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How did that Universal Basic Income test work out?

Westlake Legal Group Tubbs How did that Universal Basic Income test work out? universal basic income The Blog Stockton Michael Tubbs mayor California

Last year we found out that the mayor of Stockton, California was launching a test program to see how a universal basic income program might work out. Michael Tubbs had arranged for a combination of public and private funding to allow a relatively small number of people to sign up for a monthly check with no strings attached. (In a curious turn of events they wound up having trouble attracting enough people to the test program because most people who received letters about it assumed it was a scam.) Tubbs did eventually get the program off the ground, however, and it’s been running for roughly a year.

So how did it work out? If you listen to the program’s supporters, not too badly. Most people claimed to be using the money for basic bills, food and necessities. Or at least that’s what they’re telling the people conducting the survey. (Fortune)

The first data from an experiment in a California city where needy people get $500 a month from the government shows they spend most of it on things like food, clothing and utility bills.

The 18-month, privately funded program started in February and involves 125 people in Stockton. It is one of the few experiments testing the concept of “universal basic income,” an old idea getting new attention from Democrats seeking the 2020 presidential nomination.

Stockton Mayor Michael Tubbs has committed to publicly releasing data throughout the experiment to win over skeptics and, he hopes, convince state lawmakers to implement the program statewide.

This doesn’t seem to be a question as to whether or not people enrolled in the program like it or not. Who’s not going to like having extra money every month that they’re not used to seeing? The real question mark hanging over this “data” they’re releasing is how accurate or valuable it is.

The money was distributed on debit cards in the amount of 500 dollars per month. The first red flag is the fact that nearly half (40%) of the money was withdrawn as cash at ATMs, so you have nothing to go on but anecdotal data as to where it went. Of the money that was spent directly using the card, nearly half went for food, with smaller percentages going to nearly everything from utility bills to “self-care and recreation.”

One of the concerns expressed by critics when this started was that people might be using the money for alcohol, illegal drugs or other self-defeating expenses, so supporters are pointing to this data as a sign of success. But let’s hold our horses for a minute here. If 40% went out of ATMs as cash and people were actually using it for booze and drugs, do you think they’d tell you that when you call?

Also, nearly everyone in the program had some other form of income they had previously relied on, in the form of either full or part-time jobs or public assistance. They still had that money coming in after the program started. So if they use the $500 to pay bills or rent, that just frees up $500 from their normal income and nobody is tracking what happens to that money.

In other words, this data is essentially useless. What you’ve managed to prove is that people like getting free money from the government. I could have told you that before the program even began and saved you a lot of effort.

The post How did that Universal Basic Income test work out? appeared first on Hot Air.

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Universal Basic Income has majority support in the UK and Canada but not in the US

Westlake Legal Group UBI-support Universal Basic Income has majority support in the UK and Canada but not in the US universal basic income United States United Kingdom The Blog gallup Canada

Gallup released the results of a survey today on the topic of Universal Basic Income. The survey found that respondents in the UK and Canada overwhelmingly support UBI while it remains a minority position in the United States:

A recent survey by Gallup and Northeastern University finds a slight majority of Americans opposed to a universal basic income (UBI) program as a way to support workers displaced by AI adoption. Conversely, about three-fourths of residents in the U.K. and Canada favor the idea…

In the survey, UBI was defined for respondents as a government-instituted program that would provide every adult with a specific amount of money each year. These funds would serve as income support for people who lose their jobs or occupations because of advances in artificial intelligence…

Gaps in support for UBI among the three countries surveyed may be due to the tradition of more robust social safety nets in the U.K. and Canada than in the U.S.

In all three countries, young people are the most supportive of the idea. In the UK and Canada, about 80 percent of those 18 to 29 support it while in the US it’s 60 percent.

As for why there is such a gap between countries, Gallup may be speculating a bit but I think they are onto something. Countries where people expect free health care paid for by the government seem more likely to accept the idea of cash handouts paid for by the government. In fact, the most interesting result in this survey was the follow-up question about whether or not supporters of the idea would be willing to pay higher taxes to implement it. Here’s the chart prepared by Gallup.

Westlake Legal Group willingness-to-pay-e1569876053638 Universal Basic Income has majority support in the UK and Canada but not in the US universal basic income United States United Kingdom The Blog gallup Canada

Keep in mind this chart is the result for supporters of UBI only. Notice that in the U.S. it’s the young people who are most willing to pay for it. Put another way, only a fracton (14%) of the 60% of young supporters of the idea in the U.S. are not willing to pay more to make it happen. Meanwhile, in the UK and Canada 80% of the young support the idea but barely over half of them are willing to pay for it through higher taxes.

