Why one city is giving its residents $500 a month — no strings attached.

Just six years ago, the city of Stockton, California, filed for bankruptcy. Now, it's giving money away to its residents.

In October 2017, Stockton's elected officials announced plans to give "a few dozen families" $500 a month, no strings attached, for 12-18 months.

But why give away sweet, free money?


It's called universal basic income (UBI) and as history shows, it's not a new idea.

The philosophy behind UBI programs like Stockton's actually dates back to the 16th century.

The idea originated with Thomas More's 1516 novel "Utopia," which took place in a world where the government passed its profits back to its citizens. Thomas Paine, the British-American activist best known for his 1776 pamphlet, "Common Sense," advocated for a similar idea, calling it "citizen's dividend." British thinker and activist Bertrand Russell made an argument for "a certain small income, sufficient for necessaries, should be secured to all, whether they work or not." In 1967, Martin Luther King Jr. called for a guaranteed income "pegged to the median of society."

Hello, ladies. It's me, Thomas Paine. Photo by Hulton Archive/Getty Images.

The only time the U.S. truly considered implementing a UBI was under President Richard Nixon. He took a liking to the idea of giving individuals a guaranteed income, with early outlines of a proposal offering to give families the equivalent of about $10,000 in today's money per year. Unfortunately for UBI enthusiasts, Nixon was talked out of the idea just before its launch.

In 1976, Alaska created the Alaska Permanent Fund, which paid the state's residents a dividend for profits brought in through oil drilling. It's shifted a bit since then, surviving a number of court challenges throughout the years, but it still exists to this day.

Economists Milton Friedman and Friedrich Hayek, favorites among conservatives, had also endorsed the idea as a way of addressing poverty outside the framework of the more complex social safety net system.

In the 1970s, Canadian Prime Minister Pierre Trudeau (father of current PM Justin Trudeau) launched a "mincome" (minimum income) program aimed at alleviating poverty in Dauphin, Manitoba. The program was extremely popular, but after Trudeau's political opponents took power, it was gutted. Canada continues to dabble in UBI, though it's yet to be implemented on any sort of national scale.

Stockton's UBI program won't cost taxpayers anything — at least for now.

Thanks to interest from business leaders in nearby Silicon Valley (Facebook's Mark Zuckerberg has made multiple arguments in favor of UBI programs, citing the Alaska Permanent Fund as an example of how they can work), Stockton's $1.2 million 12-18 month program is being paid for entirely through outside donations.

The reason tech CEOs tend to be so interested in the idea is based on the fact that the world is gradually moving more and more towards automation.

Priscilla and I spent the weekend around Homer, Alaska as part of the Year of Travel challenge. It's beautiful...

Posted by Mark Zuckerberg on Tuesday, July 4, 2017

In an interview with NPR, Stockton Mayor Michael Tubbs explained why the city's doing this: "People deserve a basic economic floor so the bottom doesn't fall out under them."

"People working 14-hour days, working incredibly hard, and being rewarded with wages that haven't kept up with the cost of inflation over the past two generations," he said, articulating some reasons why a UBI might help address some of the issues brought on by wealth inequality.

Michael Tubbs attends the 'True Son' documentary premiere in 2014. He's now the mayor of Stockton. Photo by Cindy Ord/Getty Images for the 2014 Tribeca Film Festival.

Beyond that, Tubbs believes people are more than their jobs.

"We're not just designed just to work all day and run a rat race," he said. "We're designed to be in community, to volunteer, to vote, to raise our kids. And I think the more inputs and investments we can give in people to do those things, the better off we are as a community."

It'll be interesting to watch what happens in Stockton over the next few years. If history's any indication, it could be good.

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