Why presidential candidate Andrew Yang wants gov’t to give every adult citizen $1K per month

2020 Democratic presidential hopeful, Andrew Yang, 44.
2020 Democratic presidential hopeful, Andrew Yang, 44. | Screenshot: YouTube

America is careening toward a dystopian future without jobs due to increased automation and technological advances, says 2020 Democrat presidential candidate Andrew Yang.

To prevent the inevitable “widespread squalor, despair, and violence” that will result from millions of workers being permanently displaced by technology, Yang, 44, wants to start giving every adult citizen $1,000 a month in universal basic income.

“America is starting 100,000 fewer businesses per year than it was only 12 years ago, and is in the midst of shedding millions of jobs due primarily to technological advances,” Yang explains in his 2018 book The War on Normal People.

Yang, who founded Venture for America, an organization that helps entrepreneurs create jobs in cities like Baltimore, Detroit, Pittsburgh, and Cleveland, argues that “normal” Americans who represent a majority of the population are the ones most vulnerable to being ravaged by the ongoing technological shift.

Normal Americans, he says, did not graduate from college and don’t have an associate’s degree.

“He or she perhaps attended college for one year or graduated from high school. She or he has a net worth of approximately $36K— about $6K excluding home and vehicle equity— and lives paycheck to paycheck. She or he has less than $500 in flexible savings and minimal assets invested in the stock market. These are median statistics, with 50 percent of Americans below these levels,” he says.

More than 4 million jobs have already been destroyed by robots, software, artificial intelligence and a third of all American workers are “at risk of permanent unemployment. And this time, the jobs will not come back.”

In a 2017 report, consulting firm McKinsey and Company estimates that some 50 percent of all work activities will be automated by 2055 or sooner. The Government Accountability Office also released a report  last week outlining how federal agencies are doing little to prepare for the eventual automation of the trucking industry, tapping what Yang has been preaching for months.

“We are confident that between 2 million and 3 million Americans who drive vehicles for a living will lose their jobs in the next 10 to 15 years. Driving a truck is the most common occupation in 29 states,” Yang writes in his book.

“Self-driving vehicles are one of the most obvious job-destroying technologies, but there are similar innovations ahead that will displace cashiers, fast food workers, customer service representatives, administrative assistants, and even well-paid white-collar jobs like wealth managers, lawyers, and insurance agents,” he adds.

“Our economic engine is stalling out in many places, and automation is eliminating livelihoods for hundreds of thousands of the most vulnerable Americans in regions across the country. New jobs are less numerous, are most often created in towns located far from those most hard hit, and require far different skills than the ones that are being lost,” he warns.

Yang, who has stirred a movement that both young and old, Democrat and Republican supporters have come to know as the “revolution of reason,” argues that his plan for universal basic income, which he calls the “freedom dividend,” would provide Americans aged 18–64 an annual income of $12,000 that would be indexed to increase with inflation. He suggests the UBI would also “replace the vast majority of existing welfare programs.”

Universal basic income is just one of Yang’s three key policy platforms listed among scores of others on his website, including regulating AI and other emerging technologies. His two other key ideas are Medicare for all and a new form of capitalism — Human Capitalism — that’s geared toward maximizing human well-being and fulfillment.

Universal basic income, he argues, is the first step toward a better life for workers who are being rapidly replaced by technology.

“This plan was proposed by Andy Stern, the former head of the largest labor union in the country, in his book Raising the Floor. The poverty line is $11,770. We would essentially be bringing all Americans to the poverty line and alleviate gross poverty. A universal basic income is a version of Social Security where all citizens receive a set amount of money per month independent of their work status or income. Everyone from a hedge fund billionaire in New York to an impoverished single mom in West Virginia would receive a monthly check of $1,000,” he explains.

“If someone is working as a waitress or construction worker making $18,000, he or she would essentially be making $30,000. UBI eliminates the disincentive to work that most people find troubling about traditional welfare programs — if you work you could actually start saving and get ahead,” he writes.

Yang argues that the increasing threat of automation has attracted renewed interest in UBI in places like Oakland, California, Canada and Finland, as well as in India and other parts of the developing world. A version of it, he argues, has also been working in Alaska for decades.

“The Alaska Permanent Fund accrued earnings and started paying dividends in 1982. Each Alaskan now receives a petroleum dividend of between $1,000 and $2,000 per person per year; a family of four received more than $8,000 in 2015. The dividend reduces poverty by one-quarter and is one reason that Alaska has the second lowest income inequality in the country,” Yang says. “Studies have shown that the dividend has increased average infant birthweight and helped keep rural Alaskans solvent. It has also created at least 7,000 jobs due to the increased economic activity each year.”

The program is so popular, he argues, some 64 percent of Alaskans said they would be willing to accept higher taxes if necessary to fund it.

Yang proposes that the best way to fund universal basic income would be a value added tax on automation.

“For businesses, it gets baked into the cost of production at every level. It makes it much harder for large companies, which are experts at reducing their taxes, to benefit from the American infrastructure and citizenry without paying into it,” he writes. “The biggest companies, like Amazon, would pay the most into the system because a VAT gets paid based on volume, not profits. It also would make it so that we’d all root for progress — the mechanic in Appalachia would feel like he’s getting a stake every time someone gets rich.”

Some 160 of the world’s 193 countries already have a VAT or goods and services tax, Yang says, including all the developed countries, except the U.S.

