INSIDE ECONOMICS

Mark Zandi:                       Welcome to Inside Economics. I'm Mark Zandi, the chief economist of Moody's Analytics. And I'm joined today by my two co-hosts on a very special bonus podcast today. Hey, Marisa. Hey, Cris.

Marisa DiNatale:              Hey, Mark.

Cris deRitis:                        Hey, Mark.

Mark Zandi:                       What's going on? Anything good?

Cris deRitis:                        Not since Friday.

Marisa DiNatale:              No, [inaudible 00:00:32] Monday.

Mark Zandi:                       Anything bad?

Marisa DiNatale:              Did you say it's Friday?

Mark Zandi:                       Not much since Friday.

Cris deRitis:                        Since Friday.

Mark Zandi:                       Oh, no, we-

Marisa DiNatale:              Not since-

Mark Zandi:                       ... recorded Thursday. Did we? We recorded Thursday. Feels like a long time ago now.

Cris deRitis:                        Was it Friday? I can't remember.

Mark Zandi:                       I can't either.

Marisa DiNatale:              No, it was Friday.

Mark Zandi:                       It was recently.

Marisa DiNatale:              We just did this-

Mark Zandi:                       It was Friday.

Marisa DiNatale:              ... a couple of days ago. Yeah.

Cris deRitis:                        Yeah, it was recently.

Mark Zandi:                       That was with Chris Mayer, the Columbia Business School professor in real estate. Yeah, now I remember. It's all coming back to me.

Cris deRitis:                        There you go. There you go.

Mark Zandi:                       And we've got a guest, Mark Donovan. Mark, how are you?

Mark Donovan:                Great, thanks. Thanks, Mark. I appreciate you having me on the podcast.

Mark Zandi:                       It's good to have you. Would I call you the Executive director of the Denver Basic Income Project. Is that the right title?

Mark Donovan:                It is, yes. I'm the founder and executive director.

Mark Zandi:                       Founder and executive director. And we are going to be talking about the work you're doing with regard to guaranteed income. Is that the right term? Would you say it's guaranteed income, because it's universal basic income, that's the other term that's been popularized. How would you describe?

Mark Donovan:                What we're doing is a guaranteed income.

Mark Zandi:                       Guaranteed income.

Mark Donovan:                Personal, basic income would apply to everybody.

Mark Zandi:                       Yeah. And you came to this kind of circuitously, you've not been a straight line to being executive director of the Denver Basic Income Project. You want to describe a little bit about your background and how you got to where you are today?

Mark Donovan:                Sure. Well, I'm a long time entrepreneur. I started a business back in the early nineties and ran that with my partner for over 25, 27 years. It was a sweater company, making women's sweaters, and I learned a lot in that experience. I'm a believer in the power of free markets and the theory of lean thinking, built on respect for people and continuous improvement and first principles. So I really believe in the power of innovation. And 2017, I started down sort of a different pathway. I moved to Denver and in 2020, as Covid was hitting, I was getting a divorce and I exited my business and I was looking for a new direction, and I was watching people losing their sources of income and their stability and their housing. And at the same time, I was watching this amazing increase of wealth with Apple growing by a trillion dollars of market capitalization and Amazon by 800 billion in 2020 and Tesla by 600 billion.

                                                And I had made a fairly large bet in Tesla five years before, because I really believed in the way they were innovating and that they were taking on an existential real world problem. And that grew by 10 times in 2020. And so I decided to start experimenting with how I could have an impact and give back and innovate in this space. And I saw the Vancouver project, the New Leaf project that was providing unconditional cash to people experiencing homelessness, and just started to experiment in this space and that kind of led to this project.

Mark Zandi:                       And you told me a story, I don't know if you want to repeat it, about that your Tesla stock and you said," I'm selling a whole chunk of Tesla stock and that you're using that as a basis for funding what you're doing today?"

Mark Donovan:                I did. Yeah. So in 2020, I first started by, just a personal experiment. I felt like I wanted to do something and I started to give basic income to 10 or 12 people that had been impacted by Covid. And it had a really powerful impact on me, kind of the immediacy of it, the impact of it. And then when I did a deep dive on the literature, I saw, "Wow, this really has a ton of promise but hasn't been explored." So yeah, I took a half million dollars of Tesla gains and said, I'm going to start up a project to expand upon what's already been learned in Vancouver and with Mayor Tubbs in Stockton, another early demonstration project. And we started organizing in early 2021, and surprisingly or not, some of the foundations stepped up and decided to back us. And before we knew it, we had a fairly significant amount of money and a really powerful and growing coalition of partners that wanted to work on exploring this space together.

