Six Years After Bankruptcy, Stockton Is Preparing To Start Handing Out Free Money

Almost six years after a judge declared Stockton, Calif the most populous US municipality to ever declare bankruptcy, the city has struggled through a painful Chapter 9 restructuring, but its primarily agriculture-based economy remains mired in poverty.

As KQED News explains, Stockton residents are struggling with stagnant wages, rising home prices due to the city’s proximity to Silicon Valley and a loss of middle class jobs – all against a backdrop of the looming threat of automation. The city first filed for bankruptcy in 2012.

The pervasive poverty in his city is what led Stockton Mayor Michael Tubbs to announce last year that the city would soon begin an interesting social experiment.

Starting later this year, a random sample of 300,000 Stockton residents will receive $500 every month with no strings attached. The program is set to become the US’s largest experiment with a policy that has become a favorite topic of Mark Zuckerberg and his Silicon Valley peers: Universal Basic Income.

 

UBI was famously first proposed by Richard Nixon as a way to soften the impact of post-industrial job losses. But the American left is increasingly discussing it as one method for curbing widening income inequality. Tubbs hopes to begin making payments as soon as August.

And as mayor, Tubbs says it’s his duty to help Stocktonites lift themselves out of their dire circumstances.

“I feel that as mayor it’s my responsibility to do all I could to begin figuring out what’s the best way to make sure that folks in our community have a real economic floor,” Tubbs said.

“I think Stockton is absolutely ground zero for a lot of the issues we are facing as a nation,” Tubbs said.

To the relief of Stockton’s taxpayers (and lenders), the project is receiving private funds: Dorian Warren co-chairs the Economic Security Project, which is contributing $1 million to the initiative. He told KQED that the goal is to gather data on the economic and social impacts of giving people a basic income. In addition to tracking what residents do with the money, Warren said they will be monitoring how a basic income affects things like self-esteem and identity.

“What does it mean to say, ‘Here is unconditional guaranteed income just based on you being a human being?’ ” Warren asked.

The hope is to demonstrate UBI’s potential and encourage other cities to give it a try.

Michelle Anderson, a Stanford law professor, said Stockton may discover it gets more economic stimulus by giving money to its citizens rather than corporations it hopes will bring in jobs and tax revenue.

“The UBI that is being proposed in Stockton now is very small compared to the big corporate subsidies that cities like that engage in,” Anderson said.

However, nothing has been said about the fate of the experiment once private funding runs out: And there’s probably a good reason for that.

As the city’s mayor admits, Stockton has racked up millions in debt on development projects in the past.

“We’ve overspent on things like arenas and marinas and things of that sort to try to lure in tourism and dollars that way,” he said.

Tubbs thinks the UBI experiment will show that Stockton’s best bet is to invest in its own people.

But not everybody agrees.

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In what he describes as a “radical critique of Universal Basic Income”, Charles Hugh Smith explained in a post we published back in June how UBI – far from staving off widening income inequality – would instead lead to de facto “serfdom”.

But a radical critique must go much, much further, and ask: is UBI the best that we can do? If we provide the basics of material security – the bottom level of Maslow’s hierarchy of human needs – what about all the higher needs for positive social roles, meaningful work, and the opportunity to build capital?

This critique reveals the unintended consequences of UBI: rather than deliver a Utopia, UBI institutionalizes serfdom and a two-class neofeudalism in which the bottom 95% scrape by on UBI while the top 5% hoard what every human wants and needs: positive social roles in our community, meaningful work that makes us feel needed, and the opportunity to build capital in all its manifestations.

UBI is the last gasp of a broken, dying system, a “solution” that institutionalizes all the injustices of serfdom under the guise of aiding those left behind by automation. We can do better–we must do better–and I lay out how to do so in this book.

A radical critique must also examine the widely accepted assumption that automation will destroy most jobs. Is this assumption valid? It turns out this assumption rests on a completely false understanding of the nature of work, the economics of automation and the presumed stability of an unsustainable global economy.