Meet Presidential Hopeful Andrew Yang and the ‘Freedom Dividend’ He Wants to Give You
2020 Presidential candidate Andrew Yang joins a diverse group of historic Americans including Richard Nixon, Thomas Paine, Milton Friedman, and Martin Luther King Jr. who all support a universal basic income.
The 2020 Democratic candidate has attracted attention for his signature universal basic income proposal, which he calls “The Freedom Dividend.” Yang, a former tech executive and entrepreneur, believes automation is going to wipe out millions of jobs. His platform is future-oriented and focused on adapting the economy to issues like artificial intelligence, climate change, and automation with what he calls “human-centered capitalism.”
Wired Magazine titled their interview with the 44-year-old Democratic candidate “Andrew Yang’s Presidential Bid Is So Very 21st Century” in reference to his tech-centered policy positions. When asked about automation’s job eliminating potential, Yang described the paradigm-shift he wants to see in economics:
“We have to start facing facts where businesses are designed not to employ lots of people. Businesses are designed to try to get the most done as efficiently as possible using given resources. And in many cases having a human as part of the process is not what you’d be doing if you were just designing for capital efficiency.”
What is the Freedom Dividend?
Yang points to the millions of jobs lost to automation and globalization as the impetus behind the populist rage that elected President Donald Trump. He believes the “Freedom Dividend” (Yang uses this title for his universal basic income plan because it polls better with conservatives) would help the population through the growing pains of an economy transforming to accommodate 21st-century technology.
Yang’s Freedom Dividend proposal would provide every American over the age of 18 $1,000 a month. Yang argues a universal basic income would create more than 2 million new jobs by giving entrepreneurs and creatives a safety net and consumers disposable income to spend on goods and services. He believes UBI (universal basic income) would decrease stress levels, improve mental and physical health, and improve labor market efficiency by enabling workers to demand fair conditions and find jobs that make a good fit.
Critics point to the plan’s cost and the likelihood of inflation. Yang says the dividend would be funded by a 10% VAT (value added tax) a tax applied to the goods or services a business produces at each stage of their production. Yang points to the European model of VAT, which is on average 20%. He believes this form of tax is harder for major businesses to avoid in offshore tax havens or clever accounting. He also says he would consolidate welfare programs he deems inefficient, and that social program beneficiaries would have a choice between their current benefits or the monthly $1,000 unconditional dividend.
When pressed on the lofty claims of UBI, the Democratic hopeful points to the success of Alaska’s dividend of $1,000 to $2,000 a year, which has been popular for 37 years. Yang points to data that shows poor people typically do not misuse guaranteed income on drugs or alcohol. He argues the $4 trillion in quantitative easing the government printed for the bank bailouts caused no inflation, and that the value added tax would fund most of the dividend while technology and automation reduce the costs of goods.
A strong criticism to Yang’s idea comes from the nonpartisan Center on Budget and Policy Priorities, which estimates the program would cost $3 trillion a year (social security cost $988 billion in 2018). Depending on how social programs are reorganized, the Freedom Dividend could effectively serve to redistribute income upwards (since every American, no matter their wealth, would receive $1,000 a month). Yang is betting the Dividend will stimulate the economy and improve health enough to offset these costs, arguing policymakers are underestimating the impact automation will have in coming years.
Yang Says Retraining Isn’t the Answer
Yang has expressed distrust in the “retraining” solution to widespread job loss. Retraining involves giving workers who are replaced with automation new education in different skillsets. In his interview with Wired, Yang used the example of self-driving trucks eliminating the need for truck drivers to explain why he thinks universal basic income is a better solution:
“The retraining path fails right now, because one, we’re terrible at it. But two, it fails over time spectacularly because even if I succeed in some miraculous way in turning a truck driver into a software engineer, 15 years from now AI is going to be able to do that coding anyway.”
Yang argues the “data indicates that retraining programs do not work on a large scale,” pointing to the failures of similar policies. The Trade Adjustment Assistance (TAA) program, was found to have only 37% of participants working in the field they were retrained for. Michigan’s No Worker Left Behind program found a third of its participants unemployed after completing retraining, a similar percentage (40%) displaced workers who didn’t enroll that remained jobless.
Yang is Not the First to Propose a Universal Basic Income
While Yang’s Freedom Dividend plan is radical and should be vigorously debated, it is not without precedent in American history. Oddly enough, in 1969 President Nixon wanted every American family of four to be given $1,600 dollars a year ($10,000 now) from the state, until he was dissuaded by advisors. Thinkers as diverse as Thomas Paine, Milton Friedman, and Martin Luther King Jr. have expressed affinity for the idea of universal basic income.
Yang’s website details the specifics of over 80 policies, explaining his advocacy of topics like universal healthcare, using geoengineering to fight climate change, and “making taxes fun.” Yang raised in campaign fundraising since announcing his bid, keeping him in the conversation of the 2020 Democratic primary for now. Even though Yang is a long shot, his fresh ideas are a valuable source of ideas, and policymakers would be wise to consider his vision of an economy that optimizes technology for the benefit of the people.
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