“He’s that guy who wants to give you $1,000 a month!”
Since it’s bold and unique, Andrew Yang’s Freedom Dividend idea is just about the only thing many people have heard about him. The concept usually provokes an immediate eye roll or snicker, whether from everyday people or from other candidates on the debate stage. Yang is a lot more than his support of Universal Basic Income (UBI), but first, let’s debunk the sort of “hysteria” surrounding the UBI. It isn’t nearly as crazy as everyone’s making it out to be.
The Basics
The UBI is a response to the massive technological shift being experienced around the world right now. It’s predicted that ⅓ of all Americans will lose their jobs to automation in the next 12 years and the creation of new jobs will not be able to keep up with this massive loss.
In order to support Americans in this transition, every United States citizen over the age of 18 would receive $1,000 a month from the government, no strings attached. It would be opt-in, meaning citizens can choose whether or not to participate in the program and receive the monthly cash. Current welfare or social program beneficiaries would choose between their current benefits or the $1,000 unconditional cash. Social security and veterans’ disability would still stack with UBI, so that older generations can retire without needing to work long past retirement age to survive. This is only $12,000 per year, not nearly enough to live on in most places, which invalidates the argument that the UBI would discourage people from working.
How to Pay for it
Where’s the money coming from? The answer lies in taxing corporations like Amazon. Amazon, which recently became a trillion-dollar company, does not pay federal income tax. Believe it or not, Amazon isn’t breaking any rules by not paying taxes. They’re merely working a broken system in their favor: “Amazon avoids paying federal taxes using a variety of tax credits and tax exemptions that are legal and built into the U.S. federal tax code” (Business Insider). That’s why Yang says we need to rewrite the rules. Subjecting Amazon and other corporations to a Value-Added Tax (VAT) will redistribute the positive side of automation’s impact from corporate clutches into the hands of the everyday United States citizen.
Background on the Value-Added Tax
Value-added taxes aren’t new: 160 out of 193 countries in the world already have a VAT or something like it. While the VAT will likely cause prices to increase on many goods, the increase will mostly be smaller than the VAT as producers find more efficient ways to produce goods and adjust prices to maximize their profits. It is also likely that some companies will increase their prices in response to people having more buying power with the UBI, but there will still be competition between firms that will keep prices in check.
What about inflation?
The plan for UBI primarily uses money already in the economy. Leading monetary economic theory states that inflation is based on changes in the supply of money—the Freedom Dividend has minimal changes in the supply of money because it is funded by the VAT.
Why should the rich get it?
Giving everyone the Freedom Dividend ends the stigma for accepting cash transfers from the government. It also removes the incentive for anyone to remain within certain income brackets to receive government benefits.
Aren’t people just going to spend the money on things like drugs and alcohol?
Not according to a study done by the World Bank.
“Universal basic income is not new—it is an old idea whose time has come.”
The Universal Basic Income has been supported throughout history by Thomas Paine, Martin Luther King Jr. and Milton Friedman. It passed the House of Representatives in 1970 but died in the Senate only because Democrats wanted a higher guaranteed income.
Why Andrew Yang?
But enough about his Freedom Dividend (if you need more convincing, click here). Who is Andrew Yang, really? Born in Schenectady, New York to Taiwanese immigrants, later studying at Brown and Columbia and launching his own education company followed by a job-creating start-up, Yang epitomizes the spirit of the American Dream.
He’s young, he’s focused, he’s forward-thinking, he’s smart, he’s capable, he’s funny, he’s a father and he’s a person. He’s an experienced entrepreneur who understands the economy and simultaneously recognizes the innate differences between running a business and running a government. He’s the only candidate facing the reality of our world’s automation-dominated future and what it means for our economy (cue Joe Biden’s out-of-touch “anybody who can throw coal into a furnace can learn how to program as well”). This is completely unrealistic. What if coal miners don’t want to learn code? What if they’re content with their jobs, many of which are soon to be usurped by modern technology? Roughly 8% of the US is in STEM fields. Chances are, the other 92% isn’t because they don’t want to be. Data also shows that retraining people for new jobs doesn’t work on a large scale. Training programs are a great idea but historically haven’t worked. Automation looms very near on the horizon and we can’t afford to waste time on inefficient responses to it.
While his Freedom Dividend is one of his best-known policies, Yang’s several other policies are also worth noting. Yang is a proponent of human capitalism, which holds three claims: humans are more important than money; the unit of a Human Capitalism economy is each person, not each dollar; and markets exist to serve our common goals and values. Yang supports the idea of Medicare for All but recognizes that it’s unrealistic to completely eliminate the private option and restructure nearly ⅕ of the United States economy. He supports controlling the cost of prescription drugs, investing in innovative technology and taking on Washington D.C.’s lobbyists. Yang understands the need for both federal and local work to address the opioid crisis. He has extensive plans to reduce crippling student loan debt. He values fighting climate change, reducing mass incarceration and prioritizing mental health.
Even if Yang doesn’t secure the nomination or the presidency, the pressing problems he’s fighting to fix will persist. Yang represents the logic, data-based policies, future-oriented thinking and personality Washington needs now. Check out his website to learn more.
(Yang2020)
(Yang2020)
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