Tag Archives: homelessness

Los Angeles Skid Row

Guaranteed Income: California’s Next Horizon

Guaranteed income pilot programs are emerging throughout the state of California. The programs differ in who is selected and how much recipients get. None have strings attached.

The concept of a guaranteed income gained publicity during the 2020 elections, when presidential contender Andrew Yang made it a central part of his campaign. In California, additional exposure came from Michael Tubbs, who founded Mayors for a Guaranteed Income in June 2020, a coalition that advocates implementation of guaranteed income trials.

Three Sample Guaranteed Income Programs

Michael Tubbs, when mayor of the City of Stockton implemented one of the first guaranteed income pilot programs in the state, with great fanfare and a lot of private donations. The program gave $500 a month to 125 selected low-income residents and ran for two years (February 2019 to January 2021).

Oakland Mayor Libby Schaaff launched her pilot guaranteed income program in March 2021. The privately-funded program will give low-income families $500 per month, for 18 months. Families selected are of color, in an effort to close the racial wealth gap.

On April 19, 2021, Los Angeles Mayor Eric Garcetti, proposed a $24 million tax-payer funded one-year guaranteed income pilot program. The program will give $1,000 per month to 2,000 low-income families adversely affected by Covid-19.

The Selling Points

A guaranteed income, with no strings attached, given in addition to established public assistance programs takes aggressive selling in some communities. In Stockton, for example, Mayor Tubbs was not re-elected in spite of accomplishments. His defeat was in part (there were other adverse circumstances) because some of his constituents were not ready for agendas as progressive as a guaranteed income.

The promotional efforts are convincing, but debatable in some regards. Here is a sample of the press California’s guaranteed income programs have received, followed by clarifications that might be helpful.

  • “The idea of the government providing poor residents with some basic level of income has been floated by a number of prominent people over the years, including civil rights leader Martin Luther King Jr., libertarian economist Milton Friedman and Republican President Richard Nixon.” L.A. could soon become the largest city in the U.S. to offer guaranteed income for poor residents.” L.A. could soon become the largest city in the U.S. to offer guaranteed income for poor residents, Fortune, April 19, 2021.

Martin Luther King criticized the existing welfare system as fragmented and designed to affect root causes of poverty, not mitigate poverty itself. He did propose a guaranteed income as remedy. However, his plan came with strings attached. Government needed to create “social good” jobs for individuals who the market economy left behind. Dr. King’s plan, therefore, differs from the current “no strings” proposals.

Milton Friedman proposed a negative income tax, not a guaranteed basic income. Under Friedman’s plan, people file their tax returns, and depending on their income level, they either pay taxes or receive cash from the government. Also, Friedman’s plan was intended to replace existing welfare programs not supplement them. Today’s guaranteed income plans require nothing of recipients and supporters intend to avoid cannibalizing other public assistance programs.

Richard Nixon introduced in 1969 The Family Assistance Program (FAP), which aimed to implement a negative income tax that would benefit working parents with household incomes under a certain level. Unlike today’s guaranteed income proposals, FAP had a work requirement that applied to most recipients (there were exceptions to mothers with small children at home). The proposal passed the House of Representatives, but failed in the Senate.

  • “There’s a number of ways to pay for guaranteed income, from a sovereign wealth fund in which citizens benefit from shared national resources like the Alaska Permanent Fund, to bringing tax rates on the wealthiest Americans to their 20th century historical averages.” Mayors for a Guaranteed Income

Alaska’s principal source of revenue is crude oil. Residents receive an “oil dividend” from a natural resource that theoretically belongs to all residents. It might be difficult for California to come up with a comparable natural resource dividend.

California already has one of the highest tax rates in the nation. Several large employers have recently left California citing high taxes and high costs, among them California icons like Hewlett-Packard and Tesla. Texas and Arizona are among low or no-tax states that are happy to welcome California’s wealthy expatriates.

An objective of Mayors for a Guaranteed Income and others is to establish a federal guaranteed income program. The federal government can print copious amounts of money, redistribute revenue from low-spending to high-spending states, and does not need constituents’ approval to raise taxes. The only catch is that residents of low-spending states might not be happy with this plan.

  • Preliminary analysis of Stockton’s guaranteed income program: “Results gathered from the first year, which spanned February of 2019 to February of 2020, found recipients obtained full-time employment at more than twice the rate of non-recipients. Recipients were less anxious and depressed, both over time and compared to the control group … Recipients had a greater ability to pay for unexpected expenses …” University of Tennessee, College of Social Work, March 5, 2021.

“Asian/Pacific Islanders and homeowners comprised a larger share of the debit-card recipients than of the control group , which could have biased the results…The study’s small sample and reliance on self-reported outcomes are bigger problems. It’s difficult to assess a statistically significant effect on employment among such a small group over a one-year period—from Feb. 2019 to Feb. 2020—especially given high labor-market turnover among lower earners.” Universal Basic Income Hype, Wall Street Journal, March 22, 2021.

Conclusion

The highly-promoted Stockton experiment is serving as a catalyst for the proliferation of guaranteed income trials in California. However, it is difficult to see how a study of 125 folks, among them homeowners, can apply to California’s large population of low or no-income residents.

The state of California has a poverty rate of 11% compared to lower-poverty states like New Hampshire at 4.9%. Also, California has the third largest rate of homelessness of all states in the U.S. (after New York and Hawaii).

Guaranteed income programs in California will prove expensive. Local and state jurisdictions will have difficulty finding sources of cash. The federal government, with its ability to create debt, would be a reasonable source, but would low-spending states be willing to subsidize high-spending states?

Lyndon Johnson’s expensive Great Society sounded wonderful, but nothing really got fixed. It will be worth carefully reading the fine print on guaranteed income programs.

