Money for nothing
The City of Minneapolis is undertaking an experiment with universal basic income (UBI), paying households $500 per month for two years, no strings attached. The program will run from the spring of 2022 through 2024.
The city will use $3 million in federal COVID relief money for the program, which will help support 200 families. St. Paul already has a similar pilot program in place. (See John Phelan’s piece from June 2020 on the St. Paul program.) The City of Stockton, California operated a test program beginning in early 2019.
The idea of a universal basic income has been around in different forms for decades. Nobel prize-winning economist Milton Friedman advocated a version known as the negative income tax. In his version, payments would come from the government to supplement earned income. The payments would replace regular welfare payments, food stamps, housing subsidies, and other aid in cash and in-kind. The idea was to make one lump payment to recipients, and then they would decide how best to spend the money.
In the current UBI test programs, the monthly payments are supplemental, in addition to any other government benefits the household or its members may qualify for.
Nor are there any work or school requirements included. The payments come without any conditions. Nor does there appear to be any wealth, good conduct, or ongoing residential requirements. It’s free money, for however the program lasts.
Studies of past pilot programs focus on the outcomes for program participants. Not surprisingly, people who get free money for no effort appear to be better off than not getting free money. What is unclear is what impact such programs have on nonparticipants: those who work hard, pay their bills and taxes, but don’t receive largesse from the government. What is their incentive to keep playing by the rules?
For me, advocacy for these types of programs falls under a type of cargo cultism. The idea is to close the amazingly large income disparities in Minneapolis and other large, liberal cities. Just giving people more income would seem an obvious solution to closing the gap. But $500 per month meets no one’s definition of a living wage. Instead, we seem to be giving recipients the accoutrements of a middle-class lifestyle without providing the education, life skills, and habits of thrift and economy that most rely on to achieve the status on their own.