Oh, Chicago. I love my home city so much, but it keeps giving me reasons to never move back! Now the corrupt city has decided to toy with universal basic income (UBI) because we all know Chicago has a ton of money to throw around.
Except it doesn’t.
Chicago Alderman Ameya Pawar wants the city of Chicago to give between $500 and 1,000 to families. Pawar is worried about “the coming wave of automation” from Tesla, Amazon, etc. that could potentially put people out of jobs:
“You know, the British pit Hindus and Muslims against one another,” Pawar told The Intercept at the time, drawing on his Indian-American heritage. “Pit people against one another based on class and geography, caste … this is no different. Chicago versus downstate. Downstate versus Chicago. Black, white, brown against one another. All poor people fighting over scraps.”Pawar now believes that a wave of mass automation will only compound this problem.“From a race and class perspective, just know that 66 percent of long-haul truck drivers are middle-aged white men,” he observed. “So if you put them out of work without any investment in new jobs or in a social support system so that they transition from their job to another job, these race and class and geographical divides are going to grow.”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.
*temples starting to bruise from rubbing them too hard*
Let’s back up a minute. Chicago is the reason Illinois has is embroiled in a battle with downstate. The city owns the state. The city receives everything first and the leftovers go to everyone else. Granted, Illinois wouldn’t receive as much attention as it does if it wasn’t for Chicago.
Secondly, where is the money coming from? The Intercept discussed how it could work, but it never brought up the severe economic problems that have enveloped Chicago and Illinois.
The easiest and best way to solve this problem is to cut taxes and spending so people have bigger paychecks. If Pawar is so concerned about job availability then he should direct his attention to Springfield to make these changes so Illinois becomes more business friendly.
Illinois finally passed a budget last July after a two-year stalemate, but it didn’t do much to help and the Democratic legislature pushed through a $5 billion income tax-hike. The bill also included a corporate tax hike, making the state even less business friendly:
The budget plan would spend more than $36 billion on primary and secondary education, colleges and universities, social services, medical care for the poor and other government functions, with nearly $5 billion in new taxes to help pay for it. The personal income tax rate would rise from 3.75 percent to 4.95 percent. The corporate tax rate would go from 5.25 percent to 7 percent. The plan also would have the state pay down about half of the nearly $15 billion pile of unpaid bills through a combination of borrowing and using cash from other state accounts.
The U.S. News and World Report ranked Illinois as “the most financially unstable state in the nation.” From WQAD:
The ranking of 2018’s most fiscally unstable states was conducted by McKinsey & Company, the global management and consulting firm. The report considered credit rating and state public pension liability to rank states on long-term stability. For short term, the report measured each state’s cash solvency and budget balance.Illinois was 50th overall.The state’s pension debt – commonly estimated at $130 billion, but measured as high as $250 billion last summer by Moody’s – was a factor. That debt load was cited by Moody’s and other creditors as a cause of the state’s near junk rating.Rankings by short-term stability used the amount of liquid funds in a state’s budget and how balanced the state’s budget is.Illinois’ current budget that passed last July, despite Gov. Bruce Rauner’s veto, is $1.5 billion in the red, even with a $5 billion income tax hike, according the Civic Federation.
Bad policies and sky-high debt have led Illinois to bleed working-age adults at an alarming pace. Between July 2016 and July 2017, Illinois lost 37,000 residents between the ages of 25 and 54 and a total of 115,000 people.
This happened despite the fact that America’s working-age population grew by 0.4% during that time period. The Illinois Policy Institute found income growth is stale in Illinois:
In the rest of the U.S., personal income grew 28 percent faster than Illinois from 2015 to 2016, according to the Bureau of Economic Analysis. In addition, Illinois job seekers stay unemployed 33 percent longer than unemployed workers in the rest of the nation, according to government data. This helps to explain why other states offer more opportunity.The state of Illinois’ economy is one reason the 2017 tax hikes were such a poor policy choice. By costing the state thousands of jobs and billions of dollars in economic activity, the recent tax hike will exacerbate the state’s outmigration crisis. State lawmakers cannot continue to rely on tax hikes if they want families to bet on Illinois.
Pawar talks about race and class wars, but handing out money won’t help anything. University of Illinois at Chicago professor Janet Smith and other researchers discovered that Chicago lost a large chunk of the middle class, leaving Chicago with a population “on opposite ends of the income spectrum.”
PNC chief economist Gus Faucher said the industry growth in the suburbs may attract a lot of millennials to the metropolitan area. Losing such a large population could cause major problems for Chicago:
“If the population is not growing, that could lead to economic stagnation,” Faucher said.Job growth in the Chicago area has lagged behind other parts of the country, and that along with a high cost of living and crime could all entice millennials to move elsewhere, Faucher said.In some cases, the beneficiaries could be other Cook County communities that have access to urban amenities — at a lower price.
Chicago is a great city filled with food, entertainment, and culture. None of that matters if people cannot make a living.
I won’t be shocked if this passes. Maybe it’s what Chicago needs if it’s ever going to find its way back to reality.
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