An economic crash opens a 'window for hope' on universal basic income

Photo by Joe Raedle/Newsmakers

American policymakers have long disliked the idea of giving poor people money.

In the 1990s, a bipartisan coalition gutted cash aid for needy families, fulfilling President Bill Clinton’s promise to “end welfare as we know it”. At the state level, general assistance programmes were undermined and eliminated. The remaining nutrition, health, and housing assistance options are often extremely restrictive.

But in recent years, the idea of unconditional cash aid has experienced a renaissance in public policy circles. In her 2016 retrospective Hillary Clinton said she had considered running on a “universal basic income” to provide cash to all Americans. In 2020, Andrew Yang built his quixotic presidential campaign around the idea.

Before the pandemic, American municipalities edged towards narrower “guaranteed income” programmes for poor households. One of the first to embark upon such an experiment was Stockton, California, where 125 people are being given $500 a month on debit cards.

The University of Pennsylvania's Amy Castro Baker is one of the researchers overseeing Stockton’s programme. CityMetric spoke with her about how the pandemic could change welfare policy, the inequities in Congress’s $2.2 trillion CARES Act, and how cities can lead the way on unconditional cash assistance.

The interview has been edited for clarity and length. 

We're dealing with economic collapse on a stunning scale. But a crisis can be a time for radical policy change, like the New Deal and the Great Depression or single-payer health care in the United Kingdom after World War II.

Do you think cash assistance schemes could bloom from the pandemic?

If you were to ask me this question pre-pandemic, I would say we were a few years out from that being taken seriously as a policy. The fact that we've had bipartisan agreement on cash transfers is a window for hope.

At the same time, it's telling who was left out of the CARES Act. As we know from the New Deal, the inequality of the past shows up as the inequality of the present. Those who were locked out decades prior are those who are now at the bottom end of the income and wealth distribution. Anybody that we're locking out of the stimulus payments, it's going to create another form of inequality. I worry we’re creating a legislative pathway so that if we roll out a basic income programme in the future, whoever we lock out now is potentially locked out of future proposals.

Who is being locked out now?

The first group that I'm concerned about are returning citizens. If you haven't been filing your taxes and you're returning from prison, you're going to be locked out. Then there are mixed immigration status households. The unbanked and underbanked. Another big one is that the CARES Act does not protect people from their stimulus checks being garnished by their banks.

You've been involved in a basic income experiment in Stockton, California. Can you describe the details of that programme and what the results have shown so far?

In February 2019, we started giving out $500 a month, no strings attached, on a prepaid debit card to 125 randomly selected individuals in census tracts at or below the median income of $46,000. It’s an 18-month programme, the last payments are scheduled this summer.

The goal is to see what type of infrastructure we would need to scale up something like basic income across the whole city, across the whole state. A lot of what we've learned so far is how people are spending the money. But also, one of the key things we've learned in Stockton is how the flexibility of cash allows people to meet their basic needs.

The second piece is showing that the programme itself needs to be flexible. Compare what's happening with the CARES Act [where some payments are being delayed or made inaccessible], whereas Stockton is relying on a prepaid debit card. That promotes financial inclusion rather than exclusion.

In terms of the spending data, 40% of the $500 each month goes towards food, but it’s probably higher than that because the next category after that is big box stores like Walmart and Dollar Tree. In Stockton that’s where most folks go to buy their food. We can say at minimum 40% is going to food, but it's probably closer to 60%.

Are there best practices in terms of structuring a municipal-level cash assistance programme that other cities should consider?

What really differentiates Stockton from a lot of the other things that have been proposed is that we advocate for maintaining access to benefits alongside a cash transfer programme. The way that the social safety net is structured in the US, each additional dollar can push you over a threshold where you're then losing benefits. Stockton is designed to work alongside government benefits, not in place of them. You can't have a scenario where someone receives a cash payment that causes them to lose health insurance.

The second one is using a mechanism to distribute the money that meets people where they're at. In Stockton, the prepaid debit card means no one is forced into a banking relationship with a particular institution, and it allows for really quick transmission of the cash.

The third piece is human contact. Contrary to this idea that you just need more efficient systems and you can eliminate human labor, we're learning that human relationships make the programme run well. We've embedded licensed clinical social workers in the experiment, and they work alongside programme staff to implement it and walk people through benefit structures. That relationship piece is the secret sauce of the experiment. It infuses trust into the programme.

What other cities have been considering UBI in the United States, and what does the current crisis mean for these policy experiments?

There's Jackson, Mississippi; Chicago has a task force right now; Newark, New Jersey, has one as well; and Philadelphia announced that they're going to be doing something. Who knows what will happen in the face of the crisis, but there's good momentum around cash transfers. It's an idea whose time has come.

People never recovered from the Great Recession. Then you've got the second economic crisis of the pandemic that pulls back the curtain and shows how unstable we are. If anything, what the pandemic is going to do is accelerate momentum for more of these experiments.

But aren’t there structural problems keeping American cities from doing this at scale? Municipalities and states can't run deficits, so even in the best of times there are limits to how generous a city-level programme like this can be in the United States. Philadelphia's proposed programme was going to be quite small even before the city began facing massive pandemic-related budget cuts.

