Recent analysis of US proposals for a $1,000 a month basic income show it would have a dramatic effect on poverty and inequality, while also substantially increasing the US budget deficit.
Max Ghenis, a researcher at The UBI Center, explores the financial implications of Andrew Yang’s plans to give all US citizens a Freedom Dividend. Ghenis’ investigation shows that it would cost $2.8tn a year. Tax revenue and related changes to welfare costs would pay for around half of this, leaving a deficit of $1.4tn to make up the difference. This is considerably more than the current US deficit (just over $800bn in 2018).
Despite the lower economic growth caused by a larger deficit, Ghenis calculates significant benefits for nearly all citizens. Only those the wealthiest 10% (in terms of yearly disposable income) would suffer financial loss, and there would be marked increases in disposable income for the poorest 10%. Even median earners would receive over 20% extra disposable income.
Ghenis also discusses the potential economic benefits of Yang’s Freedom Dividend, comparing it with earlier studies on basic income in the US (such as the Penn-Wharton model and Roosevelt Institute study). He is sceptical of Yang’s claims that the Freedom Dividend would stimulate government by up to $900bn – with the implication that alternative strategies would need to be considered. In a related article, Ghenis proposes a deficit-free basic income of $471 a month that would not add to the US budget deficit.
Picture: Photo of Andrew Yang. Attribution: Collision Conf from New Orleans, Louisiana, USA [CC BY 2.0]
Chapo Trap House is known for bringing an irreverent, jokey style to US left discussion.
Andrew Yang’s interview with Virgil Texas on the podcast Chapo Trap House helps to answer a lot of questions that keep coming up as his candidacy is debated. After a little while Virgil brings up concerns that one often encounters in debate around basic income.
Full disclosure: I interviewed Andrew Yang a year ago and plan to vote for him. Most of my political training and viewpoint is left-wing. I have fond feelings and understanding for many friends who plan to vote for Bernie Sanders or Elizabeth Warren.
Yang avoids ideological language. He has embraced the slogan Scott Santens often uses of “Not right, not left, but forward.” That is not a slogan for me. I recognize that basic income is a policy that could be attached to any ideological program. I’ve written about that. I would call Yang’s Freedom Dividend a left policy proposal precisely because it re-allocates wealth from the rich to the poor. Yang is proving that basic income (and a diagnosis of “disintegration”) can get the attention of non-voters and even Trump voters.
My goal here is to do a little bit of translating and clarify a couple of points that I have seen raised on cable news and in left magazines. One hears these same points from political newcomers in online Yang discussion pages. Millions of people are thinking about a basic income for the first time. I am sticking to three points that Yang raises in this interview and that I have seen him make elsewhere.
(1) The Value Added Tax. I asked Andrew Yang about the VAT because I was not quite sure it was the best way to go. When you find out why he wants it, you can be better assured that he is ready to take on the one percent.
Yang’s reason for using the VAT to raise about a third of the Freedom Dividend is that it would capture a lot of the revenue that companies like Amazon and Google are making without having to pay tax. Even more important, Yang makes it clear that he will keep looking at ways to make sure these giants of the new economy pay their fair share. In the UK where VAT has been implemented for a long time, the VAT returns process has been claimed to be a confusing process (https://www.rosspartners.co.uk/vat-return-services-london/) However if VAT is implemented with strong easy to understand legislation, issues like these would be less of a problem and potentially bring more companies on board to the VAT system. Yang stressed in this interview that we should “Go where the money is.”
Chapo’s Virgil is not certain about the VAT for the same reason progressives often oppose sales taxes. Yang is clear that “in a vacuum” this would not be a progressive tax. With the dividend, it moves money from the wealthy to everyone else. Yang makes it clear that he also believes in funding the dividend through a carbon tax and a financial transactions tax as well. He would also like to see an increase in marginal taxation of income and wealth.
We should support various, multiple taxes in order to support everyday government and a basic income guarantee. There is less incentive for the wealthy to dodge a tax if there are different kinds in play. The VAT is featured in most of the social democracies that we on the left point to as evidence that good policies can improve social outcomes.