It’s enough to make you think that some sense of basic economics still permeates the U.S. In fact, I wonder if support for UBI wouldn’t rise UK/Canada levels if people here in the U.S. were less likely to feel obligated to contribute the money to pay for it. After all, UBI packaged with higher taxes (even if that’s just implicit in the respondent’s mind) is less appealing than UBI without higher taxes.

I’d genuinely like to know where the people who want this but aren’t willing to pay for it think the money will come from. Someone else, obviously, but who exactly would it be? They seem to have forgotten that sooner or later you run out of other people’s money.

The post Universal Basic Income has majority support in the UK and Canada but not in the US appeared first on Hot Air.

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An update on Stockton, California’s Universal Basic Income experiment

Westlake Legal Group Stockton-UBI An update on Stockton, California’s Universal Basic Income experiment universal basic income The Blog Stockton

Last year when I wrote about the pilot program for Universal Basic Income now taking place in Stockton, CA, I predicted that the outcome would be stories with headlines like “Stockton Recipients Benefit from Basic Income in a Variety of Ways.” That’s not the headline of this Associated Press update on the UBI program in Stockton, but honestly, it could be. The piece opens by highlighting one of the 125 people selected for this trial. Her name is Suzie Garza:

Garza can spend the money however she wants. She uses $150 of it to pay for her cellphone and another $100 or so to pay off her dog’s veterinarian bills. She spends the rest on her two grandsons now that she can afford to buy them birthday presents online and let them get the big bag of chips at the 7-Eleven.

“I’ve never been able to do that. I thought it was just the coolest thing,” said Garza, who is unemployed and previously was addicted to drugs, though she said she has been sober for 18 years following a stint in prison. “I like it because I feel more independent, like I’m in charge. I really have something that’s my own.”

I don’t want to be mean to Ms. Garza but honestly, having a job could give her that same feeling and no one else would be asked to pay for it.

The money has made Jovan Bravo happier. The 31-year-old Stockton native and construction worker is married and has three children, ages 13, 8 and 4. He said he didn’t see enough of his children when he worked six days a week to pay the bills.

That changed when he started getting $500 a month. Now he only works one Saturday a month. He uses the other Saturdays to take his kids to the amusement park and ride bikes with them in the park.

Good for Jovan Bravo spending more time with his kids. But is it right that taxpayers should be forced to subsidizing him $500 a month for his personal enjoyment? Granted, at the moment, all of the money for the pilot program is coming from a group called the Economic Security Project led by Facebook co-founder Chris Hughes. Chris Hughes has a net worth of $430 million so he can afford to give away the $1.1 million involved in this pilot and not even feel it. But that won’t be the case for taxpayers if this project were to expand to the entire country.

What infuriates me about this program and other UBI experiments is the way in which the “research” around it is designed solely to elicit positive headlines. There’s no cost-benefit analysis being done here. The entire effort consists of measuring how happy it makes people to give them free money:

A team of researchers is monitoring the participants. Their chief interest is not finances but happiness. They are using what they call a “mattering scale” to measure how much people feel like they matter to society.

“Do people notice you are there? Those things are correlated to health and well-being,” said Stacia Martin-West, a researcher at the University of Tennessee who is working on the program along with Amy Castro-Baker at the University of Pennsylvania.

As I’ve said before, can’t we just stipulate that free money makes people feel good? Do we need to hand socialist demagogues a certified talking-point about how science proves free money is awesome for personal well-being?

To make this fair, let’s assume we adopt Andrew Yang’s UBI scheme at a cost of nearly $3 trillion per year. Someone needs to run a pilot program that asks 125 people to pay significantly higher taxes (including those who currently pay very little in federal taxes) while also giving them $1000 a month as a UBI payment. Then we can ask how happy they feel about the trade-off. My guess is the reaction will be much more mixed.

The current pilot program runs through next year, but the first results will be released this fall. Expect lots more headlines marveling over the ways in which free money made people happy.

The post An update on Stockton, California’s Universal Basic Income experiment appeared first on Hot Air.

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Reminder: You can’t fund the left’s agenda on the backs of the rich

Westlake Legal Group Sanders-Warren Reminder: You can’t fund the left’s agenda on the backs of the rich universal basic income The Blog Taxes medicare for all free college Elizabeth Warren Bernie Sanders

Last week the Heritage Foundation published an analysis looking at what it would take to fund the progressive agenda, i.e. Medicare4All, free college, and either a job guarantee or some kind of Universal Basic Income. The paper concludes that it’s not possible to fund this agenda, not even if you take 100% of the income of everyone earning above $200,000 a year.