Mark Zandi:                       Oh, I forgot, because we had this conversation a few months ago. What struck me was, you sold your company or you monetized your ownership in the company and you just bought Tesla stock. You bought as much as you could get your hands on. You didn't practice good financial... Oh, you did practice good financial planning, but decided that wasn't right. That wasn't working out.

Mark Donovan:                Well, it's true. I did break one of the fundamental rules of investing, and I was getting really frustrated with investment advisors who couldn't follow my sustainable investing plan that I had laid out. I kept looking under the hood and I was like, "Oh, I don't want to be invested in that." You go beyond the top 10 and all of a sudden you're like, "Whoa, that's not what I signed up for." And so I finally said, "Okay, I'm just selling it all and I'm putting it all into Tesla."

                                                And I know it sounds crazy, but I really have been watching Elon Musk and Tesla really closely for 12 years. And so the rule that I didn't break was, really understanding what you're investing in. And I saw a pace of innovation and a spirit of taking on open sourcing patents and just the way that they were doing it, I decided, "If Elon goes down, I'll go with him." So yeah, I made a big bet and it paid off. And then I thought, "Okay, I want to leverage this for good." This idea accumulating wealth and then deploying it to fix the problems that we create as we build the wealth, it seems like kind of a broken cycle. And so it's like, how can we build sustainability and economic justice and all of these things into the foundations that we are working on in our companies and in our entities? And that's kind of the space I'm exploring right now.

Mark Zandi:                       Well, thank goodness Tesla stock did well. It's kind of personal for me because my son, we invest together sometimes on a very small scale, and I've done it with him since he was a little kid, because it's a good way to learn about companies and the economy and how business actually works. And he does research on companies. He came back and said, "I want to buy Tesla stock." This was a number of years ago. And I said, "I don't think I'd do it," but he did it. Fortunately, he bought the Tesla stock. He reminds me of that every day, so.

Mark Donovan:                I bet.

Mark Zandi:                       Just like you.

Mark Donovan:                Good for him.

Mark Zandi:                       Yeah, good for him. Good for him. So-

Mark Donovan:                I do believe in diversity and I've deployed, so that was a moment, but I have deployed those resources to build this project, and I don't advise doing what I did. This is not investment advice.

Mark Zandi:                       Right. Right. I'm glad it worked out.

Mark Donovan:                Yeah.

Mark Zandi:                       And so you founded the Denver Basic Income Project and you've been running, would you say it's an experiment? Is that how you would describe it? Or I guess a program where you-

Mark Donovan:                I call it a demonstration project.

Mark Zandi:                       Demonstration, okay.

Mark Donovan:                Yes.

Mark Zandi:                       Do you want to describe the project and how it's structured?

Mark Donovan:                Sure, yeah. It's a demonstration project that provides unconditional cash to people who are experiencing homelessness. And so in early 2021, when we started organizing, we brought in DU Center for Housing and Homelessness Research to run a rigorous randomized control trial. We brought in community-based organizations that had decades experience working in the space. We brought in people with lived experience, and we basically started meeting weekly to say, how would we expand upon the existing knowledge that's in this space? And lots of questions to be answered and choices to be made. And I, as an entrepreneur, really wanted to go fast. We had raised some money, winter was coming up and I was like, "Let's launch in the fall." But the community pushed back and said, "We need to take more time to build trust and infrastructure."

                                                And so we decided to do a trial in the summer of 2021. And the structure that we trialed and then ultimately launched in 2022 was to give one group of people $1000 a month for 12 months. A second group of people would get $6,500 upfront and then $500 for the next 11 months. So both payment groups would get $12,000 across 12 months. And then we have an active comparison group getting $50 per month to complete surveys and give us a baseline for learning. We gave everybody a cell phone or a stipend if they use their own smartphone and a year's worth of data.

                                                That was the basic structure. There was four criteria, to be in the program, you need to be 18 or over unhoused. I mean, we used a broad definition, not HUD, but the McKinney-Vento definition, which includes people that are doubled up or sleeping in cars. You needed to be connected with one of our 19 partner organizations. And then finally, not presenting with severe and specifically untreated mental health or substance needs. And we ran two trials over the course of about a year and a half to understand how to do this work well, and to build the community partnerships we needed to do it at scale. And then in November of 2022, we had over 3000 inquiries, took 1500 applications with 150 screeners across those partners and for 820 slots. And then we randomized into the three groups through DU Center for Housing and Homelessness Research did that, and launched the program. And to date, we've deployed over 6.5 million to our unhoused neighbors, and we've released our interim results, the six month results that are on our website, both qualitative and quantitative results that are at Denverbasicincomeproject.org.

