Bankrupt Chicago Ponders Universal Basic Income, Obama Sings Hallelujah

Socialist fools are giving high fives and singing hallelujah as a Chicago alderman seeks a "free money" trial.

The Intercept reports Chicago May be the Largest US City to Try Universal Basic Income.

Chicago Alderman Ameya Pawar is worried about the future.

He is concerned that a coming wave of automation could put millions of people out of work and result in more extreme politics.

Pointing to investments in autonomous vehicles by companies like Tesla, Amazon, and Uber, Pawar observed that long-haul trucking jobs, historically a source of middle-class employment, may become obsolete. More people out of work means more political polarization, says Pawar.”We have to start talking about race and class and geography, but also start talking about the future of work as it relates to automation. All of this stuff is intertwined.”

Pawar thinks that one way to battle racial resentment is to address the economic precarity that politicians have used to stoke it. He has decided to endorse the universal basic income — an idea that has been picking up steam across the world.

The UBI is based on a simple premise: People don’t have enough money to provide for their essential needs, so why not just give them more?

Yes Indeed, Why Not?

How about the simple fact there is no such thing as "free money". It has to come from productive members of society via taxation or the printing press.

Fortunately, Chicago does not have a printing press, so it has to come from taxation. And taxation is driving away both businesses and high wage earners Fed up will Illinois stupidity. But reality does not stop socialist nutcases like Pawar.

Pawar's Pilot Program

Pawar recently introduced a pilot for a UBI program in Chicago. Under his program, $500 a month would be delivered to 1,000 Chicago families — no strings attached. Additionally, the proposal would modify the Earned Income Tax Credit program for the same 1,000 families, so they’d receive payments on a monthly basis instead at the end of the year — a process known as “smoothing” that enables families to integrate the tax credit into their monthly budgets.

It always starts out small, but it can never scale. Will $500 make a difference to those families? Yes, $6,000 would help a lot of people, but at what cost?

$6,000 * 1,000 = $6,000,000

Can Chicago Afford 6 Million?

It would be just a tiny part of Chicago's budget, but it would also be $6,000,000 wasted.

The obvious problem, but not to economically illiterate socialist fools, is how to scale it up.

Poverty Rate and Population

The Cook County Poverty Rate from the latest census is 16.7%.

The population in Cook County is 5.2 million.

Free Money Math

  • If we gave "free money" to everyone in Cook County the socialists would need to come up with $31.2 billion in additional taxes.
  • If we gave "free money" to only those in Cook County living in poverty (not even close to "universal"), the socialists would have to raise $5.2 billion.
  • Cook County is a super-set of Chicago, so for Chicago alone the numbers would be a bit lower. Then again, the tax base would be lower too.

Anyone who thinks this is a good idea has mush for brains.

Mush in Chicago

Obama Mush

Mush for Brains Disease Running Rampant

Clearly, the mush for brains disease is running rampant in Chicago.

For further discussion of the absurdity of universal basic income, please see More Give Everybody "Free Money" Idiocy

Mike "Mish" Shedlock

Comments (50)
No. 1-50
MtnMan
MtnMan

Handing out free money does not provide any dignity or sense of purpose. Doing work that means something to you is what can provide a sense of purpose. I would argue another bad side effect of free money is lack of a sense of purpose.

shred1
shred1

Notice behind Obomber and on the floor are spirals, meant to hypnotize you.

2banana
2banana

Vote buying the support of the free sh*t army

lol
lol

butt butt butt we've had a decade of "recovery" (lol)millions of (gov't dependent) jobs created,the unemployment "rate" is technically zero (lol)),why would we even need to pay the 200 plus million folks who choose not to work?Plus doesn't moar than half the population (2/3 by 2025)receive some "check" some handout some subsidy from big gov't 1st of the month already!

FloydVanPeter
FloydVanPeter

Seattle isn't too far behind with taxing employers for employing. I think they reneged on this, though.

Runner Dan
Runner Dan

“Pawar recently introduced a pilot for a UBI program in Chicago. Under his program, $500 a month would be delivered to 1,000 Chicago families — no strings attached.”

