What is "California Optimistic"? Paying for Everyone's Basics
"California Optimism is an admixture of this hope and desperation."
Witness the hope of all young actors heading to California each year thinking they're going to become a famous movie star. What happens to them when they arrive? If they can avoid being "Weinsteined" they end up facing other disappointments.
Is that also the case for Universal Basic Income, the idea (as we recently described is under way in the city of Stockton, Calif .) that everyone should be paid a small stipend each month by the government to take care of essentials? UBI is a pretty self-explanatory concept - it's universal, it's income, and it's a basic amount - just enough to cover some expenses. Proponents also suggest that it be used as a substitute for other more expensive government-run programs.
The money everyone would receive is unrestricted. People can use it how they like. The mayor of Stockton thinks the $500 per month he proposes will be used for start-up businesses or charity by those who have their basics covered. For some, it will be used to cover the rent and food.
Just a couple challenges to that pretty picture:
Basic Income schemes essentially take(s) money out of the pot currently reserved for the needy and disabled, and distribute(s) it to able-bodied people plus the needy and disabled. Such a scheme may have good effects, like encouraging people to enter the workforce by removing the welfare traps that can make people who switch from benefits to paid work worse off. But if that’s the main plus, why not just restructure the existing benefits so that these traps don’t exist, instead of blindly re-allocating money from the for-sure needy to wealthy hipsters who don’t feel like working? ...
Current poverty reduction programs are not perfect, but they do make attempts to stop those most vulnerable from being exploited. What happens to these people on UBI? Are they simply to be continuously scammed? I don’t think we can call that an improvement. ... The poor in the US are faced with some pernicious financial instruments: Payday loans, car title loans, furniture leasing, fees for keeping a low balance, lottery tickets, and of course everyday hucksters. This is the PT Barnum objection: There’s a sucker born every minute, and we’re stuffing their wallet with plums for the taking.
If UBI is implemented at the expense of every other social program, it makes the presumption that people helped by those programs are competent and capable of shifting to a life of managing their own money, budgeting, and not being exploited by the thousands who will line up to do so. Think of the most vulnerable people you’ve ever encountered and remember that they get the same amount of money. Now think of everyone from cigarette companies to bling social status brands to landlords who will want a piece of their easily divested wallets. There are forms of poverty that we have spent a long time partially solving, and UBI may make those forms of poverty much worse. We must be careful to make sure UBI is not a transfer of wealth from the needy to hucksters.
What to do if UBI fails? The author suggests that Venezuela is an example of what happens when the whole shebang goes up in smoke. Perhaps one way to alleviate heading in such a direction (aside from skipping the UBI experiment) is, for instance, to supplement UBI with a basic job works programs to maintain agriculture (wouldn't Napa Valley love that?) or infrastructure.
Do you think this author underestimates the ability of people to take care of themselves? How do you help people who can't take care of themselves?
There are a lot of downsides to consider in this article, but can you offer some upsides to implementing UBI in a way that works?