Mark Zandi:                       Were you surprised by the reception you got? I mean, it sounded like, based on our previous conversation and I read the interim report, it felt like people were very excited about participating. I mean, is that the case, or did you meet any kind of resistance or reticence to participate in the program?

Mark Donovan:                I mean, who wouldn't want to participate?

Mark Zandi:                       Who wouldn't take the money, right?

Mark Donovan:                Yeah, no. So, yeah.

Mark Zandi:                       Yeah.

Mark Donovan:                So, huge enthusiasm. What there was, was skepticism.

Mark Zandi:                       Skepticism?

Mark Donovan:                Most people thought it was a scam, right? And didn't believe it was real. Where you have your resistance is, with, not people that are participating in the program, but people that maybe think it's not a good idea. And you get a lot of pushback in that way from people that think this is, for instance, might disincentivize people to work or it's going to... And these things are not true. And it's proven not true with our results, and with other programs, I'm sure we're going to get into today. But when I've talked to people that have skepticism, I say, "What we've been doing is not getting the outcomes that we're hoping for collectively as a society." We want thriving cities. We want equal opportunity for everybody. We want to build an economy that works for everyone. I think most people agree on these things. It's just how to get there.

                                                And so what I propose is let's run some innovation. Let's try some innovation. And it's not necessarily, this is the silver bullet or the only way to do this, but we need to innovate the way Tesla and others are innovating in this space. We need some of our best minds working on this collaboratively and collectively. And if we do that, we can move the needle.

Mark Zandi:                       So you released your six month interim report in October. So this is ongoing, and this is going to be completed later into 2024. The project will come to an end and you'll get more additional results. But so far, what are you learning from six months into the project?

Mark Donovan:                Well, I have some good news on that front. The project's not coming to an end-

Mark Zandi:                       Oh, good.

Mark Donovan:                ... and we can talk about that more. We have received additional funding, and we do believe that one of the most important things we can do at this stage in the project, is to continue running it longitudinally. I was in Washington, we presented at HUDs PD&R quarterly about three weeks ago, and also met with the Center for Policy and Budget Priorities, Peggy Bailey, and across the board, in these meetings, everyone says, "It'd be really valuable to know what happens over time with this." We know what happens with the benefits cliff, but I think the expectation for the amount of time that it takes for people to recover from homelessness, which is a severely traumatic experience, is longer than most people think. And also, the question of, in this economy of the future, what's the role of basic income?

                                                Well, here we are in Denver with over 800 people on a very structured, rigorous randomized control trial, over 92% opted in. We need to keep running this to keep learning. But what we found is, and it is validating our theory of change is, that it accelerates the pathway to, first and foremost, for our unhoused neighbors, safety. But also, housing, work, stability and thriving. I say safety first because again, it's such a traumatic experience to be in homelessness and housing first is proven as a best practice. Getting people first, to a safe place, that's a home, is a great platform for growth and for moving to a better situation. But the other piece that's been really an early learning that we found was, how quickly you can break down the wall of distrust by approaching people in the way we've approached them, by saying to them, "We trust you, we believe in you. We are going to respect your agency.

                                                And at first, again, they think it's a scam and they think you're just talking like everybody else, but then you hand over the money and it's real. And again, over 92% of our participants opted into our research voluntarily. They didn't have to do that. And we have super high rates of engagement. So this idea that, if we start from a place of trust and then provide resources, you can create a really incredible platform for change. We have so many people that have come to us and said, "I'm clean and sober since I got into this program because I don't want to lose this opportunity," or, "I'm alive today because of this cash."

                                                I mean, for many, it is truly a matter of life and death. And so the urgency of it, we kind of see cash as representing freedom, as representing, it's kind of the currency of urgency, and that's what we need. And we have a state of emergency for homelessness in Denver with our new mayor. And that's the way, as a country, I think, we need to approach this. It is really when there's a 20 year life expectancy gap between ourselves and people that are chronically homeless, that's unconscionable, and we can do better and we're going to do better.

Mark Zandi:                       One of the criticisms of this approach is that it dissuades work, it disincents work. Any insight into that kind of thought? That view?

Mark Donovan:                Yes, it's not true. It's not true at all. Yeah, no. Stockton, the payment group was 50% more likely to achieve full-time work than the control group in that study. And our initial results, our two payment groups, our $1000 payment group went from 18% to 25% full-time employment or employment. Group B went from 21% to 31%, where group C was somewhat flat. It's just not true. I mean, when you provide people with some stability and some resources, they can fix their car, they can get the appropriate clothes for a job, they can take a day off and maybe not take the first job that comes to them and find a better, longer term, sustainable job that's going to create a better future.