San Francisco – Slouching Toward Gomorrah

Drug injection needles on the street

San Francisco, once a lovely city, is now a poster child for urban decay. The Drug-Homeless Complex rules this once home to strong retail stores, industry, and port activity. What San Francisco has now is a cadre of tax-benefitted app makers, a gargantuan government bureaucracy, and Poop Patrols tasked with washing human feces from sidewalks. What happened?

The Just Vote No Blog recommends a beautiful opinion piece by Lee Edwards, Heritage Foundation Fellow, that appeared in the Washington Times on October 14, Is San Francisco the Future of America?  In this piece, Dr. Edwards speaks of visiting The City after some time of absence. He vividly describes a society that no longer believes in right or wrong, accepts a premise that the purpose of government is to rectify every injustice, and that disdains the universal benefits of the limited government our Founders envisioned.

The vividness of Dr. Edwards’ opinion piece is enhanced by his alluding to the fact that in an uncontrolled spiral, things fall apart. Also, the whole of America might have plunged into the spiral.

What has happened? Why is America slouching like some rough beast — not toward Bethlehem, but Gomorrah? Beyond dispute, things feel as if they are failing apart, and the common rules of a civil society no longer seem to apply.

So true that once civil society starts disintegrating, salvaging individual liberties, personal privacy, private property, and opportunity for upward mobility of all people becomes increasingly challenging. At this point halting and reversing San Francisco’s march towards Gomorrah – as well as halting the national tendency to march along – will require that responsible people pay attention to another admonition in W.B. Yeats often quoted poem The Second Coming.

Things fall apart; the centre cannot hold;
Mere anarchy is loosed upon the world,
The blood-dimmed tide is loosed, and everywhere
The ceremony of innocence is drowned;
The best lack all conviction, while the worst
Are full of passionate intensity.

The Founding Fathers envisioned a limited government hopefully free of special interests such as San Francisco’s Drug-Homeless Complex. Halting the slouching away from such a vision will require responsible people to acquire conviction and the same passionate intensity as those who espouse anarchy and decay.

Old Debate: Homelessness and Reagan

Ronald Reagan's inaugural address 1981In late 1980 and early 1981, interest rates hovered around 15%, unemployment was at 11%, and economists visualized a crises.  That is the backdrop of Ronald Reagan’s inaugural address .  In that address, Reagan said,

In this present crisis, government is not the solution to our problem; government is the problem. From time to time we’ve been tempted to believe that society has become too complex to be managed by self-rule, that government by an elite group is superior to government for, by, and of the people. Well, if no one among us is capable of governing himself, then who among us has the capacity to govern someone else?

These 74 words became a battle cry of both conservatives and progressives. Conservatives see Reagan’s words as warning against relying on government. Progressives see the same words as proof of the folly of not relying on government.

A favorite topic for battle is homelessness. In 1967, while Governor of California, Reagan signed the Lanterman-Petris-Short Act which ended the practice of institutionalizing patients against their will for indefinite amounts of time. At that time, there were 22,000 patients in state mental hospitals. By 1973, there were 7,000. Community clinics with the help of newly-developed medication assumed responsibility for patient care. In 1981, as President, Reagan signed the Omnibus Budget Reconciliation Act. The legislation created block grants for states, but reduced federal spending on mental illness.

To this day in 2017, more than half a century after the signing of the Lanterman-Petris-Short Act and 37 years after the Omnibus Budget Act, progressives are still convinced that closing the state mental hospitals is the cause of present homelessness.

However, 56 years seems ample time to reopen state mental hospitals, where the mentally challenged can be warehoused out of sight and out of mind with or without their consent, if that is what Reagan critics desire.

How is “Affordable Housing” Working Out For You?

Legislators pass housing bills
Sacramento Bee: Legislators announce passage of bills

In 2016, there were 550,000 homeless people in the United States, mostly concentrated in large cities such as New York and Los Angeles.  California has the largest percentage of unsheltered (not in emergency shelters) homeless in the U.S. at 66%.  California has 22% of U.S. homeless population (in shelters and unsheltered), and 12% of the total U.S. population.

The currently accepted reason for California’s large homeless population is the state’s traditional resistance to population density — the Not In My Back Yard syndrome.  Therefore, the accepted remedy is to force all counties to build “enough” taxpayer subsidized housing.  However, one could observe other contributing factors:

* Destruction of small transient hotels, where low-income or no-income individuals and families called home.  Old timers will remember the last stand, the battle for survival of the International Hotel.  The low-income residents lost and the developers won.

* Explosive growth in drug use that interferes with gainful employment. Is anyone going after the real causes of the growth?

* Advent of central planning that mandated high population densities along transit corridors and designated large swaths of land as conservation or protected areas closed to development. Some call it the Watermelon Plan, green on the outside and red on the inside.

* Acceptance of words such as “displacement,” “housing rights,” “fair housing.”  Rejection of principles such as self reliance, freedom of movement, local control.  Maybe Orwell’s Animal Farm is no longer read in school.

* Utter rejection of the word “suburban sprawl.”  New rule:  everybody stay put.

One would think that as density rises in confined spaces, housing prices would rise.  Thus, all funding options should be viewed as ongoing and forever increasing – never “enough.”

On September 15, 2017, the open-ended nature of California’s “housing crisis” became clear.  Senate Bills SB 35, SB 2, and SB 3 passed the legislature, and are expected to be signed into law by Governor Brown.  SB 35 further moves decisions on housing from cities and counties to state.  SB 2 loads residents with more fees when they need to file a property-related document.  SB 3 funnels $4,000,000,000 in bond money into subsidized housing.  Supporters in the legislature say “It’s just a start.”