The evils of socialism strike again

It’s July 9, 2018. The scene is set in Stockton, California. It’s a normal Monday morning. People are milling around, going about their daily business. Completely oblivious to the imminent mayoral announcement, the city’s 300,000 residents are in the middle of their Monday routine: stuck in a boring math lesson, drinking a cup of coffee, walking a beloved pet, finishing a graveyard shift at the local Dameron Hospital, one of the region’s largest employers. It seems like any other average town in America. With a median household income of $49,271 (approximately $8,000 lower than the U.S. median), the city’s economy is nearly average. Despite the aura of normalcy, there’s something much more interesting happening below this city’s surface. On this Monday morning, 27-year-old mayor Michael Tubbs has substantially deviated from the city’s routine by announcing, to the shock of many of Stockton’s citizens, the implementation of a universal basic income pilot program.

The program, aimed at testing the feasibility and effect of universal basic income, will last 18 months and will provide its 100 participants $500 per month. The catch? Nothing. The money has no strings attached. Participants are allowed, encouraged actually, to spend it however they deem fit. As expected, there’s been quite an uproar amongst “pull yourself up by your bootstraps” philosophizers. To them, this program is everything that is wrong with America. They’re tired of their tax dollars being spent on lazy, poor people. They’re tired of “evil socialism” perpetuating this laziness. They’re tired of the “welfare queen” who sits on a couch every day, collecting government handout after government handout with a heroin needle stuck out of her arm as her seven children from five men chase each-other through the city streets.

While there are several issues with this “welfare queen” image popular amongst anti-government assistance pundits (including, but not limited to, its racist undertones, its factual inaccuracy and its hyperbolic and vile nature), the one that I choose to address is this assumption that government assistance is not effective.

To help, let’s imagine a hypothetical scenario. It’s 2029. The stock market is booming. Everyone is buying and selling stocks at unimaginable rates. People buy a share and it doubles within a week. The stock market is America’s hottest new toy and it seems like it is here to stay. Until, suddenly, there’s a slight hiccup.

Stock owners get spooked. No one trusts the foundation the market sits on, or a forex trading guide strategy that won't fail. Everyone unloads shares, but no one is buying because of rampant over-speculation and fear. All stocks lose value. The market crashes. And, since their lifesavings are tied to the market, the average American crashes as well.

Unemployment is rampant; poverty even more so. People stand in line for hours just to get a slice of bread. Now, as you have probably guessed, this is no hypothetical scenario in 2029. This scenario is actually a brief (very brief) synopsis of an event that occurred 100 years earlier: The Great Depression.

To understand the true gravity of the situation, it may help to think about the financial situation of the average American after the crash. Even if an American could get a decent job, which was unlikely, they had no savings (lost in the market crash). With no savings, the slightest cough could send a family into bankruptcy. How could the United States respond to such a bleak financial situation?

With the supposed evils of socialism, of course. The U.S. embarked on a journey famously known as “The New Deal.” Lo and behold, the evils of socialism were able to reverse such a bleak moment of history. The U.S. recovered and average Americans started getting back on their feet.

Now, let’s look at the situation of Stockton, Calif., once again. The city’s financial situation today is analogous to that of the U.S. during the Great Depression. In 2011, it was known as the foreclosure capital of America. Five-point-four-three percent of the city’s housing units were foreclosed upon (nationwide that number was 1.45 percent). Since a large percentage of a person’s savings is tied to property value, a foreclosure in 2011 was equivalent to the loss of a person’s stocks in 1929. Couple that with the predatory lending practices of pre-2008 America, and you’ve got a recipe for disaster which bankrupted hundreds of thousands of Americans. Not only did residents of Stockton file for bankruptcy at high rates, but the city itself did as well. Stockton was, like 1929 America, in rough shape.

So, let’s reanalyze the question: What does $500 per month do for a family in Stockton, Calif.? As a requirement, the participants in this program will have very little to no savings. These residents, just like Americans in 1929, are financially unstable. In this case, what do the evils of socialism have to offer? Amongst other things, it can ensure that a broken taillight doesn’t bankrupt a struggling family. It can ensure that a filled prescription doesn’t require sacrificing a meal. It can ensure that 100 participants most affected by the 2008 housing crash could choose to start their lives over through investment in a higher education, a small business or even the stock market.

It could do all these things and more. The question is not, then, “Why surrender to the evils of socialism through the implementation of this pilot program?” The question is “why not?” The worst that could happen is that this program fails and anti-government assistance pundits can do an “I told you so” dance. The best? A revolution in the way state, local and federal governments use public funds in assisting the impoverished. I cannot predict with absolute confidence the end result, but history shows that the latter is more likely. I certainly hope so.