                                                So yeah, this is one of the many myths that's just not at all true. We find that this stability of basic income helps people accelerate to work, but we also need to recognize that there's a segment of our population that cannot work and will not be able to work for many good reasons, and we need to deal with that as well, as a reality of our society. And with automation and everything else that's coming down the pipe, that number of people that are going to be displaced from work is going to grow quickly. And so we're facing kind of a tsunami of challenges that require more efficient and effective policy and programming that delivers results. It delivers stability, that delivers safety for everyone.

Mark Zandi:                       The intuition on the other side is, well, if you give folks money for nothing, then they're just going to, why should they work? And what you're saying is, that may be the case for some, who knows? But at least, in terms of the broader set of people who receive the support, it provides them the basis, the ability to actually go to work. Otherwise, if they're not living somewhere, there's no chance they're going to be able to sustain a job, go to a job, be there during the day. So this just gives them the basic requirements for actually going out and doing the work. And that's what you're finding that they're doing?

Mark Donovan:                That's exactly it. It creates an accelerated pathway to work with 64% of Americans living paycheck to paycheck. I mean, and with the levels of the wealth disparities and income disparities that we have, don't view it as a handout. It's sort of just creating a more level playing field.

Mark Zandi:                       Got it. I want to come back and explore some of the other criticisms, but I'm going to turn to Cris because I can see, he's kind of biting at the bit. Go ahead, Cris. What do you want to weigh in on?

Cris deRitis:                        Just a quick question. I was curious if you found a difference between group A and group B in terms of their outcomes? Group A was getting a stipend every month.

Mark Donovan:                Yeah, I'll qualify in saying, these are interim results and the six month report was really more about assessing the balance of characteristics across the groups. But the initial findings do show that there was an even larger increase in full-time work for Group B, receiving the lump sum than Group A, but both improved significantly. And that was also similar for the number of people that were in a home or apartment that they rent or own. For instance, the lump sum payment Group B went from 5% to 40%, and group A went from 8% to 34%. So you're seeing a more significant impact. And so that's interesting, yeah. As we get to our final report, which will come out in June, we're going to do a lot more deep analysis of sub-sectors of this and looking through different lenses, like the lens of the individual service providers or the cash lump sum versus the steady monthly payment to try to assess and learn from that.

Mark Zandi:                       Marisa, anything you wanted to add?

Marisa DiNatale:              Is that because, Mark, that by giving them a lump sum upfront, they're able to more quickly find housing with that money upfront? Is that what you assume?

Mark Donovan:                Yeah, we think that's the case. We know that if somebody already had, for instance, they had a voucher that it helped accelerate their path into the housing to have a down payment that they would need. But another reason we want to run this over a longer period of time, I'd love to run this for five years, for instance, is keep building those relationships. The conversations I was mentioning, just before we got onto the podcast, that we had a celebration of our first year with about 40 people in the community here today. Six of our participants, funders, people from the state and Senator Bennett's office were here. And having those conversations and understanding the nuances of this. Each pathway is unique, and it's about creating relationships and trust. And again, that hope might be equally important to the cash. Having hope in a better future, means that you're then willing to try some different things and believe that you're going to get to a better place, that it's not just running against the wind.

Mark Zandi:                       Most of the income support programs that are in place today, the ones that the government provides, the federal government and sustainable governments provide, are, I guess, you'd call them conditional, right?

Mark Donovan:                Yes.

Mark Zandi:                       Like the SNAP program, which is the food assistance, or housing vouchers you mentioned, to allow low-income households to find a home, TANF, the old welfare, other various programs, but they're tied to some specific need. In this case, what's unique about what you're doing, among many things is, as you said, it's unconditional. The folks get the cash and they can do whatever they want with it. Do you have a view on the advantage, disadvantage of one over the other?

Mark Donovan:                I do. Yeah. I think that we have a lot of conditions in many of our programs that are counterproductive. Like for instance, the asset limit for SSI, if you have more than $2,000 of assets, you're going to be thrown off the program. I mean, whether or not you should have any asset limit, that seems too low. I mean, I think we want to incentivize people to have safety nets and to save. And so it's like, as soon as you start to make some progress, it's like, "Okay, we're going to pull this away." And so the idea that we're exploring, partly is, what happens if you just sustain a floor below which nobody falls? And kind of the stability of that and the reliability of that, reduces stress and creates, again, this hope and the stability where a $400 emergency isn't going to put you on the street.

                                                It's hard to think straight and be your best when you're under the pressures of just trying to survive or fearing that you can't make your next payment. And so it just creates, it takes, not just the edge off. It really creates a whole new dynamic for people. And so yeah, I think we have some great vehicles for delivering this kind of, what I'd call, a new social contract. The earned income tax credit is great, but if we were to reduce the work requirement on it and just deliver it to everybody, that would essentially, be a basic income.

