Another Idiotic "Free Money" Proposal, This One From Chicago Mayor Rahm Emanuel

-edited

The economic lunatics are out in force, each upping the scheme previously proposed.

The Chicago Resilient Families Initiative Task Force, sponsored by Mayor Rahm Emanuel has an asinine proposal on the books.

I picked this one up from ZeroHedge. My analysis follows.

The report is 50 pages long and you have to wade through 37 pages of sob stories, anecdotes and other sheer garbage, to get to the bottom line.

GUARANTEED INCOME PILOT

  • Sample: The "sample" will be 1,000 low-income Chicagoans.
  • Amount: Participants will receive $1,000 per month.
  • Use of Funds: Use of the funds would be unconditional. Recipients can decide how the income can best meet their unique needs and goals.
  • Duration: Participants will receive the disbursements for 1.5 years.
  • Benefits: We want to ensure that the pilot does not make people who are most vulnerable worse off by preserving eligibility for existing benefits such as SNAP, child care assistance, and Medicaid.
  • Cost: A minimum $12 million per year will be needed for the cash disbursements. An additional stipend for participation in interviews, ethnographic studies, and surveys can be provided to those who give consent. Operations cost to be determined.

Pilot 100% Guaranteed Success

The pilot will undoubtedly a success. How can it not be? If you give 1,000 poor people an additional $12,000 a year their lives are 100% sure to improve.

The Problem

It's easy to improve the lives of 1,000 people by giving the free money no strings attached. The obvious problem is that it cannot possibly scale.

The population of Chicago is roughly 2.716 million. Give everyone 1,000 a month and that comes to $26.1 billion a year.

OK So let's not give the money to everyone. It will no longer be "universal" income as discussed in the report, but something less.

Demographics

The Census dept has Chicago Demographics.

If we exclude those under the age of 18 and throw those over the age of 65 under the bus, then we can lop off 33.2% of the bill.

If we further restrict the "free money" handout to those at the poverty rate then only 12.4% of the population gets free money.

But we are seriously getting away from the concept of "universal" aren't we?

Nonetheless, let's start there. The cost would be a mere $3.2 billion.

Chicago Budget

The Chicago Tribune reports "The $8.9 billion 2019 package included no vote on new tax or fee hikes, music to the ears of the council members who will be up for re-election in February and don’t want to give opponents that cudgel as they try to defend their seats."

Bottom Line

Even if we only give money to those at the poverty level, 12.4% of the population, light-years away from "universal income" the Chicago city budget would go up by a mere 36%.

Scalability

One of the goals of the "study" was to prove the plan is scalable.

Scrap the study as nonsensical.

Mike "Mish" Shedlock

Comments (45)
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Murdo McSponge
Murdo McSponge

Somebody has to do something about the ever increasing wealth gap. Chuck in AI, and the need to do something to rescue Society from some sort of explosion will becomeever more pressing, and ultimately unavoidable.

Chicago isn't the first place to try this. I think the Finns have had a go too, but stopped the experiment. I'm not sure why they stopped it or how successful or unsuccessful their experiment was - perhaps we should find out.

However, the fact that administrations in different places and at different levels are trying this out is indicative of the underlying need to solve poverty gaps everywhere. I have often thought that quantitive easing was wrongly directed; money shouldn't have been doled out to the banks, it should have been given to the general public - from lowest poverty level upwards. The banks would have go it all in the end. - They always do!!!

MrGrumpy
MrGrumpy

That $8.9 billion could help fund Chicago's public pensions. Perhaps that problem has already been solved. Strange, I haven't heard of it lately.

Chris P
Chris P

If this goes through, it will open up some great investment opportunities. The drug trade in Chicago will go through the roof. Not sure if you want to stand on the street corner to capitalize in it?

JonSellers
JonSellers

Hayek was a fan of a guaranteed income in order order to insure a non-coercive relationship between job-seekers and job-providers. However, I'm not sure that folks in danger of losing their SNAP benefits qualify as job-seekers.

ReadyKilowatt
ReadyKilowatt

So what's changed? Buying votes is a tradition in Chicago politics. I guess now they don't have to use campaign funds.

