Entrepreneurs

Free cash handouts take a step closer to mainstream thanks to California Democrats

Photo by RICOWde

Free cash handouts — it's an idea Elon Musk, Richard Branson and Mark Zuckerberg have all talked about. And now it's officially part of the California Democratic Party's 2018 party platform.

Though a party platform is a guideline and does not guarantee action, the idea of universal basic income (UBI) took a step from theory towards possibility when it was adopted as part of the 2018 official party platform of the California Democratic Party at the 2018 California Democrats State Convention, which was published February 25.

"The platform is a statement of general principles and specific policies we believe should be be the basis for public policy. It's not meant to be read or understood as a legislative document. However, we certainly support legislation that's in line with our platform," John Vigna, the communications director for the California Democratic Party, tells CNBC Make It.

In a section of the party platform titled "economic justice," the idea of cash handouts is addressed.

"All people deserve the opportunity to pursue the American Dream and have the financial resources to live in economic security. We support efforts to enact programs, such as a guaranteed government jobs program and a universal basic income/rent or housing to eliminate poverty while improving prospects to secure good jobs that help people climb the economic ladder," the party platform reads.

The concept of universal basic income is to distribute money to all citizens, irrespective of employment status.

Facebook co-founder Chris Hughes, a vocal advocate of universal basic income, cheered the inclusion of cash handouts in the state party platform.

"California Democrats included a guaranteed income in the official party platform for the first time in decades!" he tweeted.

Hughes published a book about UBI, "Fair Shot: Rethinking Inequality and How We Earn," on Feb. 20.

Though naysayers argue cash handouts would be prohibitively expensive and encourage laziness, the idea is gaining traction. Forty-eight percent of Americans support it, according to a new Northeastern University/Gallup survey, reports CNBC.

It's also been getting attention among billionaires and Silicon Valley elite.

"There is a pretty good chance we end up with a universal basic income, or something like that, due to automation," Tesla and SpaceX CEO Musk told CNBC in November 2016. "Yeah, I am not sure what else one would do. I think that is what would happen."

Branson has also publicly said as much.

"I think with the coming on of AI and other things, there is certainly a danger of income inequality," Branson told CNN's Christine Romans in a piece published in February. A "basic minimum earnings," or a universal basic income, should be instituted "so that there is nobody that is having to sleep on the street," Branson said. "One hundred percent, I think that is really important."

And Facebook founder Zuckerberg promoted the idea of universal basic income in his Harvard commencement speech in May. He say cash handouts would give people the confidence to be innovative and entrepreneurial.

"Let's face it: There is something wrong with our system when I can leave [Harvard] and make billions of dollars in 10 years, while millions of students can't afford to pay off their loans, let alone start a business," he says." Now it's our time to define a new social contract for our generation. We should explore ideas like universal basic income to give everyone a cushion to try new things."

As the California Democratic Party gives universal basic income a nod, privately funded experiments in the state are underway.

Silicon Valley start-up accelerator Y Combinator has already conducted a one-year "feasibility study" in Oakland, California to prepare for a larger study of universal basic income. Y Combinator will select 3,000 individuals across two U.S. states to participate in the forthcoming project: 1,000 will get $1,000 per month for five years, and 2,000 will receive $50 per month, according to a September blog post about the study.

Sam Altman, a partner at Y Combinator, was encouraged to see the California Democratic party include universal basic income in its platform, but thinks more needs to be understood about how best to implement it on a broad scale. "I'm excited to see it gaining momentum as a concept, but I think it's definitely something we should test before rolling out widely," Altman tells CNBC Make It.

Also, in October, Stockton, California's 27-year-old mayor, Michael Tubbs, announced a universal basic income project for his city, which declared bankruptcy in 2013. The cash handout program, called the Stockton Economic Empowerment Demonstration (SEED), is an effort to alleviate poverty in the city.

The plan is for checks of $500 per month to be distributed and the goal is for the program to launch "ideally in August," Tubbs told CBS This Morning in February. The project is being funded, initially, with a $1 million grant from the Economic Security Project, which aims to raise awareness of universal basic income. The organization is co-chaired by future of work expert Natalie Foster, Facebook co-founder Chris Hughes and scholar Dorian T. Warren. Crowdfunded donations are also being accepted through a Crowdrise campaign.

"The idea is that it will be as universal as possible. ... Somebody who makes $70,000 could get it, someone who makes $7,000 would be equally eligible to well qualified" Tubbs told "CBS This Morning." "The second tenet will be that it will be no strings attached ... We trust that people are smart and resilient and will make the best decisions for them and their family with the money, understanding that everybody is not going to do it right, I guess, but that doesn't happen in the status quo anyway."

See also:

Elon Musk: Robots will take your jobs, government will have to pay your wage

Billionaire Richard Branson: A.I. is going to eliminate jobs and free cash handouts will be necessary

Another tech titan joins Elon Musk and Mark Zuckerberg in supporting free cash handouts for Americans

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