                                                The expanded child tax credit showed that we could reduce child poverty by 50% in one year. We could do the same thing with poverty overall, and at the same time, create more thriving, safe and vibrant community. So it's not about us versus them, or taking away from anybody else. It's about, we can build a better society by just having a floor that creates stability that's just not there today, and we know that, but we just seem to be afraid to do what we've known since the sixties with Nixon and Dr. King. Right? They were talking about this, and Nixon, of all people, almost got it passed.

Mark Zandi:                       Yeah. Yeah. I was reading that. Was I reading that in your literature? I was reading that in preparation for the conversation.

Mark Donovan:                It's covered in a lot.

Mark Zandi:                       Yeah, I see.

Mark Donovan:                It was quite close.

Mark Zandi:                       Yeah. What did he call it? What was the name of the program that Nixon, I can't remember, but he was pretty close to doing that.

Mark Donovan:                I don't remember the name.

Mark Zandi:                       I don't remember.

Mark Donovan:                Yeah. But Denver back in the seventies along with Seattle, was also had a major demonstration project, but the lens through which they viewed it, it's often viewed as not being successful because for instance, maybe there was a slight reduction in the amount people worked, but it might be because people were now in a position where they were able to spend more time with their kids or their family. And this is another one of the big learnings we've seen is, just how important it is to be able to do things for your family, for your kids, to take them out for a meal or just have a little joy in your life. And so, many people don't have that at all. We started this right before Christmas last year, and so in our qualitative report, you'll see a lot of comments about that, just the joy of being able to do something with their family or even on the housing front.

                                                It's really interesting, because a certain percentage of the people we're serving will find their way to housing without any other intervention. And some people are not comfortable doubling up if they can't contribute something, they feel like they're going to be a burden. And sometimes, a basic income gives just enough financial stability to then be able to contribute a little bit to a living situation. And maybe it's not permanent or long-term, but it's, again, it's a step in the right direction. And if you're feeling like you're getting somewhere, you're going to keep doubling down on those investments and things that are going to bring you there.

Mark Zandi:                       What about work requirements? I mean, that's become a popular mantra more recently, around these various income support programs that if you're going to receive the benefit, you should have some requirement to work.

Mark Donovan:                Yeah, I think that we saw in '96 with the Clinton administration, the changes that were made and we went in that direction, it hasn't actually resulted in what we hoped it would. So I think, what is really showing to be really powerful about what we're doing is, that when you take all of that away and you just use a very simple concept of, "We trust you and we believe in you, and we're going to create this income floor and we're going to sustain it." That alone, is such a powerful foundation, especially with the economy that we're moving into with automation and job displacement. A work requirement, I think, is a recipe for disaster.

                                                And I think, most people, this is what's counterintuitive about this is, our approach actually leads people to work. So we get to where everybody's saying, they want them to go, but nobody thinks that this is the pathway to get there. So I'm hoping that people will study the data, but unfortunately, data doesn't seem to drive rational behavior, as we've seen with climate change and other things. So even though the evidence keeps mounting with over a hundred demonstration projects across the country, exploring this space. In Cambridge, Mayor Siddiqui running one of the largest publicly funded programs in the country. Chicago, California, leading with Governor Newsom, all of these places that are exploring this, but even if the results are showing efficacy and positive results and outcomes that people are hoping for, we still seem hesitant to get behind it.

Mark Zandi:                       Here's another potential criticism. So a lot of what you're trying to do is get people that are homeless into housing. And the problem in the housing market is, there's just no supply. There's just a very severe shortage of affordable housing and certainly, that's one of the reasons, I think, behind the increase in homelessness in recent years, just because rents have gone up and it's just very, very difficult to afford a home, even a basic kind of rental home. If you're providing support, cash to households to go find a home, but there's no supply, wouldn't that just drive up rents and costs and doesn't solve the problem? I mean, isn't that kind of backwards? I guess the other way of asking that is, wouldn't it be better to take the resources you're using now to find and figure out ways to improve the supply of housing so that rents can come down or rents be more affordable to the people that are looking for homes?

Mark Donovan:                There's no doubt that we have an affordable housing crisis and that we need to build out as fast as we can, affordable, abundant, available housing, and that's urgent and it should be done. But it's not either or, Is think it's both, and. And to do that, say, "Okay, we're going to do that first," which is going to take a decade, probably at the pace we're going or more, what happens to everybody that's not in those houses? And right now, we're just leaving them on the street or putting them in congregate shelters, which are often not a place that people want to go. If you look at the House Key Action Network, Denver report that spoke to 800 of our unhoused neighbors, the three top barriers to housing are one, cash, two, credit, and number three, phones.