Sudo
Sudo

Cost: A minimum $12 million per year - That is probably true. Most likely it will be something like: Cash disbursement ------- 12 million Stipends -------------------------- 3 million Administrative Cost ------- 100 million (Salary, Medical, Retirement and so on) Salaried board of Directors ---- 100 million Lawyers to handle the resultant legal issues ---- Only God knows

Dsgn
Dsgn

"Nonsensical"? Didn't they used to call it "nonsense on stilts"?

thimk
thimk

Chicagoans "come on down" the price is right.

ksdude
ksdude

Problem is there's a lot of people in the US that want free stuff. They can also vote. I don't really think they're going to debate rather it works or not. If you have zilch and someone offers you money and food every month it's pretty clear who's going to get the votes. $1000 a month might be the magic number to put down the bong and xbox controller and someone drag their ass to the polling station and install an entire legion of AOC candidates. The current environment will also help their cause. Trillions for wars, billionaires in the news constantly, a bunch of filthy rich politicians,i'd suggest AOC is much more of a threat than you realize. That could be a reason she's in the news everyday .

stillCJ
stillCJ

Editor

A report was just issued on results of the Finnish experiment with universal income. For some reason they hoped it would result in more people willing to go to work. Surprise, surprise, that was not the result. The report I read did not make it clear if they are ready to abandon the idea, but at least they're not going to expand it.

AWC
AWC

Hell, give each Chicago taxpayer $75k, then, tax it back to pay off the cities debt. Why stop a $1k for a few "connected" people?

Knuckleheads.

RonJ
RonJ

"Chicago's Bold Path to Fiscal Insanity"

They arrived at their destination some time ago. How long have city pensions been over generous and under funded?

Carlos_
Carlos_

So free money to the poor for a change. Billionaires have been getting access to unlimited amounts at no cost for years and years. Good to see the democratization of free money

Carl_R
Carl_R

I'll offer a radical alternative. First, eliminate the minimum wage, so that everyone can get a job, regardless of their skill level or ability. Second, supplement their income, but in order to receive the supplement, they have to have a job. This way everyone can find work, and everyone can benefit from the boost to self-esteem that having a job gives.

Mish
Mish

Editor

Carl: "I'll offer a radical alternative. First, eliminate the minimum wage, so that everyone can get a job, regardless of their skill level or ability. Second, supplement their income, but in order to receive the supplement, they have to have a job."

Mish: Actually, point two is the basis of EIC Earned Income Credit - Republicans increased EIC.

Six000mileyear
Six000mileyear

In a free market, increasing demand signals the need to increase supply. Automation drives down the supply of labor. This presents a moral question: What does society do with its surplus of labor?

Welfare, government employment, and drafting people into military service for war are some strategies of the past. The first two involve taxing/borrowing, which leads to a false signal to continue creating more labor. War is definitely not the answer to labor surplus.

The Chinese have used forced abortion, which completely flies in the face of a free society of the US. It has also lead to chosing to letting a son be born. The imbalance of males in leads to a testosterone filled, agressing society that we are witnessing spilling into the rest of the world.

I would like to propose a reproductive buyout. The poor have a tough time pulling themselves up. It gets even worse if the family has children. By offering money that can be used for college and surgically preventing births into poverty, the negative feedback of poverty can be reduced significantly. Poverty will never be eliminated since someone will always make bad personal decisions.

Christian dk
Christian dk

MISH, They tried that in finland, but have just terminated the experience. People were still out of the work force,...why bother getting up in the morning... BUT they were much...happier..... Give me 1000 $ per month, and you can have my job.... Mike

WildBull
WildBull

A junkie's dream.

Hansa
Hansa

I love these "do with it as you want" proposals coming from big govt. control freaks. Yeah, gifts are MEANT to be wasted and thrown away. Who wants a practical spatula for Christmas, and who would prefer a colorful Yankee Candle that smells like vanilla? The people getting this money have no intention of spending it on heating and milk for the kids. But lottery tickets? Welllll.....