There’s been a lot of disagreement about the cost of these proposals. Another group published an estimate of the cost of the Green New Deal back in February and came up with the figure $93 trillion over ten years. Progressives reacted like vampires hit with a combination of sunlight and crosses. How dare someone try to estimate costs from a resolution that doesn’t even spell out any specific policies!

What Heritage does is break their analysis into two categories: a high estimate of $92 trillion and a low estimate of $48 trillion. In both cases the conclusion is roughly the same: US government spending would leap to third highest in the world (low estimate) or highest in the world by far (high estimate):

If the progressive agenda were to be implemented, then using lower-bound estimates, government spending in the U.S. would be higher than all other industrialized countries except Finland and France. If using the higher estimates based on more expansive programs and less conservative assumptions, then government expenditures in the U.S. would dwarf those in any other developed country.

Bernie Sanders, Elizabeth Warren, and other progressives always assure us we can pay for their proposals by taxing the rich. But Heritage ran the numbers. It turns out that even if you created a 100% flat tax on the wealthy, you can’t even reach the low-cost estimate:

Data from the Internal Revenue Service Statistics of Income show that imposing a 100 percent flat tax with no zero bracket amount on those with incomes of $1 million or more would increase federal revenues by about $986 billion annually. This figure is simply adjusted gross income less taxes paid for taxable year 2016. It means confiscating every dollar not currently taken by federal income taxes for those with an AGI of $1 million or more. Thus, a policy of confiscating all earnings of those with incomes over $1 million would not even eliminate the federal deficit, currently about $1.1 trillion annually—let alone pay for utopian progressive causes. This figure reflects taxation of all income, including the first $1 million, at 100 percent and does not consider federal payroll taxes or state and local income, property, and sales taxes (approximately $106 billion) already paid by this group.

Confiscating all remaining after-tax income of those with incomes of $500,000 or more would increase federal revenues by about $1.4 trillion annually. This assumes confiscation of their first $500,000 in earnings as well. This is enough to eliminate the federal deficit but not a great deal more. If, however, the federal government were to confiscate all remaining after-tax incomes of those earning $200,000, that would increase federal revenues by $2.7 trillion annually.

Obviously, if you confiscated 100% of earnings that would have a dramatic impact on the behavior of the people earning that money. Why work if you don’t benefit from it? So it seems extremely unlikely you’d be able to keep this scheme going for 10 years and keep collecting the same amount. However, even if you assume that were possible, it wouldn’t be enough:

Multiplying the annual amounts by 10 to achieve an imaginary 10-year revenue increase would result in the following figures:

Thus, confiscating all income of all taxpayers earning $200,000 or more would only fund somewhat over half of the progressive agenda using the lower cost estimates from Chart. Using the higher cost estimates, a 100 percent federal tax on all taxpayers earning $200,000 or more would only fund 29 percent of the progressive agenda.

Here’s the bottom line:

The European experience with large welfare states demonstrates that socialist or highly progressive policies must be funded by imposing very high consumption, payroll, and income taxes on the middle class. Notwithstanding the “tax the rich” rhetoric from progressive and socialist politicians, there simply is no alternative to dramatically raising middle-class taxes if the progressive agenda is to be implemented.

This is something I’ve written about before. Despite the reality of this being so clear that even Vox agrees, you almost never hear the leading progressives pushed to admit that their policies would require massive tax increases on the middle-class. Rep. Alexandria Ocasio-Cortez doesn’t even try to explain how she would pay for her policies anymore. After trying and failing to explain it she now just says we can’t afford not to fund her priorities. But these policies would be a lot less popular if people were frequently reminded there’s a significant cost associated with them, one that won’t just fall on the well-off.

The post Reminder: You can’t fund the left’s agenda on the backs of the rich appeared first on Hot Air.

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Alan Mak: Conservatism 4.0 – We must ensure that no-one is left behind by the Fourth Industrial Revolution

Alan Mak is MP for Havant and Founding Chairman of the All-Party Parliamentary Group on the Fourth Industrial Revolution.

Stanley Baldwin said the Conservative Party stood for “real England” – a Party defined by voluntary organisations and Christian patriotism, little platoons and big national causes.

His Conservative Party of the 1920s faced an upstart opposition in a Labour Party that had usurped the Liberals to become the second party of British politics. Outlining the growing threat from Labour, Baldwin described them as being for a nation of class divisions and over-mighty trade unions.

Under Jeremy Corbyn, Labour has come full circle and is once again challenging the success and legitimacy of our free-market economy.

