Stockton’s Basic Income Experiment: 40% Of The Money Is Unaccounted For

The initial report on Stockton’s “basic income” experiment, in which 125 residents in low-income Zip Codes receive $500 a month, shows that most of the money that can be tracked has been spent on necessities. But that’s only part of the story. Forty percent was transferred to bank accounts or turned into cash and has left no trail.

So, where did it go? How can the program — currently funded by a nonprofit that supports “projects that explore and champion unconditional cash for Americans,” but sure to be paid for by taxpayers if it becomes permanent — be accurately analyzed if four of every 10 dollars can’t be monitored?

Of the purchases that can be tracked, 38% went for food, 24% for home goods and clothing, 11% toward utilities, 9% to buy gas; and 18% was spent on “other,” which includes “services, medical expenses, insurance, self-care and recreation, transportation, education and donations,” says Fortune.

Stockton Mayor Michael Tubbs, who initiated the project, has said he “thought it was important to illustrate folks aren’t using this money for things like that. They are using it for literal necessities.” Eventually, “researchers overseeing the program,” Fortune reports, want “to see if people change their behavior,” and also “measure how the money impacts their physical and mental health.”

But that data won’t be released for a while. And even then, will it be enough to determine if such a program will work? No matter how much data is compiled over time, it won’t be of use unless every dollar can be tracked.

One of the researchers defends the program as a means for people to use “the money in ways that give them dignity or that gives their kids dignity.” Yet PRI’s Damon Dunn, who knows what it’s like to grow up in need, says basic income programs are “another name for putting everyone on welfare.”

“By establishing the principle that every person is deserving of, and in some fundamental way needs government support, it systematically lowers the expectations that we have for one another as participants in a free society,” says Dunn.

He believes a basic income is “a fundamental shift in the relationship between the people and their government,” which will be “uniquely disempowering to the average citizen.” While growing up he saw “communities ravaged by precisely this type of policy” because “if you set low expectations for people, they tend to meet them.

There’s no human dignity in that.

Before Stockton sent out the first dollar, it should have, and could have, looked at programs elsewhere to determine if the city should pursue the project. Had it done so, it would have found that Finland tried but dropped a basic income project in about year. Had it stubbornly stayed the course, the country would have been forced to raise its income tax by nearly 30% says Joseph Semprevivo, an author, business owner and professor of finance, real estate and business at Indian River State College. In a nation where the personal income tax rate “already maxes out at more than 50%, another increase would likely prove unsustainable.”

A basic income program in Ontario, Canada, suffered a similar fate.

In the U.S., an experiment much like universal basic income that was developed to test the negative income tax was implemented in four random trials across six states from 1968 to 1980. It resulted in fewer hours worked, longer unemployment, and decreases in earned income, according to Vijay Menon, a policy adviser for the Joint Economic Committee.

Rather than hand out dollars, policymakers should make it easier to live in California. Due in large part to steep housing costs, high energy bills, punitive income and motor fuel taxes — each the direct result of poorly conceived public policy — the cost of living in this state is the highest in the country outside of New York and Hawaii.

Our elected officials could change this, yet they seem determined to add even greater burdens.

Kerry Jackson is a fellow with the Center for California Reform at the Pacific Research Institute.

Nothing contained in this blog is to be construed as necessarily reflecting the views of the Pacific Research Institute or as an attempt to thwart or aid the passage of any legislation.

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