Democratic presidential candidate Andrew Yang says he knows how to save capitalism: a universal basic income, or UBI, a policy he refers to as a “Freedom Dividend.”
Yang, a 44 year-old serial entrepreneur, argues that the U.S. faces a bleak future of unemployment riots in the absence of his proposal, because technology will eliminate millions of working-class American jobs. As a remedy, Yang proposes creating a universal basic income, or UBI, of $1,000 a month given unconditionally to every citizen over the age of 18.
“We need to invent a whole new economic system,” said Yang. “We are in the third inning of the greatest economic and technological shift in human history.”
In other words, Yang is running an instructional campaign, trying to build support for a plan to provide a soft landing for truckers and manufacturing workers who he believes will soon be out of work.
Born in upstate New York, Yang graduated from Brown, where he studied political science and economics. Afterward, he got a law degree from Columbia, but after a short stint as a corporate lawyer, Yang decided his passion was for entrepreneurship and founded the entrepreneurship nonprofit Venture for America in 2011 after serving as the CEO for the national education test-prep company Manhattan GMAT.
With that background in business, Yang advocates what he calls "human capitalism," as an alternative to the democratic socialism of Sen. Bernie Sanders, I-Vt., another Democratic candidate for president.
“We need to become both capitalist and socialist in different areas,” said Yang.
Yang argues that UBI is socialist in that the government ensures a minimum standard of living for everyone, and capitalist in that individuals are free to spend the money as they see fit.
That latter feature of the UBI has made it enticing to free-market proponents such as economists Milton Friedman and Friedrich Hayek, who believed it would shrink the government social safety net. The UBI, the thinking goes, could supplant a range of in-kind benefits that the government provides today, such as food stamps and housing assistance.
The idea of a UBI also appeals to Silicon Valley tycoons such as Mark Zuckerberg and Elon Musk, who fear that their efforts to revolutionize industries will lead to mass unemployment and social upheaval and therefore make UBI necessary. In their view, UBI would make viable a range of jobs that otherwise just don't pay enough. Accordingly, Yang’s campaign gets most of its support from Silicon Valley: Tony Hsieh, the CEO of Zappos, and Kevin Lin, Twitch co-founder, both support his campaign.
UBI is a revolutionary concept, but not totally untested. Both Finland and Alaska have experimented with UBI on a scale far smaller than what Yang is proposing. Finland’s experiment only involved 2,000 people, and Alaska’s UBI amounts to a yearly cash payout from a government oil and gas fund of only a couple thousand — or less — a year per citizen.
Yang’s proposal would be a major experiment. Giving every American $12,000 a year would cost the Treasury approximately $2.5 trillion every year, or more than 60 percent of the federal government’s annual spending. He proposes funding the new project in part by creating a new value added tax, or VAT, styled after similar ones in Europe. Yang claims the VAT would mostly be a tax on the technology because it would target money companies saved by eliminating jobs. Combining the VAT with faster economic growth and less spending on other government benefit programs that would be redundant, Yang argues, would easily offset the cost of the UBI.
While Yang is the first Democratic candidate to support UBI, he is not the first to consider it. Hillary Clinton revealed in her campaign memoir What Happened that she wanted to propose a UBI but that, ultimately, “[u]nfortunately, we couldn’t make the numbers work.”
Gallup and Northeastern University released a poll last year showing that 65 percent of Democrats and 48 percent of Americans in general support a UBI for workers displaced by technology.
Despite being the first Democrat to enter the race, Yang’s chances at even making the primary debate stage remain slim. To make the debate stage in June, Democrats must poll above at least 1 percent and have over 65,000 individual donors. Yang claims he is on track to hit both of those benchmarks. The latest Monmouth poll released this month shows Yang polling at 1 percent, but with big names such as former Vice President Joe Biden and former Texas congressman Beto O’Rourke potentially making the field more crowded, Yang is fighting an uphill battle.
Regardless, Yang says that his campaign is meant to bring attention to the economic apocalypse that he sees threatening the nation. He is using early primary states Iowa and New Hampshire to bring awareness to UBI by giving one person in each state $1,000 a month. The miniature UBI, a version of a campaign stunt, accords with his belief that policy is more important than the person in office. He argues that President Trump won his election because of the ongoing transformation of the labor market, and says that just changing the president will not change the fortunes of American workers.
“It’s not like if we had a sane, moral, competent person in the Oval Office everything would just snap back and everyone’s lives would be rosy again," he said. "The fact is, America has been disintegrating by the numbers for years now.”
Yang said he would consider his campaign a success if it can be helpful in any way in bringing the UBI closer to realization. “I don’t really care about the seating chart," he said of the debate stage. "I’m just trying to keep this country whole and together so my kids don’t grow up in a total disaster zone, which is unfortunately where I think we are heading.”