It should be clear now that Yang is NOT the “Silicon Valley candidate”. Everyone who is getting a free ride will end up paying into the dividend and into Medicare for All). That is the goal here. The VAT is a means to that end. A lot of workers in Silicon Valley might share his concern about automation but that is very different from calling him the candidate “of Silicon Valley”. You can bet that Yang is Peter Thiel’s worst nightmare. Yang cites the fact that so many tech companies are untaxed right now as a reason to bring something else into the party. If a VAT doesn’t work, he will try something else.
When it comes to taxing the wealthy, Yang goes further than any of his opponents. Moderates would just repeal previous past tax cuts. Without the dividend, other left candidates run the risk of backlash as people wonder if these new policies really include them.
(2) The size of the dividend. Will $1,000 a month do the work we want it to do? Virgil makes two very different points. First, he points out that there were many periods of his life when even one tenth of this amount per month would have been extremely helpful. Second, he gives cases in which this amount would not help much. Yang’s particular proposal does not give a share until one reaches 18 years old. (I would prefer they be included. I can tell you that, every day, I encounter strong opinions on both sides of this issue.)
Yang wants to point out that a single mother would get her dividend and know that the kid is getting the dividend in the future. He did not say that this was something that many voters can’t get their heads around. Millions of Americans think that low-income people have kids in order to get welfare. That simply never happens.
This is a very interesting line of discussion we are now seeing. I will summarize it:
You need more than X a month to survive/do well.
This plan offers less than X as a dividend.
Therefore, we should reject this plan.
The problem with this line of argument is that we are left without any dividend at all. If $1,000 a month is not enough, then zero is much worse. Very few people are arguing for zero basic income, but that is where we are now. Virgil Texas does not reach this conclusion. It is a very friendly interview. But we do run into this a lot. What should we do if we think this amount proposed is not enough?
Andrew Yang is very clear that his goal is a dividend that, combined with Medicare for All, would abolish poverty. This is why he is not talking about gutting current support systems. Everyone who gets support of any kind will have the option of keeping it or going with the Freedom Dividend. He reiterates that when he says “go where the money is”, he knows that low-income people aren’t who he’s talking about. He commits in this interview to tinkering to make sure that this dividend is sufficient, given the expenses that are out there, as well as any price changes in play due to the VAT or carbon tax.
People who say that an extra $1,000 a month is not enough to matter have not seen what low-income people are already doing with what they have. There are many, many communities that are politically invisible. Nothing will increase their ability to develop the stuff of good living-restaurants, shops, studios, dance schools, gyms, etc.-than a dividend. Yang also points out that many people do not get valued by our market at all who should be. Here he includes home-makers and those who care for the elderly in their family.
Some people are worried that this dividend will not matter because of the taxes in play. Sure, it would be bad to get a check and then lose it all to taxation. We only need to be aware of how much more commerce, pollution, and financial transactions are the property of the top ten percent and top one percent of US society. Again, Yang is committed to making sure that the dividend is enough to accomplish the goal of a secure share for all.
Once any amount is secured, we can call to raise it.
(3) Capitalism and “entrepreneurship”. Early in the interview, we hear that the word “entrepreneur” includes a lot more people for Yang than is typically the case. Starting a family or taking care of elderly relatives is included. He also includes creative work, citing the many studies showing that “creatives” improve quality of life and are an economic engine. This is all part of his quest to improve our measurements of economic progress. The Gross Domestic Product and the Stock Market keep improving, even while life expectancy is going down for the first time in the US since the Yellow Fever Epidemic.
This meme is “not my style” but we are seeing conversations like this blossom once people get on board the idea of a dividend for all.
This can be a translation issue for the left. Yang’s “capitalism” and “entrepreneurship” just aren’t the sorts described in our business schools and on television. I tried to address some of these translation issue in an earlier piece for Basic Income News. My main goal there was to get us to think of caregivers and organizers alongside business start-ups. The word “capitalism” puts an image in my mind of someone taking a portion of everyone else’s wealth. I think of Wall Street. Andrew Yang is thinking about markets. To understand him when he says “human capitalism”, think about Main Street in a “nice town”. He wants a lot of that everywhere. This is one reason he wants to improve our measurements of economic well-being. If we can develop better ways of tracking well-being, then an increase in creative and political organizing power (as well as consumer, labour, and negotiating power) will appear in those new measurements. Interestingly, Bernie Sanders and Elizabeth Warren often point to images of Main Street. We shouldn’t let the right own this imagery. They offer nothing to promote actual markets.