                                                And so we're addressing two of the three of those. And so in this interim period, I don't think we can sit back and just wait for housing. But what I just pointed out is, that a certain percentage of people in this program find their way there, even despite the lack of affordability or availability, they're finding their way to housing. I don't know if you've read Annie Lowery's book, $2 a Day?

Mark Zandi:                       No, I haven't read it, no.

Mark Donovan:                It's great. I mean, this community is used to surviving on so little-

Mark Zandi:                       Little.

Mark Donovan:                ... and so, this has been one of the incredible things to watch, is that people are finding their pathways to housing. Even Miracle Money in San Francisco saw the same thing, a very small initial pilot, but 60% of their participants found their way to housing, and with $500 a month. I mean, so I think that we need to do both.

Mark Zandi:                       Got it. Annie Lowry, she's with the Atlantic, I believe, right?

Mark Donovan:                Yes.

Mark Zandi:                       Yeah. She's a great journalist. Yeah.

Mark Donovan:                Yeah, that's a great book. And Matthew Desmond's book, Poverty, by America-

Mark Zandi:                       Oh, yeah. For sure.

Mark Donovan:                ... is also just really an important read if you're really interested in how we allocate resources and really digging into the economics of it.

Mark Zandi:                       Okay. I think, here's the big question. How do we pay for this? I mean, you're not arguing that we reduce other benefits, right? You're saying, okay, we've got to keep what we've got, on TANF, on housing vouchers, on SNAP, so forth and so on, but we need this kind of basic level of income, let's say, $1000 a month. That seems to be what everyone's been coalescing around. Let's use that as our benchmark. If you do the arithmetic, and that seems like that's really, a bridge too far, particularly, in the context of our big budget deficits and rising debt load. What do you think about that? How do you respond to that?

Mark Donovan:                Yeah, my first response is, how do we pay for what we're doing right now? I mean, the cost of having the conditions we have, the cost of healthcare interactions, of justice system interactions, the cost of not dealing with this upfront is so much vastly more expensive than actually dealing with it preventatively. It's like anything, it's like healthcare. If you deal with something preventatively, it costs you a fraction of what it costs you to deal with it down the road. And that's exactly what we're doing. So my question is, how can we afford... We can't afford what we're doing right now.

                                                So my belief is, this pays for itself many times over. And you give, you provide this income floor to this community, and what happens to that money? It gets invested into the local community. Look at Give Directly's research. They find this multiplier effect. And so, it stimulates growth in the economy. It's exactly what we want. And so, this idea that we can't afford it, I think, is frankly ridiculous. I think we can totally afford it. We can't afford not to do it. It's just how do we get to the political and social will to actually do it?

Mark Zandi:                       Yeah. What do you think, Cris?

Cris deRitis:                        Well, could we actually replace some or all of those other programs, the Alphabet soup of programs that you're talking about, Mark, given all the overhead they have as well, right?

Mark Donovan:                Sure. Yeah, and the whole nonprofit sector, there's a lot of work and energy and resources that's devoted, that certainly, over time, could be allocated better. And if people are able to find pathways to health and to safety and housing and stability via an income floor, a lot of those things will disappear. And that's what I love about it. It's sort of a root cause solution that works across a whole host of societal problems. And when you do it at the universal level, it becomes so efficient and so simple. That's the beauty of it. That's what I love about it so much. I'm obviously, a big believer in it.

Mark Zandi:                       Well, of course, to pay for it, you would have to raise taxes, right? Or cut spending somewhere else. And that just feels like that's going to be... I hear you on not doing it as costly, but actually getting it across the finish line, feels like I can't get my mind around it. Particularly in the... I mean, it was one thing if you go back a few years ago when interest rates were very low, but now interest rates are much higher, the borrowing costs are more significant. Our deficit and debt issues, seemingly, more in our face, given all the costs associated with the pandemic. It just feels like politically, I don't know how you'd get there.

Mark Donovan:                I agree. It's a huge challenge and I'm not sure exactly, how we get there either, but I think, we are going to try to get there by, first of all, organizing across the community of practice with the Economic Security Project and the Guaranteed Income Community Practice, Mayors for Guaranteed Income. We have also, local state groups, the Colorado Direct Cash Community Practice and the Guaranteed Income Coalition in Colorado. And I think we're going to show that it works and keep showing models of it.

