Why cities are experimenting with giving people cash payments

A pilot project in Canada is challenging stereotypes by giving cash to people experiencing homelessness. The results of The New Leaf project showed that the money was managed well by recipients and led to fewer days of homelessness and food insecurity. Additionally, the cash payments made it easier and faster to find stable housing. Participants also managed to save $1,000 of their $7,500 grants. The findings challenge the common assumptions held about giving cash to "people living on the margins."

13 million South Koreans were given money to spend in their local markets in order to stimulate the economy after the economic slowdown. The money is distributed through a debit card and significantly boosted sales for small businesses. Politicians propose using the concept to offset job losses from automation by levying taxes on the manufacturing industry in the form of a "robot tax."

Countries spanning several continents have experimented with basic income in often successful attempts to curb poverty, transition into the era of automation, reduce crime, and boost health and happiness outcomes. The idea has received pushback from political parties that are concerned with the costs of the policy as well as the possible disincentivization of work. Countries on the map have experimented with the policy in varying degrees.

In Lindsay, Ontario, the provincial government is funding a pilot for a universal basic income that provides monthly stipends to those who are facing poverty to help boost them to at least 75 percent of the poverty line. Although the longterm benefits and costs are yet to be seen, so far participants have reported that it has acted as "a social equalizer, a recognition that people who make little or no money are often doing things that are socially valuable."

The results of a universal basic income (UBI) program in Kenya show the positive ripple effect of giving everyone money on a consistent basis over the course of several years. Recipients have been able to lift themselves out of poverty, start businesses, and invest in communal projects such as plumbing and better housing. Improved mental and physical health was also a major outcome of the initiative.

Mumbuca is a digital currency used in Maricà’s basic income program. Residents, with few eligibility requirements, can qualify for a monthly stipend to purchase goods and services using a smart phone or a card. The currency runs on the digital platform E-dinheiro and can only be spent in the city limits. Individuals cannot swap Mumbucas for national currency, but businesses can after a 48-hour waiting period and a 1% fee. Local currencies, which are popular in Brazil, help residents increase personal savings and, with increased stipends during the Covid-19 pandemic, allowed informal workers to stay home.

Families experiencing poverty have been given $1,000 each month in an effort to address the racial wealth gap through the Magnolia Mother's Trust program. The cash payments yield an increase of recipients who were able to earn their GEDs, cook fresh meals for their families, and meet all their basic needs. The payments began prior to the onset of the pandemic but have proven to be a crucial safety net.

A pilot program in Jackson, Mississippi called Springboard to Opportunities is providing 20 single, African-American mothers living in public housing with $1000 a month, with no stipulations on how that money should be spent. The experiment so far has allowed mothers to save money, avoid predatory loans, pay off loans, and consider classes and higher education.

A study of a 1910 cash-based welfare program in the United States reveals the positive lifelong results of giving families cash to reduce poverty and prevent the long-term effects associated with it. Providing cash for families with children once resulted in a better rate of return in the form of better nutrition, higher socio-economic status and longer life expectancy. Currently, the government provides the "deserving poor" with welfare benefits such as health coverage and food aid but recipients must meet the strict requirements for eligibility.

The Finnish government's experiment with basic income revealed the mental and emotional benefits associated with receiving a small monthly income. The 560-euro amount is not enough to live on but provides a financial security net for those who have experienced long-term unemployment. Basic income allowed participants to consider low-paying jobs that would normally cost them their benefits. The notion of basic income has gained traction across Europe, especially during the pandemic and in the face of general job losses due to automation.