount of money, so let’s back it down. Let’s say only those Americans living in poverty would get a UBI (meaning it’s no longer “universal”). If America’s current population is 325,858,248, and 14.7 percent live under the poverty line, that’s 47,901,162 people. Multiply that number by $6,000, and that’s $287,406,974,736 – nearly $300 billion per year, just to provide a UBI of $500/month. And this amount would never, ever decrease even if, say, the recipient gets a well-paying job and lifts himself out of poverty.
The current expenditure on welfare, according to the (liberal) Washington Post, is “just” $212 billion per year. Presumably welfare is temporary, but a UBI is supposedly permanent, and it would cost half again as much as welfare.
Where will this money come from?
But back to Stockton. The results of this experiment – or at least, the only results we’ll hear about – are a foregone conclusion. “The advocates of the plan make no bones about the fact that they think the idea will work and will serve as a showcase for other cities and states, and even other nations,” per this article. The project coordinators will cherry-pick some inspirational individuals for whom the UBI was a tremendous boon. Using this money, these shining examples will be able to keep a roof over their heads, start a small business, place a child in college, cure the common cold and finally get rid of those dust bunnies under the bed. Heck, some might even be able to afford to move out of Stockton.
Advocates say the “strings attached” nature of welfare is counterproductive for recipients – it traps people in poverty and rewards passive behavior, but the “no strings attached” form of UBI would be more conducive to improving lifestyles. Since it could never be cut, it would contribute to a higher income and improve the recipient’s financial situation because work is rewarded. Instead of the “ceiling” of welfare, it creates a “floor” from which people can lift themselves up. It would eliminate “fear, suffering, and existential panic” for a significant part of the population, according to this video.
The best way to fund UBI, we are told, is to end all welfare and use those funds to finance a UBI, which would eliminate government bureaucracy (oh, and they also want higher taxes for the very wealthy).
When this article hit Drudge last weekend, the reaction was explosive. Within hours, nearly 4,000 people had left comments, most of them outraged and scathing. These realists were counter-attacked by feel-good economically ignorant progressives who hammered down on the callous, cold-blooded, heartless anti-utopians who dared question the benefits a UBI could offer low-income people.
But of course, low-income people need a break, so how’s this for a wild, radical notion: Rather than hand out no-strings-attached government money, why not get the government out of the way of businesses trying to get established? According to Charles Hugh Smith with the Mises Institute, for jobs to be abundant:
- It must be easy to start a business;
- It must be easy to operate the new business;
- It must be easy to make a profit so the business can survive the first few years; and
- It must be easy to hire employees.
Does this sound like California’s current economic climate? Of course not, which is why businesses are leaving the Golden State in droves and cities like Stockton are left in a lurch. The situation will not – cannot – change until state and local governments change their insane anti-business strategies.
Like most progressive utopian schemes, handing out free money won’t work because it never – never – takes into account either human nature or basic economic realities. Any criticism of this utopian methodology is viewed as heartless, cold-blooded, unfeeling and hostile. Those with a grasp of sound economics and human nature are accused of wanting to keep people homeless or destitute, just for jollies.
Maybe it’s time to help people gain true dignity and pride through jobs. Improve the business climate, reduce the tax burden and heavy-handed bureaucratic regulations, and let America become the industrial powerhouse that once wowed the world.
Oh … and stop teaching the virtues of victimhood in the public schools.
Just some thoughts from (according to progressives) a callous, cold-blooded, heartless anti-utopian housewife.