Fast forward one year from now:

“UBI recipients reported that they are no better off than a year ago, as their rents went up by the subsidized amount. Meanwhile, the landlord lobby has fully endorsed Pewar and efforts to scale up the UBI program.”

thimk
thimk

Tinstaafl - economics 101

Kinuachdrach
Kinuachdrach

How are the 1,000 Chicago families going to be selected? Done right, this could translate to 2-4 thousand reliable votes for a specific alderman.

The underlying problem is the distortion of democracy caused by universal suffrage. But could we ever turn the clock back to the idea that only those paying into the system should be allowed to vote? Skin in the game -- it is the missing concept.

nic9075
nic9075

No its not that people CHOOSE NOT TO WORK. It is more on the lines of EMPLOYERS WHO CHOOSE NOT TO HIRE SUCH PEOPLE. Remember that the Median IQ in the USA is 100, that means that half are BELOW 100... Most jobs now are high skill, require high intelligence, creative & critical thinking not to mention the rigorous interview process & background check process today. A criminal record that is anything more serious than being convicted of a very minor misdemeanor will limit employment options greatly and permanently

nic9075
nic9075

How are the 1,000 Chicago families going to be selected? Done right, this could translate to 2-4 thousand reliable votes for a specific alderman.}} And its only $500 per family (is that the maximum or does every family selected regardless of size get this $500?? Is this $500 'taxable'?? As we all know, this money will be used for designer clothes, sneakers, Iphone apps, and of course booze, cigarettes and drugs since such families don't know the meanings of the words 'savings' or 'investments'. Its all about immediate current consumption for stuff that loses value faster than a new car does

Onni4me
Onni4me

"He is concerned that a coming wave of automation could put millions of people out of work and result in more extreme politics." I feel that his concern is right. Not sure about how to solve the future problems coming. Does Mish have a solution other than provide jobs that the salary doesn't make ends meet and social welfare needs to pay the rest? This is a huge dilemma and worth suggestions to solve it.

Six000mileyear
Six000mileyear

Feeding strays always leads to more strays.

killben
killben

As it is suffering an idiot is tough. Added to it if the idiot holds position where he can implement such inane idea as UBI then God help those who are going to pay for it. It is time to slipper guys who come up with such inane ideas. While I condone lynching that is now being practiced all over India, I sometimes feel, whether lynching would be the appropriate medicine. Moreover since it is tax-payers money, they should be the one to vote on whether they want to fritter it away. In addition only those tax-payers who like this idea should pay for it. Why should the tax-payer not decide how his money should be used?

killben
killben

Let all those who propose or support this inane idea pay for it from his or her own pocket.

jmosk
jmosk

The problems are real but I agree with Mish UBI is Not the answer although it's better than QE which helped the 1 pct as ubi is effectively printing for the people. Instead of experimenting we should look at the root of the problem which is runaway government which spends unproductively and has ingrained no term limits , lobbyists which keep power growing in the hands of the powerful, promise of private sector jobs to politicians when they leave office ensuring laws that benefit corporations and a federal reserve which has bailed out any bad actors for speculation on financial endeavors creating a heads I win tails taxpayers lose culture- no one goes to jail, why invest in R&d it's easier to speculate on real estate.. etc etc

Roger_Ramjet
Roger_Ramjet

Let me guess, the 1000 families will all be in Pawar's aldermanic precinct.

KidHorn
KidHorn

It's not a question of if, but when. By the time this has taken hold, i'll be retired and asking for my share of free stuff. My kids will be screwed unless they figure out a way to get paid under the table, which will be a natural consequence of taxing people at over 50% to pay for all this. Look at Greece as an example of our future.

Snow_Dog
Snow_Dog

Aldermanic precinct? Shit they may all be in his extended family!

This is Chicago we’re talking about. All graft, corruption, deceit, embezzlement and any other form of political patronage you can possibly imagine is born of the womb of Chicago. It’s where it takes life form, where it grows up, big and strong.

RonJ
RonJ

Chicago is effectively bankrupt.

Chicago is a big city and 1,000 people is no where near being universal anything. The name is a scam.

”We have to start talking about race and class and geography..." Pawar is demonstrating he is a racist and classist. He is not a universalist. There is no race or class in universal.

jivefive99
jivefive99

If someone does not find a solution to the inevitable "automation" of humanity and the joblessness that comes with it (the millennials were the first salvo), youre gonna have plenty of societal dysfunction to write about.