Then there's the Republican Party, which is far to the right of pretty much any other conservative party in the developed world in terms of economic policy. Those seem like high barriers to cash aid at the municipal or national level.

First, I would say that our governments and our social safety nets are policy choices that reflect what we value.

Second, we don’t know what works yet. In Stockton, we're not even done yet. Before we scale something out, we really need more data. There's been a long history of poor safety net interventions because they've moved before they had data. (Also, in Stockton’s experiment I should say that money is all philanthropically funded. No taxpayer dollars are used.)

As far as the Republican Party goes, the idea of cash payments gets a lot of support from both the right and the left, just for very different reasons. Absolutely, there are a lot of Republicans that are opposed, but there's an awful lot that are for it. I've never seen any other policy idea that gets this much bipartisan support.

But it seems like Republican support for it is usually in the context of gutting other programmes.

There is the libertarian argument that we should have this but get rid of things like food stamps. But you have to ask, where's our space for coalition building? We need to start having the conversation that there's better ways to address inequality and poverty. If you think about the way our safety net operates, we have not had any major innovations in over 30 years. It’s time for us to rethink how we do things. These are choices. Change is possible.

Looking beyond the United States, are you seeing this kind of policy innovation in other countries?

Spain is toying with rolling something out in response to Covid that will probably be long term but hasn’t been entirely announced yet. It will be targeted towards lower-income people, but until the final version is out it could change.

One of the big questions around basic income is how it will affect the local economy. We can’t tell with Stockton, because it's too small to measure anything at the community level. The most exciting thing happening now is a partnership between the Jain Family Institute and some universities in Brazil in a city called Maricá. What they are doing is a complete basic income, so it will apply to everyone in that area, but the money is being given in a denomination that can only be spent in that region. It's going to answer questions we haven’t been able to answer so far about what can happen in a local economy. This cash transfer is going to go to 50,000 people and there are about 150,000 people in the city.

That's not an option we have in the US but it speaks to the international movement around basic income, knowing that no one country can answer all these questions. We need cities globally to be running pilots to fill these different gaps in knowledge.

Jake Blumgart is a staff writer for CityMetric.


In South Africa's cities, evictions are happening despite a national ban

An aerial view shows a destroyed house in Lawley, south of Johannesburg, on April 20, 2020. The city has been demolishing informal structures on vacant land despite a moratorium on evictions. (Marco Longari/AFP via Getty Images)

On the morning of 15 July, a South African High Court judge ruled that the city of Cape Town’s Anti-Land Invasion Unit had illegally evicted a man when it destroyed the shack where he was living.

That afternoon, the Anti-Land Invasion Unit was out again, removing shacks in another informal settlement.

Evictions were banned in South Africa for nine weeks, after the national government placed the country under a strict Covid-19 lockdown in late March. At present, eviction orders are automatically suspended until the country moves to a lower “alert level” and can only be carried out with a special order from a judge.

Yet major cities including Cape Town, Johannesburg and eThekwini (created through the merger of Durban with several surrounding communities), have continued to use municipal law enforcement agencies and private security companies to remove people from informal housing. In many cases those operations have been conducted without a court order – something required under regular South African law.

Around 900 people were evicted from three informal settlements in eThekwini during the eviction ban, according to the Church Land Programme, a local NGO. Its director, Graham Philpott, says it’s also aware of evictions in other informal settlements.

While evictions aren’t a “new experience” in these communities, the NGO released a report on lockdown evictions because they were “so explicitly illegal”. “There was a moratorium in place,” Philpott says, “and the local municipality acted quite flagrantly against it. There’s no confusion, there’s no doubt whatsoever, it is illegal. But it is part of a trend where the eThekwini municipality has acted illegally in evicting the poor from informal settlements.”

Evictions also took place in Cape Town and Johannesburg during so-called “hard lockdown” according to local activists. In eThekwini and other municipalities, the evictions have continued despite restrictions. In Cape Town, authorities pulled a naked man, Bulelani Qholani, from his shack. That incident, which was captured on video, drew condemnation from the national government and four members of the Anti-Land Invasion unit were suspended. 

The cities say they’re fighting “land invasions” – illegal occupations without permission from the land owner.

“Land invasions derail housing and service projects, lead to the pollution of waterways, severely prejudice deserving housing beneficiaries and cause property owners to lose their investments over night,” Cape Town’s executive mayor, Dan Plato said in a statement. (Plato has also claimed that Qholani did not live in the shack he was pulled from and that he disrobed when municipal authorities arrived.)

South African municipalities often claim that the shacks they destroy are unoccupied. 

If they were occupied, says Msawakhe Mayisela, a spokesman for the eThekwini municipality, the city would get a court order before conducting an eviction. “Everything we’re doing is within the ambit of the law,” Mayisela says. But “rogue elements” are taking advantage of Covid-19, he added.

“We fully understand that people are desperately in need of land, but the number of people that are flocking to the cities is too much, the city won’t be able to provide housing or accommodation for everyone overnight,” he says. 