A century on from Baldwin, and despite being the natural party of government, our Party has often struggled to break out from its vote base of shire counties and market towns. It’s over 30 years since we won a majority of over 21 at a general election.

But there are signs of change. Our electoral success in recent years has been driven by securing more votes in Labour’s industrial heartlands. Dudley, Mansfield, Copeland and Teesside have all elected Conservatives in recent years, whilst the West Midlands and Tees Valley have elected Conservative Mayors on a region-wide basis.

This Conservative momentum in areas once dominated by trade unions and the Old Left shows that our message of hope, personal freedom and low taxation can re-define our path to a majority.

Yet our progress in these Labour heartlands is not concrete and shouldn’t be taken for granted. A pro-Leave electorate that has trusted another party for so long will be looking to the Conservatives to not only deliver Brexit, but ensure they are not left behind by the next big technological revolution either. As I said in yesterday’s article, this commitment must be a central tenant of Conservatism 4.0 – Conservative ideology for the Fourth Industrial Revolution [4IR].

The last time our country went through a technological revolution we had a strong leader with a firm ideology. The computing revolution of the 1980s powered Britain to economic success – and political success for Thatcherism. Through deregulation and an unwavering belief in the free market, the City of London prospered from the Big Bang, and our economy was transformed into a services-based powerhouse. From the stuttering, strike-crippled, state-dominated closed market that Thatcher inherited, the foundations were laid for rapid economic growth and the business-friendly, pro-innovation environment we enjoy today.

Our next Leader will also find themselves at an inflection point. They will have to harness the Fourth Industrial Revolution (4IR) as artificial intelligence, big data and automation change our economy and society beyond recognition – and ensure that every community and region benefits from the wealth that it creates. Whilst Margaret Thatcher’s transformation of Britain’s economy for the better is undeniable, there are mining and industrial communities who felt they were left behind as other parts of the country raced ahead. To win a majority at future elections, today’s Conservatives need to attract working class and northern votes, so we cannot allow the positive impact of the 4IR to be absent from any region or for its benefits to be inaccessible to any social group.

The 4IR will radically change how we work, regardless of sector or industry. Instead of dockers and miners being at risk of automation, in the near future it will be call centre operators, lorry drivers and factory workers. With a path to electoral victory that increasingly runs through industrial towns, every factory closure or job lost to robots without alternatives emerging, will make a majority harder to achieve for our next leader.

That’s the reason why, whilst we still have an opportunity to shape the 4IR, our policies must be focussed on creating an Opportunity Society centred around social mobility powered by lifelong learning, high-quality education and skills training for everyone at every stage of their lives. Our Opportunity Society must be more than just a short-term policy objective. It has to be an integral part of the future of capitalism and a key part of Conservatism 4.0.

As robots slowly replace human workers, many on the radical-left are arguing for a Universal Basic Income (UBI), a minimum wage paid by the Government to every citizen regardless of their productive capacity. Every single country that has trialled UBI – from Kenya to Finland – has found it expensive and ineffective. Research by the International Labour Office has estimated that average costs would be equivalent to 20-30 per cent of GDP in most countries. In Britain, this would be more than double the annual budget of the NHS, yet John McDonell says a Corbyn-led Labour Govnement would trial it. These are just two of the reasons why we Conservatives should reject UBI as the solution to growing automation in the 4IR.

The truth is work has always paid, and work for humans will always exist. Work drives our economy, multiplies and makes the world richer. It takes people out of poverty and gives them purpose, and this will continue to be the case in the 4IR. In fact, many more new jobs are likely to be created than are lost to robots because the technology of the 4IR will drive economic growth, which in turn will create new and more interesting jobs, especially in new tech sectors such as advanced manufacturing, 3D printing, precision medicines and AI-powered creative industries.

Not enough is made of our job creation miracle since 2010, which has seen our economy put on three million new jobs. As we enjoy the lowest unemployment rates since the 1970s, we need to re-emphasise the value of work and the benefits to be derived from a good job. A UBI would be defeatist, signifying that humans had ceased to be useful in a world of machines, and be the antithesis of social mobility – there would be no need to work hard to move upwards on the income and living standards scale if we are all paid to stay at the same level. A UBI would also stall our economy through either crippling debt on the public purse or new taxes imposed on innovation. Similarly, Jeremy Corbyn’s proposed Robot Tax would simply mean a left behind country – a nation that fails to attract foreign investment and which becomes known for its anti-innovation approach to technology.

