A California City's High Hopes for Universal Basic Income Will Likely Disappoint

Stockton, CA, dubbed the “Foreclosure Capital” is now handing out cash to residents with no strings attached. Will it improve residents’ quality of life or just be a costly experiment showcasing why universal basic income won’t work here?

About 130 residents in the city’s low-income neighborhood (where household incomes fall at or below the median of $46,033) have started receiving debit cards pre-loaded with $500 cash to spend on whatever they want.

Researchers plan to study how the added income boosts spending and saving habits, and influences quality of life, financial stability, and other factors.

Lawmakers in the city and state as well as national leaders on the left ought to pay attention to the lesson from Finland’s recent failed experiment with basic income.

The mayor, Michael Tubbs said of the program:

“I think it will make people work better and smarter and harder. We’re not just designed just to work all day and run a rat race. We’re designed to be in community, to volunteer, to vote, to raise our kids. And I think the more inputs and investments we can give in people to do those things, the better off we are as a community.”

The idea is that with some guaranteed income from the government individuals would be free to pursue work or other opportunities more aligned with their passions and interests rather than what pays well. That sounds nice in theory, but like many well-intended policies, may lead to unintended consequences.

For example, with no requirements of work, what’s to stop individuals from dropping out of the workforce entirely and just relying on a government check. Why should taxpayers pay people to stay at home and do nothing?

Finland just published results from their own experiment with a basic income program. Not surprising, they learned that giving people a no-strings-attached monthly check does not lead to more people working.

The government of Finland gave 560 euros (about $633) to 2,000 randomly selected unemployed people aged 25 to 58 for two years. Even if they got a job, the checks didn’t stop.

Instead of promoting more active participation in the workforce, recipients of the basic income were no more incentivized to work than anyone else and if they did work, they earned less income.

On the bright side, basic income recipients had fewer health problems and less stress. They also said they were more confident in their own future.

That’s nice, but the role of government is not to put a smile on our face. Government should ensure that through a vibrant economy and smart rules and regulations, individuals can pursue their passions and interests.

And the cost for UBI nationwide would be scary. Economists estimate that giving each U.S. adult $12,000 annually would cost $3 trillion per year - nearly the same amount we collect in revenue.

Despite how many on the left are celebrating the goal of well-being, they ignore the financial costs and potential losses to the labor force. If “the rat race” seems endless, imagine chasing well-being, a standard that will never be satisfied.



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