City of Chicago adopting UBI

Chicago aldermen are worried about the future.

They are 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, Ald. 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.”

Before leaving the race after being outspent by two billionaire candidates, Pawar campaigned for the Illinois Democratic Party’s nomination for governor. One of the themes of his candidacy was that politicians were scapegoating various racial or ethnic groups for their constituents’ material problems.

“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.

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?

UBI schemes entail giving a standard cash grant to everyone — regardless of need. Traditionally, the United States has addressed poverty by delivering in-kind goods. For instance, the Supplemental Nutrition Assistance Program, formerly known as the food stamp program, issues electronic cards that can be used to purchase certain types of food.

But some economists have countered that simply giving people money is more beneficial.

Research shows that cash transfer programs are more efficient overall, as they sidestep the administrative costs of distributing in-kind goods. The theory is that people know their own needs and can allocate money more effectively than the government. Moreover, the hope is that because UBI is a universal initiative, it will avoid some of the stigma associated with need-based programs, which have historically been criticized as handouts to the “undeserving” poor.

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.

The proposal also leaves room for the creation of a Chicago-specific EITC program.

Pawar has convinced the majority of Chicago lawmakers to co-sponsor the plan, and he is hoping that the Chicago City Council will soon work with the mayor to implement it. Monies to fund the program can be raised by raising the vehicle sticker tax, water bills, sewer tax, a higher parking tax and a tax on luxury foods such as prime cuts of beef and top shelf liquor. Other taxes such as the real estate tax which is quite low in the city, can be raised by 50%. Studies have shown that such an increase would still be considered fair.