Sooner rather than later Andrew Yang’s main idea, Universal Basic Income (UBI), will enter the national discussion on some level. Yang has reached the 65,000-donor threshold to appear in debates later this year. As such, this bold proposal is one that major candidates may have to take positions on.
Below are the main details of and arguments for his UBI proposal. This is not an endorsement of Andrew Yang 2020.
Yang, a successful entrepreneur, argues that we are undergoing the greatest technological and economic shift we’ve ever experienced. Automation has already destroyed millions of manufacturing jobs. He cites a report on artificial intelligence from the Obama White House that found that 83 percent of jobs making under $20 per hour, and 31 percent of jobs that earn $20-40 an hour, will come under pressure in the not-too-distant future.
Retraining low-skill workers who get left behind, a noble pursuit, is something the US has historically had a hard time with. Intuitively, it seems unlikely that many middle-aged truck drivers displaced by self-driving cars will learn how to code or do anything of the sort. He even wrote a book about these issues.
Yang’s UBI proposal is an unconditional, guaranteed check for $1,000 a month, or $12,000 a year, for all US citizens over the age of 18. He calls it the “Freedom Dividend,” because the United States is the richest country in the history of the world, and we all have a stake. He asserts that, while it is not a silver bullet, UBI would help us adapt to rapid economic change and give Americans a stronger baseline standard of living.
This proposal comes at a moment when Americans are arguing about the merits and definition of socialism. Yang asserts that “…this is not socialism; this is capitalism where income doesn’t start at zero.” Importantly, he cites studies that show that this would not discourage work.
Of course, this is an expensive proposition (around $2-3 trillion a year!). Yang proposes 4 payment sources.
- A 10% Value-Added Tax (VAT). A VAT is a tax on the production of goods and services. This targets large corporations and is supposed to make up for some of the tax revenue taken away by robots and software. Most countries already have a VAT, including all of Europe which averages 20%. This, per Yang’s website, would generate $800 billion in revenue.
- Money saved on programs like welfare, food stamps, and disability as a result of UBI. The Freedom Dividend reduces the need for these programs. This is about $500-600 billion that can be tapped into.
- New revenue. Yang’s website: “The Roosevelt Institute projected that the economy would grow by approximately $2.5 trillion and create 4.6 million new jobs. This would generate approximately $500 – 600 billion in new revenue from economic growth and activity.”
- Money saved by our improved ability to take care of ourselves. Healthcare, incarceration, homelessness services, and others currently cost over $1 trillion. Research shows that UBI would help people avoid these things, and Yang projects that we would save $100-200 billion as a result.
Whether Yang’s UBI proposal seems compelling, it has the potential to catch on in the Democratic primary. It will be interesting to see where candidates stand on this, especially in light of political realities. Even if you concede all of Yang’s points, there is a legislative opportunity cost to bold legislation. Passage of this as the first priority of a new president could make it more difficult to pass meaningful legislation on climate change, healthcare, and other (expensive) things.
One last time, here is the link to Yang’s full proposal, in which several other works are cited.