JonSellers
JonSellers

As Mish noted above, we have an exceptionally low unemployment rate. Which says that all of this automation/AI/mass unemployment talk is simply untrue. Tesla is a great example. Musk planned to have virtually fully automated factories building cars. In the end it didn't work. Why? Because we don't actually have the technology. And just because someone can imagine something, doesn't mean that it actually passes the laws of physics or makes financial sense.

I have no concerns that we are going to need a UBI to solve an "inevitable" automation problem. I much more strongly believe that for too many people, the jobs available to them do not provide the stability and income necessary to be confident about their futures. That is a problem traditionally solved by labor unions, not schemes like UBIs. Though I'm pretty sure Mish wouldn't be happy with labor unions either...

hmk
hmk

Typically in the past when disruptive new technology makes an industry or profession obsolete the outcry was that it will result in massive hardship and job loss. This hasn't held true in the past and I doubt it will in the future. New jobs with better skilled workers are created. This is the theory of creative destruction, its economic evolution. The problem is when the govt pays people not to work guess what you get? An alternative would be to help people get the skills needed in the economy to better themselves. Many don't avail themselves currently either. There is a massive shortage of truck drivers and its causing inflationary pressures currently. One thing I would be in favor of instead of UBI is universal healthcare. I am not a socialist by any means. Many people currently limit their income to qualify for the free medicaid provided for the working poor. Having universal healthcare would encourage more people to move into the workforce as well as allow people to switch jobs instead of staying somewhere for just the benefits. I do think healthcare should be something a family should not have to worry about. The govt provides police protection education military protection and other thngs I consider as part of their job. Healthcare should be one of them. The often maligned Canadian system provides healthcare per capita at one half of the US per capita cost. Their healthcare outcomes are significantly better than the US and on top of that the Canadians voted the politician who instituted national healthcare as the most popular politican in Canadian history. So if its so univerally loathed by Canadians as often mentioned by our political class they should of informed the Canadians before they voted. Anecdotally whenever I ask a Canadian about their healthcare system they seem to be overwhelmingly in favor of it.

Carl_R
Carl_R

Wow, the first post nailed it. A job is what gives a person an identity, and a sense of purpose and accomplishment. Take away a person's job, and give him money, and you will have a boom in crime and drug use. I would rather see the minimum wage eliminated, and then supplement people's income. That delays automation, and gives people jobs, and a sense of purpose.

The one thing this proposal will do is eliminate Chicago's out-migration. Yes, the exodus of tax paying citizens will accelerate, and yes, as crime and drug use increases, you will also see an exodus of the middle class, also eroding the tax base, but the influx of people seeking to receive the free money will more than offset them.

RonJ
RonJ

"As Mish noted above, we have an exceptionally low unemployment rate. Which says that all of this automation/AI/mass unemployment talk is simply untrue."

We have an exceptionally low unemployment rate, if one doesn't look behind the curtain at the record 95 million people who are not working. As for the mass automation/AI unemployment, there are a slew of jobs projected to not exist in the future. In the future, automation/AI will improve even more, as technology progresses. 10's of thousands of trucking jobs have not disappeared today, but are on a track to disappear over a period of years. Today's official unemployment rate is irrelevant in the face of that eventuality.

Carl_R
Carl_R

Employers would hire all people, if the wage that they were required to pay was lower than the benefit that the proposed employee was capable of producing. The minimum wage means that people capable of producing less than the minimum wage become permanently unemployable. If the minimum wage is raised to $15, as has happened in some parts of the country, an employee will have to do about $18 worth of work per hour to justify being hired, once you factor in payroll taxes.

superDuper
superDuper

The biggest threat to the welfare state's survival are progressives and their enablers. Open borders, UBI, free college, etc. etc. leftists are doing everything they can to collapse the system.

SleemoG
SleemoG

"Though I'm pretty sure Mish wouldn't be happy with labor unions either..."

Public or private unions?

JonSellers
JonSellers

Surely public. I'll let Mish expound on his views on private unions. I'm betting anti. But he might surprise me.

JonSellers
JonSellers

"We have an exceptionally low unemployment rate, if one doesn't look behind the curtain at the record 95 million people who are not working. As for the mass automation/AI unemployment, there are a slew of jobs projected to not exist in the future."

