☆ Economist: County's guaranteed income programs are fool's gold: unsustainable and promote gov't dependence
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Local media recently celebrated a poorly designed Joint Venture Silicon Valley study, which discovered that people who get free money from universal basic income (UBI) programs (like Santa Clara County's) are more able to afford things that—hold your breath—cost money. Stanford economics prof John Cochrane provides deeper analysis, noting that UBI historically doesn't rescue people from poverty long-term or incentivize workforce participation. Wouldn't it help low-income folks better if cities purged their burdensome regulations/taxes and helped create real jobs instead? An Opp Now exclusive.
Who could possibly be surprised that if you unexpectedly hand out a thousand bucks a month—or two—to poor people, they appreciate the money and find it improves their lives? We’ve probably known that for at least 2,000 years, along with the hard problems of scaling up such generosity. Perhaps economics is known as the “dismal science” because we point out the hard incentives and budget constraints that are all to easy to ignore, but they are there in the real world.
If Santa Clara gives out free cash, won’t a lot of people move here to get it? We basically do hand out free cash if you come homeless and stay homeless, and literally hundreds of thousands of homeless assistance per person—tens of billions of dollars a year—has only increased the number and suffering of homeless. Since there isn’t enough money for everyone to get free cash, we have to withdraw support once people get a job and start earning money. Already, each dollar a poor person earns causes them to lose about a dollar’s worth of benefits. Do we want to add to that? And money does not grow on trees; it comes from taxes. When each dollar earned faces higher and higher taxes, will people not just join the mass exodus already underway?
From the European dole to the U.S. welfare of the 1960s to 1990s, giving people cash has never sustainably helped the unfortunate, and often simply swelled their numbers. That an unexpected gift is welcome and useful does little to disprove this long lesson of history.
If you really care about the unfortunate, as I do, give them opportunity. Let people build housing and provide jobs for them without oodles of taxes and regulations in the way.
Related:
Opinion: Guaranteed income inevitably “cannibaliz[es] existing welfare programs”
Will SCC’s homeless high school senior payouts backfire? Economist expresses worries
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