Chicago's Next Really Bad Idea: A Guaranteed Basic Income

Universal income is a horrible idea from an economic and social point of view.  Universal income in Chicago, whose financial mismanagement is legendary, is even more laughable.


Chicago's Next Really Bad Idea: A Guaranteed Basic Income
Investors Business Daily

Money For Nothin': Apparently not satisfied with the already disastrous condition of its finances, Chicago this week said it would like to experiment with a universal basic income, a socialist pipe-dream that pops up every few years as a "new" idea. It's not. And it will never work. X

Chicago alderman Ameya Pawar has already proposed legislation that would give 1,000 families $500 a month. The bill looks like a shoo-in, garnering support already from a majority of the Windy City's lawmakers. Pawar is reportedly already working on the design of the program with Mayor Rahm Emanuel.

Chicago is the largest city yet to toy with this bad idea. There are many things that would help the working poor climb out of poverty. But a universal basic income (UBI), also called a guaranteed government income, isn't one of them.

Yet, even some conservatives fall for the idea, dreaming of eliminating the dozens of welfare programs at the federal, state and city levels and replacing them with one big check. It's attracted a wide range of supporters, everyone from Elon Musk and Mark Zuckerberg to union chief Andy Stern and conservative-libertarian Charles Murray embrace the idea.

Just this week, former President Obama, speaking in South Africa, said that a guaranteed income would be one way to shrink the "yawning disparities" in wealth and education.

Do these luminaries know something the rest of us don't? Sadly, no. They're just wrong.

There's already an experiment getting under way in deeply troubled Stockton, Calif., once known as the nation's home-foreclosure capital. Facebook co-founder Chris Hughes kickstarted that city's program with a $1 million donation. But it will have no more success than other "experiments" with giving money to people not to work.

Why are we so sure? It's already been tried elsewhere.

Indeed, in April, impeccably progressive Finland decided to end its limited experiment with a UBI that paid 2,000 nonworking people roughly $685 a month. The idea was that it would free up people to look for work, or be creative. It didn't happen.

"There is a problem with young people lacking secondary education, and reports of those guys not seeking work," said Heikki Hiilamo, a University of Helskinki professor of social policy. "There is a fear that with basic income they would just stay home and play computer games."

Far closer to home, as we've noted before, the U.S. has already tested a closely-related idea, the so-called "negative income tax." Essentially, it's a guaranteed income by another name. And it failed abysmally.

"In the 1970s, the government ran four random control experiments across six states to try the negative income tax, a similar policy proposal that was popular at the time," wrote Mimi Teixeira in The Daily Signal earlier this year. "In each text, the work disincentive effect was disastrous. For every $1,000 in added benefits to a family, there was an average reduction in $660 of wages from work."

So people who got checks stopped working or worked far less. What a surprise.

That's the socialist dynamic: Pay people to do nothing, and they'll do nothing. This doesn't require a Ph.D. in economics. It's simple common sense.

Yet, this is the level of thinking among our nation's mostly far-left elites. In truth, they're not overly concerned with people working less. Those who get checks will soon depend on them. And they will reliably vote for those who give them money, the leftist political elites. It's one of the most cynical political ploys imaginable, but that's what it is.

Conservatives who support such an idea naively think it will shrink the welfare state. But all it would take is one election with a Democratic president and Congress, and the welfare state would be even larger — taking more money from those who work and giving it to those who choose not to.

It's hard to imagine a more anti-work policy. Rather than empowering the poor, it turns them into wards of the state. And work is important to people, part of creating a meaningful life, a bedrock of civilization.

A universal basic income would destroy any incentive people have for bettering themselves through further education, training, relocating to a better area to find a job, or even just getting up from the couch to look for work down the street. Why bother? Check's in the mail.

Worse still, it is indiscriminate. Most Americans agree on the need for a safety net for the truly needy and destitute. Giving money to those who are neither needy nor destitute undermines that, too.

Then there's the money problem.

One of the most common suggestions we've heard is that every American should get the equivalent of about $10,000 a year. But as the American Enterprise Institute's Robert Doar recently noted, that would come to about $3 trillion a year. That's far more than we now spend on welfare, and more than we currently collect in income taxes.

Where will the money come from? Those who work. It will be a massive redistribution scheme, as we noted, from those who work to those who don't.

Which brings us back to Chicago, a city that has been misgoverned for years by leftist politicians and is in dire fiscal straits, thanks to reckless spending and lavish public sector pensions. It can ill afford a program as wasteful and economically damaging as a universal basic income.
Chicago: City On The Brink

Last year, The Fiscal Times ranked 116 cities with populations greater than 200,000 for their fiscal soundness. Chicago ranked dead last. Just like the state of Illinois, it is broke. And the current incompetent regime seems to think that raising taxes to stratospheric levels and spending more is how to fix the problem.

Rather than put in place policies that would attract investment, encourage work and lure entrepreneurs to start new businesses, such as cutting taxes, useless regulations and wasteful spending, Chicago's politicians instead engage in moral preening of the worst kind.

Advocacy of a universal basic income is perhaps the worst example of this. It is a ruinous "experiment" that everyone knows will fail.

Nor is it "welfare reform." It's just socialism, dressed up as compassion.

Americans would be wise to beware politicians who promise them a workless utopia paid for by others, those they call "the rich" but are really the hard-working middle class. Such an idea won't work, because it can't.