Of 18 people in my family, from parents to kids over 21, only 8 of 18 are in the labor force. And that's ok. It includes retired parents, housewives, one student, one sister on disability (severe dystonia). I don't know that 95 million not working means anything other than folks may not have the desire, or if they do, have the skills necessary to earn an income that would cause them to give up their liberty to become a wage slave. My wife would work if someone offered her $80K/year. But that's not looking likely.

And of the slew of "projected" job losses; it is just a guess. A tech fantasy in my opinion. The last slew of job losses related to technology was in the '60's and '70's when computers could reliably get rid of acres of women typing up payroll checks. AI is quickly getting discounted as a real, reliable thing. Especially as researchers can't reproduce each other's findings.

Look at all the great tech inventions of the 2000s: google, facebook, Uber, iPhones, YouTube/Netflix, 3d printers, internet of things, etc... Which ones are having any impact on jobs?

SleemoG
SleemoG

Pretty sure Mish is ok with private unions. What would the case against private labor unions be, except maybe that in a post-human-labor world private unions would have no leverage? In that case, unions would vanish of their own accord.

Runner Dan
Runner Dan

A problem with private unions is they tend to lobby to get ridiculous bills like Davis Bacon passed which requires trades on public projects to be paid prevailing wage, as opposed to free market wage. A typical result being that guys tarring rooves in San Francisco get paid more than the degreed engineers who design them.

Runner Dan
Runner Dan

I I forgot to add that other than that, some unions, like welding unions, keep their members’ skills up to date, so you wouldn’t want to hire someone else. However, it should be your choice.

Ordell Robbie
Ordell Robbie

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SAKMAN
SAKMAN

We are in interesting times, what is a productive member of society? Someone that can pay an intelligent person to hire engineers to build an automated system that puts a ton of people out of work?

That is the natural productive quality of wealth. We should be very careful not to associate the productively or qualities of a person with the natural productivity of their wealth in our current financial system.

Musk is wealthy, is he also productive? Who knows. I certainly don't. I do know that luck plays a huge role in financial success, and it comes down to the number of times you get to roll the dice. My financial fortunes multiplied only once I had the chance to roll the dice many times.

It is why the rich sell insurance and the poor buy it. It is just math, and it had nothing to do with my productive nature.

Forgive the spelling, every time I tried to change it on my phone it scrolled to the bottom prevent the fixes.

Grumblenose
Grumblenose

Silly to 'solve' a problem that doesn't even exist yet. Wait until automation actually causes mass unemployment (it never has so far and there has already been a HUGE amount of automation!) before thinking about a solution.

Carl_R
Carl_R

I'm pretty sure Mish is OK with private unions. He's never said anything bad about them, only about public unions. I do know he favors right to work laws, as no one should be forced to pay union dues against their wishes. I'm pretty sure that he also supports the rights of businesses to move their production, if demands from the union become too onerous.

Mike Mish Shedlock
Mike Mish Shedlock

Editor

I have much less a problem with private unions. But there are problems such as forcing employers to deal with them. If unions want to walk out or strike, it's fine by me. But is is also fine by me if employers replace workers who do walk out. Obama changed a lot of rules in favor of unions. They were already one-sided before that.

Mike Mish Shedlock
Mike Mish Shedlock

Editor

Continuing .. No one should be forced to join a union. Prevailing wage laws in Illinois and at the Federal level effectively ensure that people do have to belong to a union to get certain types of jobs. So yes, I have lots of issues with private unions. That said, it is the add-on labor legislation that has created most of the problem.

Ordell Robbie
Ordell Robbie

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Schaap60
Schaap60

Maybe I'm wrong, but I think this fear is overdone. We've been automating for 150 years. As a result farm workers have gone from 90% to 2% of workers. Other fields and services open, many we can't imagine at this time. The key is managing the transition and helping those who need to revise their skills.

jivefive99
jivefive99

Hope youre right, but if we are getting to the end of "great, big new ideas" as some economists have suggested, the number one job in America is driver and thats a lot of low skilled people replaced and not happy ...

Brother
Brother

So they have been made obsolete by a 16yr old worker offshore so the boardroom can give themselves a raise and new vacation house?

