No Strings Attached

In the latest free money experiment, Oakland to Give Low-Income Residents $500 a Month, No Strings Attached.

The mayor of Oakland, California, on Tuesday announced a privately funded program that will give low-income families of color in the city $500 per month with no rules on how they can spend it.

The program is the latest experiment with a "guaranteed income," the idea that giving low-income individuals a regular, monthly stipend helps ease the stresses of poverty and results in better health and upward economic mobility.

The idea isn't new, but it's having a revival across the U.S. after some mayors launched smaller scale pilot programs across the country in a coordinated campaign to convince Congress to adopt a national guaranteed income program.

The first program launched in 2019 in Stockton, California, led by former Mayor Michael Tubbs. Tubbs, who later founded the group Mayors for a Guaranteed Income, expects six other cities to launch similar programs by this summer.

The "Oakland Resilient Families" program has so far raised $6.75 million from private donors including Blue Meridian Partners, a national philanthropy group. 

Who Gets the Money

  • To be eligible, individuals must have at least one child under the age 18 and an income that is at or below 50% of the area median income — about $59,000 per year for a family of three.
  • Half the spots are reserved for people who earn less than 138% of the federal poverty level, or about $30,000 per year for a family of three. 
  • Participants will be randomly selected from a pool of applicants who meet the eligibility requirements.
  • The program is strictly limited to Black, Indigenous and people of color communities.

Black Panther and Free Money History

  •  It's a nod to the legacy of the Black Panther Party, the political movement that was founded in Oakland in the 1960s. 
  • "Guaranteed income has been a goal of the Black Panther platform since its founding," said Jesús Gerena, CEO of Family Independence Initiative, a partner of Oakland's program. 
  • Former Democratic presidential candidate and current New York City Mayoral candidate Andrew Yang has also long advocated for a version of a basic income for every American adult. 
  • In California, a proposal by Assemblyman Evan Low to give low-income adults $1,000 a month could cost up to $129 billion annually — more than half the state's total budget — paid for by a new 1% tax on incomes above $2 million. 

Key Census Stats

Oakland Californis Stats

Stats are according to the Census Department.

How Universal Basic Income Program Work

That's a trick headline. These programs do not work because they do not scale.

These trial balloon programs always limit the target group in an attempt to get a foot in the door for expanded socialist redistribution schemes.

In this case money comes from a private group, with strict requirements, excluding whites.

It is is household based. Individuals are not eligible. Add an additional requirement that the household has at least one child. 

There are 162,419 households. If 50% of them are people of color, the starting point is 81,210 households. Some number of them have no kids. But let's assume they all do. The poverty ratio is 16.7%. 

That's about 13,500 households. But wait. There is an additional requirement that income is 50% of the poverty level. I will take a stab that well under half those  households are eligible, but call it half.

Out of 433,000 people about 7,000 will get free money. 

7,000 * $500 * 12 = $42 million. The program raised $6.75 million. 

Let's work in reverse.  $6.75 million / $500 / 12 = 1,125. 

Out of 433,000 Oakland residents, about 1,125 will get free money.

But wait, the article actually states it will target "up to 600 families".

Andrew Yang Defend Universal Free Money

Would it Help?

Of course it will help those who get the money. They tried this in Stockton and it supposedly worked (for the 125 household that got the money).

The problem, as always, is scaling up the program. 

Scaling Issue

Let's do the Oakland math if the program was universal as Yang proposed. 

433,000 * $500 * 12 = $2,598,000,000.

If you only give the free money to those below the poverty line, then the number is still $433,866,000 and everyone just above the cutoff will be more than a little upset.

If you make it household based, the free money is 162,419 * $500 * 12 = $974,514,000.

If you give it to households below the poverty line then Oakland would need to come up with $162,743,838 annually.

Universal free money is not free. Indeed, free money of any kind is never free. 

Tax hikes would be immense, and not just on the wealthy. 

That is why these programs always start with an extremely tiny percent of the population to make it look like it's possible when it isn't.

Racist Distribution

The distribution is racist but it's private, not taxpayer funded. Imagine the stink if it was only for whites. 

The flawed rationale was white have higher income. So what? Are there no whites below the poverty line in Oakland.

Mish