An Experiment in Universal Basic Income: What Will Happen to Stockton?

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Ernest James Flickr/CC-by-2.0 (https://creativecommons.org/licenses/by/2.0/)
Stockton, Ca., just outside Silicon Valley, declared bankruptcy three years ago. Now, it's taking a grant from a research institute and will pay 100 people in the city of 300,000 $500 per month just because. It's a test of an increasingly popular idea - universal basic income.

Grab your popcorn and sit back for this one.

Vox is reporting that Stockton, Ca., is working on launching the Stockton Economic Empowerment Demonstration (SEED) next August. The program has already received $1 million from the Economic Security Project, "a pro-basic income advocacy and research group co-chaired by Facebook co-founder and former New Republic publisher Chris Hughes and activists Natalie Foster and Dorian Warren."

Stockton Mayor Michael Tubbs, currently the youngest mayor in America for a city of more than 100,000 people, wants to run the program for three years. If 100 people stay in the program for that time, it will cost $1.8 million. Financially, universal basic income could work on a sample level. But on a city-wide basis, it may be hard to do.

The fiscal situation in Stockton is much improved from when it fell into bankruptcy, but a truly universal, not-lotteried benefit at the municipal level would be challenging to enact. The plan would likely trigger an influx of residents from nearby towns (and maybe even some from farther away). The town, facing high borrowing costs due to its junk bond-level credit ratings post-bankruptcy, would need to raise taxes in response to that. Higher taxes could in turn lead some high-income residents to leave, setting off a vicious cycle.

As a payment system to residents, universal basic income takes multiple forms.

Ontario, Canada; Finland; and the international charity GiveDirectly in Kenya have all launched basic income experiments of their own. Yet another study, funded by the early-stage venture capital firm Y Combinator, is launching soon, and Glasgow, Edinburgh, North Ayrshire, and Fife in Scotland are jumping into the ring too. (A full list of ongoing and announced basic income pilots can be found here.)Each of those studies has different goals. Ontario, Finland, and Scotland are interested in potentially reforming their welfare/social assistance systems, attracted by the simplicity of just giving people cash without conditions. (Finland has already largely botched its experiment through poor design, rendering its research value rather limited.)GiveDirectly wants to test the viability of regular cash payments as a global development tool, for use by aid and development agencies like USAID or the United Nations or World Bank as well as national governments in poor countries.Y Combinator wants to see what risks people take when given an unconditional stipend: if they start more businesses or become more creative and ambitious or if they just keep on working.

Will the money drive the entrepreneurial spirit, a desire for self-improvement, or greater volunteerism? Tubbs says he hopes so, but the jury has yet to convene.

What do you think of a universal basic income?

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