                                                So for the Denver Basic income Project, we want to keep running. We want to also see other areas there, where people might say it might not work, in a rural area, in a more conservative area, and show that it's replicable and scalable so we can run at this scale in other places, and so that people in those local communities can see that. So in the next three to five years, we'd love to see 100 or 200 other cities stand up similar projects serving their unhoused communities. And with all of those, that might serve a hundred thousand people with $1.2 billion, it's still a fraction of what it would take to get this to scale universally, but maybe we can show enough local communities that this is good for everybody. It's not us versus them, it's, we will get to a more thriving, safer, stable society by having a basic income floor below which nobody falls.

Mark Zandi:                       Now, Andrew Yang, the entrepreneur who ran for president and ran for, I guess, mayor of New York, and he ran for president, I haven't heard from him recently, kind of popularized the universal basic income, UBI, kind of approach. And it feels like, at one point, it was sort of catching on, in terms of the collective view. Certainly, young people were excited about it. What's the political backdrop now? Are people still as engaged with it as when Andrew Yang was espousing it or has it kind of faded or did you have a sense of the excitement around it or not? Has it changed?

Mark Donovan:                Well, I just found out today, basic income is now in the Cambridge dictionary.

Mark Zandi:                       Okay, good. There you go. That's a good sign for sure.

Mark Donovan:                And I know that HUD is considering testing direct rental assistance versus vouchers, and they spend, I think over $35 billion a year on housing solutions. And so, they're looking at this, everybody is looking at it because there's so much powerful evidence coming forward. So I think we're in a really strong place. I think there's still, you don't see a whole lot of candidates stepping forward and running on it, the way Yang did so boldly. But I think that's going to shift in coming election cycles, and it's not going to happen quickly. But I think we need to keep having these conversations and running these types of projects to find ways to create a more just and equitable society for all. And I think, as long as we keep doing that, we're going to get to a much better place.

Mark Zandi:                       It may also be that, it is going to happen, but in a way that's surprisingly understated. For example, the child tax credit, kind of sort of is universal basic income, isn't it? Guaranteed income, right?

Mark Donovan:                It is. It's exactly it. If you take the income tax credit and you eliminate the work requirement, again, that's it.

Mark Zandi:                       Yeah.

Mark Donovan:                So there's the mechanisms to get there, and we just need the boldness in leadership, and then, we need to reach enough people to make the case that this is better for everybody. So I kind of love the idea of John Powell and targeted universalism rather than, it's not like, we're not taking something from one person to give to another. It's like, we're all going to get to a better place together and we need to do this. That's the way we're going to get there, not by working in opposition.

Mark Zandi:                       Yeah. Okay. Hey, Chris and Marissa, anything I missed you wanted to bring up? Any other comments or...

Marisa DiNatale:              Yeah. Mark, I was wondering, have you learned anything from this about the causes of homelessness? And then also, if you were to expand the program, would you think about reaching people to prevent homelessness in the first place? So have there been programs structured or are you thinking of designing one where you're reaching people that are kind of high risk for homelessness and then follow them to see if they do or don't fall into homelessness compared to a control group?

Mark Donovan:                Yeah, it's a great question. So first, in terms of the reasons for homelessness, I mean, we have such systematic failures. Like, when black families in America have one 10th of the wealth of white families, there's systematic racism built into our economic system. It's not a level playing field. And so, we often blame the individuals, as opposed to acknowledging the systems that make it so hard to break out of this kind of cycle of poverty. So... I just lost the second part of your question. I'm sorry.

Marisa DiNatale:              Oh, preventing homelessness to be-

Mark Donovan:                Oh, yeah.

Marisa DiNatale:              So instead of just targeting people that are already homeless, maybe expanding it.

Mark Donovan:                Well, so in Denver, just in the 2024 budget, there was over $30 million for rental eviction prevention. That's a smart investment, to provide some stability and keep people that are housed, keep them housed. So there's some great work that's happening in that space, and I think we need to continue that, but we continue to underinvest in our community of people that's experiencing homelessness. And so the money that we're investing, it's not a huge amount of money, but it has enormous impact. And then with that hope that's created, the potential that can be unleashed as people start to break out of that cycle and feel hope and start to invest in themselves and make strides, I think, is enormous. So yeah, I think we need to keep doing as much preventative work, and we need to keep innovating.

                                                We need to innovate in housing as well. We need to bring the cost of living down. And that's going to happen naturally. In a number of sectors, it's already happening. The cost of mobility is predicted to drop to 10 cents a mile with automation. The cost of energy, with clean, sustainable energy is dropping. And so I think we can innovate, and this is something that I'm going to start working on within this community, this trust-based space that we've built, is how do we create more affordable living spaces that are cooperatively community owned and move our communities onto these wealth building stacks? The data stack, nothing's more valuable than data these days. But it gets extracted. Why are these companies worth so much? Our data needs to be monetized for individuals. And if we do that, that's one payment stream. We need to get people onto the real estate stacks and how do we do that? So we're going to need some one-time investments, we're going to need maybe, some subsidies, but we're already spending billions of dollars.