Carl_R
Carl_R

An important economic truth gets lost on the way to this concept. Our overall wealth as a country is determined by production, not by what we can spend. If you circulate more money, but it chases the same goods, you get inflation, not an increase in wealth. UBI does nothing to increase production, or the quantity of goods and services, but only serves to increase the money chasing those goods. Thus, it can't possibly increase our overall wealth. In fact, if people work less hard because they aren't needing to earn as much money, they will produce less, and our overall wealth and standard of living will fall, not rise.

If you are going to try something like this, you need to design a progressive system, where people are rewarded more, the more they work. We know for a fact that the Laffer curve works. When we reduce the tax brackets on high income people, they produce more, and earn more. Why not try the same thing on low income people? Mish, long ago, posted this chart:

Note that a person making $9,000 a year has more spendable income than a person making $60,000 a year. The welfare system is broken because it has become a roach motel. You can check in, but you can never check out. What is the chance of a person moving directly from a $9,000 a year job to a $75,000 a year job? Nil.

If you want to fix the welfare system, and you want to raise the standard of living of the poor, you need to change the system into one that motivates everyone, rich or poor, to produce more. Try applying the Laffer curve to the ones that need it, and people will be surprised what happens.

Casual_Observer
Casual_Observer
Carl_R
Carl_R said (edited): An important economic truth gets lost on the way to this concept. Our overall wealth as a country is determined by production, not by what we can spend. If you circulate more money, but it chases the same goods, you get inflation, not an increase in wealth. UBI does nothing to increase production, or the quantity of goods and services, but only serves to increase the money chasing those goods. Thus, it can't possibly increase our overall wealth. In fact, if people work less hard because they aren't needing to earn as much money, they will produce less, and our overall wealth and standard of living will fall, not rise. If you are going to try something like this, you need to design a progressive system, where people are rewarded more, the more they work. We know for a fact that the Laffer curve works. When we reduce the tax brackets on high income people, they produce more, and earn more. Why not try the same thing on low income people? Mish, long ago, posted this chart: http://1.bp.blogspot.com/-fPe2_5TbYrU/UMlkiOHBgyI/AAAAAAAATNM/sl1B_fWfUZw/s1600/Welfare%2BCliff.png Note that a person making $9,000 a year has more spendable income than a person making $60,000 a year. The welfare system is broken because it has become a roach motel. You can check in, but you can never check out. What is the chance of a person moving directly from a $9,000 a year job to a $75,000 a year job? Nil. If you want to fix the welfare system, and you want to raise the standard of living of the poor, you need to change the system into one that motivates everyone, rich or poor, to produce more. Try applying the Laffer curve to the ones that need it, and people will be surprised what happens.

The other reason people don't need to work as much is because the same dollar goes further b/c of globalization and trade. The side effect of this has been more people in the US being marginally employed or doing something well below their skill levels due to competing with a global not local labor force.

The real problem governments around the world have is that as the population continues to grow, automation will undo them. So not only are people around the world trying to compete with one another but also competing against machines. The question for governments becomes how do you quell the population and keep it productive. UBI doensn't fit in economics but then the issue becomes what to do people who are the long term unemployed. They are trying to re-enter the labor force but many have skills that are outdated. Bringing back the old economy won't work. The world has 7.5B people. When machines can do much of the work the biggest question for governments will be what to do with the largest chunk of this population.

Casual_Observer
Casual_Observer

I would agree. The next level of innovation will be human replacements in biotech. At some point people will be rendered not necessary. What then ?

Pater_Tenebrarum
Pater_Tenebrarum

No-one would even think of asking this "what then" question if we had an unhampered free market economy with minimal government. For example, the replacement of labor with machines is partly the direct result of minimum wage laws that make people whose labor productivity is below the minimum wage unemployable. Incidentally, this will direct investment of scarce resources into certain areas which it would not have been directed toward previously. Since these resources are finite, they are no longer available for other purposes. Hence we suffer a double whammy of impoverishment due to a single government intervention in the economy. But there isn't just a single such intervention - if we add up all the administrative laws and regulations in existence, they are nigh numberless - and they are estimated to cost the economy almost $3 trillion per year if memory serves - which I think underestimates the true cost, as it doesn't take sufficient account of the "unseen" knock-on effects such as the one mentioned above.