“The average VAT in Europe is 20 percent. It is well developed and its efficacy has been established. If we adopted a VAT at half the average European level, we could pay for a universal basic income for all American adults,” he says.

Even if prices are increased slightly due to the tax, Yang expects that technology would continue driving down the cost of most things.

In recent months, Yang, a lesser-known candidate in the increasingly crowded Democrat field of presidential hopefuls, who launched his campaign in November 2017, has been gaining momentum.

The former tech executive announced Tuesday that he qualified for the first round of the Democrat primary debates by raising money from more than 65,000 unique donors. And on Wednesday, OddsShark, a betting resource that tracks odds across a number of online betting sites, said Yang, who wasn’t even on the leaderboard of candidates capable of becoming the next president of the United States, was one of the biggest movers in the conversation.

“Entrepreneur Andrew Yang has come out of nowhere to sit at +3,300 on the oddsboard after a social media push resulting from his appearance on the 'Joe Rogan Experience' podcast. Yang is a proponent of universal basic income and seems to be gaining steam,” the betting source notes.

"I'm running to win," Yang told CBS News in a recent interview. "But I'm also on the record as saying that if the winning candidate ends up adopting my policies and ideas then I would be thrilled with that. That I'm not someone who is lying awake in bed plotting my path to the White House, and that my goal is to try and help society manage the greatest economic and technological transformation in our history."

Some experts have raised concerns about UBI.

At a 2018 symposium on Universal Basic Income in Annual Review of Economics, University of California, Berkeley, economists Hilary Hoynes and Jesse Rothstein, argued in a working paper, which also referenced Yang’s book, that a UBI in its purest form would direct much larger shares of transfers to childless, non-elderly, non-disabled households than existing welfare programs, and much more to middle-income rather than poor households in advanced economies like the U.S.  

They also noted that a UBI large enough to increase transfers to low-income families would be enormously expensive.

“Interest in universal basic income is on the rise in the U.S. and other advanced countries. Decades of wage stagnation and concerns about automation, robots, and job destruction, as well as discontent with the current social safety net, provide the foundation for interest in this area,” the economists began in their conclusion.

“Support for UBIs has led to several pilot programs and policy proposals in the U.S., Canada, Finland and Switzerland. Despite all of this, there is a lack of clarity on what makes a UBI, what problem it is meant to solve, whether the social safety net can or is providing these benefits, and what (if anything) can be learned from the pilot programs that we don’t already know from the decades of existing research on individual and household responses to the social safety net, and wages and income opportunities more broadly,” they continue.

“A ‘pure’ UBI (providing a set benefit to all regardless of income, age, etc.) funded to meet basic needs for a household without earnings would be extremely expensive, about twice the cost of all existing transfers in the U.S. Funding this would require substantial new revenue. The source of the new funds is a first order issue, and will have substantial impacts on the distributional effects of the policy and its ability to target those most in need of assistance,” the paper argues.

In an op-ed published in October, Vijay Menon, research assistant for domestic policy studies at The Heritage Foundation also argues that the UBI is a bad idea because it has been tried before and failed.

“The best available evidence about the potential effects of these programs comes from the federal government’s ‘negative income tax’ experiment,” Menon notes. “The experiment, which ran from 1968 to 1980, consisted of four random, controlled trials across six states designed to test the negative income tax. Similar to the universal basic income, a negative income tax guarantees a minimum income, which phases out as earnings increase.”

After evaluations of the experiment, Menon notes that researchers found that the negative income tax reduced “desired hours of work by 9 percent for husbands, by 20 percent for wives, and by 25 percent for single female heads of families.”

Among single males the reduction in hours worked per week was a staggering 43 percent, he notes.

Those who received the negative income tax also took a longer time to find a new job if they experienced unemployment.

“For every $1,000 in additional benefits, there was an average reduction of $660 in earned income, meaning that $3,000 in government benefits were required to increase net income by $1,000. These studies also made clear that it was the receipt of unconditional aid, not the phase-out of benefits, which led to the reduced work effort,” Menon says.

“The most apparent flaw with the concept is that it fails to require work or work preparation for its recipients. Although the current welfare system does little to encourage self-support, a comprehensive universal basic income policy would remove the idea of personal responsibility entirely,” Menon argues.

In a recent appearance at Georgetown University, Yang explained that providing employment for people displaced by robots, particularly men, continues to be a fundamental challenge that he was committed to working to address. And for now, he says, UBI is a step in the right direction to a problem that isn’t going away.

“It’s particularly vital for men because as it turns out, men deal with idleness worse than women. Women find awesome things to do…men disintegrate. Men spend 75 percent of their time on computers playing video games and other things. They volunteer less than employed men, even though they have more time. Their alcohol and drug consumption goes up and they tend to spiral downwards into various antisocial behaviors,” he noted.

“The challenge is to reconstitute paths of structure, purpose and fulfilment for hundreds of thousands of American men who are going to see their jobs being automated away and that is the challenge of this time. There is no easy answer but I would suggest that if you put $1,000 a month into people’s hands 1) at least they feel as if they’re gonna survive, but 2) it also strengthens nonprofits and churches and NGOs in these communities that are going to try and create meaningful opportunities and supports for more and more people,” he said. “Many of these men also … if you have children too knowing that when they turn 18, they’re gonna have $1,000 a month is a huge burden that will be lifted.”

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