Medium: Why is UBI so key to tackling the loss of jobs to automation?
Andrew Yang: We would create more than 4 million jobs in the United States just by putting more purchasing power in the hands of Americans. Most Americans are so cash-strapped that they would spend this money locally and directly in their economy: car repair, supplies for their children, tutoring.
We’d also make the economy much more human-centered, as people would be doing lots of different forms of work that would be more sustainable in an era of automation. It would provide a degree of recognition and compensation for all the work parents and caregivers do, particularly mothers, and it would help bring some equity across gender lines and racial lines.
I’m convinced that we are in the third or fourth inning of the greatest economic and technological shift in human history, and our political establishment is completely absent. No one’s confronting the core reasons why Donald Trump is our president — reasons that are about to accelerate with the advent of artificial intelligence. When I realized that no one was going to do anything about the real problems, I decided to run for president on a platform of universal basic income. I have rebranded it the Freedom Dividend and the evolution to the next stage of capitalism.
You’re proposing a new value-added tax (VAT) to pay for your Freedom Dividend. How palatable will that be to voters in Trump’s low-tax America?
Even conservatives have known that a VAT was going to be necessary at some point in the future, and this is a great opportunity for us to rebalance our economy. We’re the only major economy that doesn’t have a VAT right now; it’s going to be increasingly necessary given the progressive automation we’re already experiencing.
The income-based system does a terrible job at harvesting revenue from large technology companies, which are great at avoiding large tax burdens.
In an income-based system, Amazon can say, “Hey, we didn’t make any money this quarter, so we don’t have to pay any income tax,” so their tax burden will be quite low, and that’s a massive problem. With a value-added tax, they would pay a small slice of every transaction, and then we get that value to apply to universal basic income.
Many Americans feel that Trump is improving the economy, so why do you think an alternative economic policy is needed?
The economic numbers are the numbers, but the average American right now is dealing with a higher degree of financial instability than they’ve dealt with in generations. Most Americans know that they are not sharing in the wealth and progress of society and that things need to change.
I’m also cognizant of the fact that we are in year 10 of an expansion and that most expansions do not last this long. It’s inevitable that we end up in a downturn at some point, and that’s when organizations that have been waiting for a downturn will make use of the full potential of data-receiving technologies.
No one’s confronting the core reasons why Donald Trump is our president.
You’ll see fast-food restaurants bringing in more self-serve kiosks and burger-carrying robots. We’ll see more companies figuring how to make do with fewer call-center workers. In the next downturn is when the rubber hits the road.
You say we shouldn’t just be asking whether there will be new jobs, but whether there will be jobs for middle-aged, low-skilled people. Tell us more about that.
Look at what happened to the manufacturing workers in the Midwest. My economics textbooks said people would be retrained and reskilled for new jobs and would move for new opportunities.
But when you actually look at the numbers, about half of the displaced manufacturing workers in Michigan and Indiana left the workforce entirely, and about a quarter applied for disability. So it turns out that people are not infinitely mobile across state lines, and they’re not infinitely retrainable for new opportunities.
If you look at the data around government-funded retraining programs, success rates are between 0 and 37 percent, if you’re very generous. It’s generally much closer to 0 percent.
How established is the idea of UBI in the United States?
It’s an idea steeped in American thought, going as far back as Thomas Paine. Martin Luther King Jr. was for it, Richard Nixon was for it, Milton Friedman was for it. It passed the House of Representatives in 1971, under President Nixon, and we’ve had a version of it in Alaska, which is a deep-red conservative state, for 32 years. It’s now sweeping the world because people are waking up to the fact that the economy’s changing for good due to advancing technologies that are going to zero out many forms of people’s labor.
Your book explains that UBI has already been tried in the United States under the Alaska Permanent Fund and among Cherokee Native Americans. What were the outcomes?
The trials have been incredibly positive, and children’s nutrition, graduation rates, and mental health have all improved. In North Carolina, children’s personalities actually changed to become more conscientious and agreeable: very positive traits for both professional and personal success. Domestic violence goes down, hospital visits went down, mental health problems go down—there are extraordinary benefits to universal basic income that are very clear.
How will you engage with Americans who view UBI as a form of socialism?
The dichotomy between capitalism and socialism is increasingly unproductive and out of date. We need a new economic system, and I want to build that. I want to lead that revolution, and anyone who wants to help make that a reality, I would love their help, no matter what they call themselves.
Most Americans know that they are not sharing in the wealth and progress of society and that things need to change.
What do you make of the argument that the Industrial Revolution proves society will cope?
That’s a subject that really does irk the heck out of me. According to Bain, we would need to absorb labor at three or four times the rate of the Industrial Revolution in absolute numbers in order to successfully have the market equilibrate. And if you look at the numbers now, Americans are moving across state lines at multi-decade lows, and labor market dynamism is also at near all-time lows — people aren’t even changing jobs at this point. But otherwise-educated people have been so steeped in the infallibility of the market that they can’t conceive of the fact that there is a majority of the population, in my opinion, who will not be able to reformat themselves or their communities for a completely different opportunity set.
How would people manage that mindset shift from having to work out of necessity to having greater freedom to go after their own interests with $1,000 every month?
Universal basic income will cause a revolution in people doing work that they care more about, and it will be the greatest channel into entrepreneurship and the arts that we have ever seen. But we have to do much more, because in many communities, having that money is not going to answer the most important questions, and right now America is trying to use work to answer those questions, which can continue to function only if we redefine work much more broadly. That is the challenge of our time, and we have to get started on it and stop pretending that it’s just magically going to sort itself out by the market creating jobs for everyone, because that’s going to stop working imminently.
Do you think the politics of today attract people who are drawn to power rather than to public service?
Our system is definitely designed so that it selects for people with certain qualities that are not super wholesome. One of the reasons our politics has become so dysfunctional is that only a certain type of person has been tempted by leadership, for the most part. That probably means there are many excellent people who don’t want to deal with the nonsense factor, the gamesmanship, and the selling. Many excellent people won’t go near it for very rational, reasonable reasons.
But our society’s in a bit of a crisis, so there are many altruistic people stepping up and trying to run for office, and I believe I fall into that category.