Tag Archives: Stockton

Yang Was Right

The Guardian recently ran a headline that made me chuckle: “California Mayor Has Tried Universal Basic Income. His advice to Trump: Go Big.” The chuckle wasn’t due to the California Mayor’s conclusions about Universal Basic Income (UBI); it was a response to the demonstrably ridiculous idea that Trump would take advice from anyone about anything.

As federal lawmakers continued to squabble over the form of the zillion-dollar intervention(s) that are clearly required if we are to have any chance at all to avert a depression, the Mayor of Stockton, California was the latest to sing the praises of a UBI–the proposal that formed the centerpiece of Andrew Yang’s Presidential campaign.

Stockton launched a basic income experiment last year, and Michael Tubbs, Stockton’s mayor, has become an ardent advocate of providing direct cash assistance to people.

The idea of providing a universal basic income to citizens is not new, but it has found new supporters in recent years, as some tech industry leaders have embraced “UBI” as a possible response to rising inequality and a growing number of American jobs lost to automation. The Facebook co-founder Chris Hughes is among the proponents of the policy; the Economic Security Project, which he co-chairs, is helping fund basic income experiments in Stockton and elsewhere.

Stockton is just the latest in a global string of experiments with no-strings cash assistance. Results of those experiments have been extremely positive, as is the early data from this one, according to the academic researchers  running the evaluation of the program.

“If you give people free cash, how do they spend it? They’re very rational about it, and they make great decisions,” said Stacia Martin-West, an assistant professor at the University of Tennessee College of Social Work and one of the lead researchers.

Labor leader Andrew Stern has pointed out that, with a UBI, in contrast to welfare, there’s no phase-out, no marriage penalties, no people falsifying information. And support for the concept isn’t limited to progressives. Milton Friedman famously proposed a “negative income tax,” and F.A. Hayek, the libertarian economist, wrote “There is no reason why in a free society government should not assure to all, protection against severe deprivation in the form of an assured minimum income, or a floor below which nobody need descend.”

In 2016, Samuel Hammond of the libertarian Niskanen Center, noted the “ideal” key features of a UBI: its unconditional structure avoids creating poverty traps; it sets a minimum income floor, it raises worker bargaining power without wage or price controls; it decouples benefits from a particular workplace or jurisdiction; since it’s cash, it respects a diversity of needs and values; and it simplifies and streamlines a complex web of bureaucracy, eliminating rent seeking and other sources of inefficiency.

Hammond’s point about worker bargaining power is especially important. Today’s work
environment is characterized by vestigial unions and the growth of the “gig economy.” Employee bargaining power has eroded; wages  have been effectively stagnant for years, despite significant growth in productivity. In 2018, Pew Research reported that “today’s real average wage (that is, the wage after accounting for inflation) has about the same purchasing power it did 40 years ago. And what wage gains there have been have mostly flowed to the highest-paid tier of workers.”

If the U.S. had a UBI and single payer health coverage, workers would have the freedom to leave abusive employers, unsafe work conditions, and uncompetitive pay scales. A UBI might not level the playing field–but it would sure reduce the tilt.

It is also worth noting that a UBI would have much the same positive effect on economic growth as a higher minimum wage. When poor people get money, they spend it, increasing demand.

This is all, of course, pie in the sky so long as we have a self-absorbed, monumentally ignorant, mentally-ill President, and a Republican Senate led by the irredeemably  corrupt Mitch McConnell. It remains to be seen how the Coronavirus pandemic will affect November’s election, but if these men–representing the utter detritus of humanity–are still in office in January, the lack of a rational social-safety net will be the least of our problems.