Instead, true devolution must be at the heart of delivering an Opportunity Society and making sure no community or individual is left behind. Our next Prime Minister must invest in the Northern Powerhouse and Midlands Engine so regional economic growth is put in the hands of regional leaders. The benefits of the 4IR, from new start-ups to overseas investment, must be enjoyed beyond the “Golden Triangle” of London, Oxford and Cambridge. As Juergen Maier who led the Government’s Made Smarter Review, argued, it’s about creating an “innovation climate” in regions such as the North.

We cannot expect the heavy industries of the past to return, but instead our focus should be on ensuring the new technologies of the future are exploited in every area of the country to create new jobs and rising skills levels in every community. The Liverpool City Region understand this, and have already taken the initiative. They have launched LCR 4.0, an ambitious plan to support manufacturing and advanced engineering organisations in the region by funding practical support to transform businesses through digital innovation. By helping traditional manufacturers upgrade their technology, they enable firms to stay in business and keep their workers employed by becoming more productive. Conservatism 4.0 should support more initiatives like this.

Moving towards a system of local business rates retention will also encourage further investment in skills and business support from local authorities as they reap the rewards of encouraging local growth. There should also be more scope for local taxation and decentralisation as a central tenet of Conservatism 4.0 to empower local areas to evaluate their workforces and set-up true long-term strategies for delivering local economic growth, building on the work of existing Local Enterprise Partnerships and new Local Industrial Strategies.

Conservatism has always evolved and must do so again as we enter a new technological age by putting social mobility and reginal devolution centre stage. They are the two key building blocks to ensuring that every community and region can benefit from technology-driven economic growth. While Thatcherism delivered for the Third Industrial Revolution, we need a new brand of Conservatism to build an Opportunity Society for the Fourth. My final article in this series, published tomorrow, will set out the four principles that should guide us as we re-calibrate Conservatism in the Fourth Industrial Revolution.

This article is the second in a three-part series explaining why adapting to a society and economy shaped by technology is key.

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Why so few takers for guaranteed basic income in California?

Westlake Legal Group Tubbs Why so few takers for guaranteed basic income in California? universal basic income The Blog Stockton Michael Tubbs mayor California basic income guarantee

Earlier this year we learned that Michael Tubbs, the new mayor of Stockton, California, was moving ahead with a few test programs involving a guaranteed basic income for some residents of his city. A couple of these proposals involved paying residents not to commit violent crimes, but a separate plan simply involved having a limited number of citizens signing up to get a monthly check, no questions asked. That project is now being rolled out, but there’s a curious phenomenon taking shape in Stockton. For some reason, people don’t seem terribly anxious to sign up for free money. (CBS Sacramento)

A team of independent researchers randomly selected 1,200 households where the median income is at or below $46,000. From the group, 100 will be selected to receive $500 a month for 18 months. But the response has been slow.

“We’re looking for at least half of the folks who have received the letter to respond back because it gives the evaluators a chance to select the 100 people from that group,” said Tubbs.

SEED is looking to study how an extra $500 will impact people’s health and stress level. They are looking to see if people feel financially secure.

In order to make this experiment in social engineering work, the city wants at least 600 people out of the 1,200 selected to respond and sign up for the program. From that group, 100 will be picked to receive the free checks. But strangely, they’re not getting close to the number they need yet. People simply aren’t sending back the forms.

Why? One reason might be at least hinted at in the messaging that City Hall is sending out. They’re appealing to people to believe that the letters aren’t some sort of scam or just a marketing trick. That makes a lot of sense if you think about it. If you received a letter in your mailbox out of the blue asking if you would like a monthly check for $500 for the next year and a half, what would you think? I’m fairly sure I’d toss it in the recycling pile without opening it. Sending in my personal information to some unknown individual for the promise of “free money” just sounds like it has to be a scam.

The Mayor’s plan also seems to target those who might not be 100% on the side of law and order. (Remember the plan to pay people not to commit violent crimes.) Do you suppose there might be an inherent level of distrust when it comes to a letter in the mail asking you to confirm your identity and address for the government? That might be putting some potential recipients off as well.

In the end, the programs that Tubbs is putting in place may still provide some enlightening data. Free money may well reduce people’s stress levels and make them generally happier and more secure. It could also improve their ability to pay their bills on time. But we’re talking about a pilot program that will involve only 100 people in a city of more than 300K residents. And it’s an economically disadvantaged area, so a significant portion of that population will be in the qualifying low-income bracket. They barely found the money for the 100 recipients on a limited basis. How would they ever expand such a program to cover everyone who would benefit from it?

The post Why so few takers for guaranteed basic income in California? appeared first on Hot Air.

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