While eThekwini claims to be a caring city, local activists say the evictions show otherwise.

In one case, 29 women were evicted from shacks during the hard lockdown. With nowhere to go, they slept in an open field and were arrested by the South African Police Service for violating the lockdown, Philpott says.

“These evictions are dehumanizing people whose dignity is already compromised in many ways,” says S’bu Zikode, the president of Abahlali baseMjondolo, a community organization whose Zulu name translates to “the people of the shacks”. 

“It has reminded us that we are the people that do not count in our society.”

Municipal law enforcement and private security contractors hired by cities regularly fire rubber bullets, or even live ammunition, at residents during evictions. Some 18 Abahlali baseMjondolo activists have been killed since the organization was founded in 2005, Zikode says, most by the eThekwini Land Invasion Unit and Metro Police.

(Mayisela says that if city employees have broken the law, Abahlali baseMjondolo can file a complaint with the police. “There is no conclusive evidence to the effect that our members have killed them,”  he says.)

Other Abahlali baseMjondolo activists have been killed by what Zikode calls “izinkabi,” hitmen hired by politicians. Two eThekwini city councillors were sentenced to life in prison 2016 after they organized the killing of Thuli Ndlovu, an Abahlali baseMjondolo organizer. A member of the Land Invasion Unit who is currently facing a charge of attempted murder after severely injuring a person during an eviction remains on the job, Zikode says.

South Africa’s 1996 constitution is intended to protect the public from arbitrary state violence and guarantees a right to housing, as well as due process in evictions. But for Zikode, the South African constitution is a “beautiful document on a shelf”.

“For the working class and the poor, it’s still difficult to have access to court. You’ve got to have money to get to court,” he says. 

The actions by municipal law enforcement are breaking down social trust, says Buhle Booi, a member of the Khayelitsha Community Action Network, a community group in the largest township in Cape Town.

“There’s a lack of police resources and those very few police resources that they have, they use to destroy people’s homes, to destroy people’s peace, rather than fighting crime, real criminal elements that we see in our society,” Booi says.

For him, it’s a continuation of the practices of the colonial and apartheid governments, pushing poor people, most of whom are Black, to the periphery of cities.

Around one-fifth of South Africa’s urban population live in shacks or informal dwellings, according to a 2018 report by SERI. Many more live in substandard housing. City governments maintain that the shacks destroyed during anti-land invasion operations are unfinished and unoccupied. But Edward Molopi, a research and advocacy officer at SERI, says that this claim is an attempt to escape their legal obligations to get a court order and to find alternative accommodation for affected people. 

The roots of the current eviction crisis go back to apartheid, which barred non-white people from living in cities. Between the 1940s and 1970s, tens of thousands of people were forcibly relocated from neighbourhoods like Johannesburg’s Sophiatown and Cape Town’s District Six to remote townships.

In the 26 years following the end of apartheid, deepening economic inequality and rampant unemployment have limited access to formal housing for millions of South Africans. Government housing programs have mostly focused on building small stand-alone homes, often on the peripheries of cities far from jobs and amenities.

While these well-intentioned projects have built millions of homes, they’ve failed to keep up with demand, says Marie Huchzermeyer, a professor at the Centre for Urbanism & Built Environment Studies at the University of the Witwatersrand in Johannesburg. Government-funded housing projects “will never on it’s own be enough,” she says. “It has to be accompanied by land release.”

Government policies call for the “upgrading” of informal settlements and the formalization of residents’ occupation. But “there are still very, very, very few projects” of that nature in South Africa, Huchzermeyer says. “Even if it’s an informal settlement that’s been around for 20 years, there still seems to be a political wish to punish people for having done that.” The government wants people to go through the formal process of being given a house, she says – and for them to be thankful to the government for providing it.

At the municipal level, change will require “real leadership around informal settlement upgrading and around ensuring that land is available for people to occupy,” she says. 

Despite the end of enforced racial segregation, spacial apartheid remains a factor in South Africa. There are few mixed-income neighbourhoods. Those who can afford to often live behind walls in sprawling low-density suburbs, while the poor live in overcrowded slums and apartment buildings.

The creation of the apartheid city “didn't happen by chance,” says Amira Osman, a professor of architecture at the Tshwane University of Technology. “It was a deliberate, structured approach to the design of the city. We need a deliberate, structured approach that will undo that.”

Since last fall, Johannesburg’s Inclusionary Housing Policy has required developments of 20 or more units to set aside 30% of those units for low-income housing.

The policy, which faced significant opposition from private developers, won’t lead to dramatic change, says Sarah Charlton, a professor at the Centre for Urbanism and Built Environment Studies, but it is “an important and significant step.”

Zikode isn’t optimistic that change will come for shack dwellers, however.

“People in the high positions of authority pretend that everything is normal,” he says. “They pretend that everyone is treated justly, they pretend that everyone has homes with running water, that everyone has a piece of land – and hide the truth and the lies of our democracy.”

Jacob Serebrin is a freelance journalist currently based in Johannesburg. Follow him on Twitter.