                                                And so it's, how do we spend them in a way that creates long-term sustainable self-sufficiency for everybody? And so we have a new economy that we're going to be moving into in the next decade. I think it's a fascinating moment of opportunity and of possibility, and that's why I'm so excited to be working and I want to work with this community that's been sort of the most disadvantaged, the most ignored, the most disregarded and blamed often, and really, just continue to invest in them. And what I've seen already in this first year is, when you do that, just people just light up and want to get busy and work together collaboratively, to take it even further.

Mark Zandi:                       This may not be a fair question, but I'll just ask it anyway, because you're clearly, a very thoughtful and self-aware person, but you came into this with a view. You thought this is going to work. So how do you guard against just confirmation bias? I mean, everyone has that problem, and I don't know that you have the answer for it, but I'm just really curious how you think about that.

Mark Donovan:                Well, I went on KOA Radio with Ross Kaminsky, and I'm going to have conversations with people that don't believe in this, and I'm going to challenge them to work together, and I'm going to listen to alternative approaches. And if I sound that way, call me out on it. I am open to feedback and listening, but there's a lot of evidence. It's not rocket science, it's pretty simple. The idea that if you just give people that have nothing or very little, a little bit of support and trust that you're going to get up to a better place. Even if you took the money out of the equation and just everybody treated everybody in our society with trust and respect, we'd see incredible improvements in all of these outcomes as well. That alone. We could do this without an investment and get some progress, but you add on the progress and I think it's even more.

                                                So hold me accountable. If I sound like I'm drinking too much Kool-Aid, let me know. But I really, I've studied it closely. I've lived it. I'm running a rigorous randomized control trial. We're inviting everybody to the table to, we're going to put our data out, open source, after we launch, release the one-year report this summer. So we're trying to go at this with transparency and with a learner's mind, and we don't think we know... We have a lot more to learn than what we've learned already. And that's the way we're going to approach this and keep building upon what we're learning.

Mark Zandi:                       Well, that's great and it's really good to have you on, and we'd love to have you back after you release the report in June, just to get a sense of things. And I highly recommend everyone to go to your website and watch the video. And they should wait to the end because you talk at the end and you choke up, and I nearly choked up when I saw you choke up. It's really quite powerful. So I recommend that folks do that. A very, very engaging website and project. So thank you for just... The other thing that's so cool about you, you're so excited about what you're doing, it just sucks everybody in. I come to this kind of skeptically, but I have to say, I've drunk some of the Kool-Aid as well, just because you are so engaged in what you're doing, and that is infectious.

Mark Donovan:                Thank you. I appreciate the call out on the website in that video. And that makes me just think of one other thing I want to say is, my gratitude for all the people that are working in the service sector to support our unhoused neighbors, it's hard work. I've been amazed at how often I'm brought to tears by the stories that I hear and the reality of the situation we see. It's difficult work and people are working so hard at it. And so, the hope that we created with our participants, we've also created incredible hope with the service providers and our partners because we're all feeling that this is something different and it's powerful.

                                                And again, cash alone is not a silver bullet, but you layer it under anything and it creates accelerated and enhanced outcomes for our partners. So our partners are excited to be at the table. The funders are really excited to be there too. And so, it's creating a virtual cycle of improvement that we're just getting going, but we can't do this without support. And so when people say on KOA radio, the Libertarians, they say, we want less government. I'd love less government too, but we have to get it done ourselves. And so, tomorrow is Colorado Gives day and so, if anybody wants to support us or, well, I don't know when this is released, but December 5th, but hopefully, you'll support this or just somebody that you're meeting on the street with a little bit of cash or a little bit of kindness that can go a long way. And so if everybody thinks about-

Mark Zandi:                       Well, I know the solution, I'm just telling you. I know the solution. You know what it is?

Mark Donovan:                Tell me?

Mark Zandi:                       What's the next Tesla stock mark? That's all that we need to know. We're golden. We're golden. We can solve a lot of problems. Yeah.

Mark Donovan:                Tesla.

Mark Zandi:                       Tesla, okay.

Mark Donovan:                Tesla is the next Tesla stock. They're just getting going.

Mark Zandi:                       Oh, that's interesting. My son will love to hear that. But best of luck with everything, and hopefully, you'll come back on in a few months and we'll see how it all turned out. But thank you so much. And with that, dear listener, we're going to call this a podcast, take care, everyone.