The comments on Chapo Trap House’s twitter page include a lot of positive reaction but they can run pretty bad. There is a lot of projection. A lot of people just did not listen to the interview but commented nonetheless. The idea that Yang’s Freedom Dividend is a “neo-liberal trojan horse” should be rendered completely absurd for anyone who listened to this interview. Yet, I have seen this phrase used by credentialed opinion-makers. I do not link here because I want to leave room for them to change.
This sums it up. Creator unknown. “M4A” means “Medicare for All”
Once we win a basic income guarantee, I hope that more people engage in social critique and I hope that solidarity, class analysis and Marxist critiques of alienation and exploitation are important parts of this. The dividend will increase the number of people who can participate in that new debate. And that participation is already starting, as put by a contributor on Facebook:
“One of the great things about this is if you imagine a town, you imagine a community, everyone’s getting $1,000 a month, how many more co-ops are going to be in that town? How many more artists? How man creatives? How many people are volunteering at their local nonprofit? How many more people are going to be civically engaged? How many people are going to join their friend’s book club because they’re not worried about starving to death? You can produce so many immense benefits by spreading the economic buying power. And yes, it would result happily in more people ending up owners of different enterprises.”
The US left needs to embrace basic income. Interviews just like this one brings us closer to making that happen. Those who stick to other candidates can still make it clear that they support a basic income. They can also support Rashida Tlaib’s “Lift Plus Act” which would issue a $3,000 / year grant to all. This measure would reduce the number of people in poverty in the US by forty-five percent. Who can say “no” to that?
Jason Burke Murphy teaches Ethics and Philosophy at Elms College in Massachusetts, USA. He worked as Head Organizer for Arkansas ACORN. He served on the Organizing Committee for the Youth Section of Democratic Socialists of America. He also served on the National Committee for the Green Party USA. He now serves on the National Committee for the US Basic Income Guarantee Network.
Echelon Insights has developed a poll where, amongst other issues, has questioned 1006 registered voters about Andrew Yang’s universal basic income (UBI) policy (to be implemented if he’s elected). It turns out that, globally, support for UBI is tightly close to opposition to it (40% support vs 43% opposed), within the surveyed sample.
However, further questions in the poll reveal exactly who is in support and in opposition to the UBI idea as proposed by Yang. Supportive are younger, Democratic voters with lower incomes. Less supportive are older, richer and politically inclined to the Right voters. Breaking down the numbers, the following charts clearly show these trends.
All ten candidates at the Democratic Deabte for the United States Presidential elections.
“It is not left, it is not right, it is forward”. Andrew Yang drank from Scott Santens famous words, to finish off his contribution to the Democratic Debate to the United States Presidential elections in 2020. The political debate, held on June 27th 2019, featured all 10 Democratic Party candidates who qualified to be in the televised debate (more than 65000 donors). Yang’s Freedom Dividend was voiced, for the first time ever, on a US national debate stage, shortly described as a 1000 $/month for every adult citizen, unconditionally.
Although severely time restrained to hush in his ideas – he was only allowed 2 minutes and 50 seconds of speaking time, the lowest of all candidates present in the debate – Yang succeeded in the attempt to plant the seed of basic income among the American People. People are definitely interested in basic income, or at least the basic income as Andrew Yang conceives it, considering the spikes in views of his intervention clips, posted by NBC, which surpassed those of any other candidate. Soon after the debate, Google searches for “basic income” spiked to about 300% of the average search results for those terms.
In March, Yang’s candidacy had just surpassed the 65000-donor mark; now it has gone over 130000 donors, qualifying him to further debates, to be held in September and October this year. Also, his platform’s list of followers shows no signs of slowing down, having gained more than 100000 new followers, just for having participated in this debate. Whether or not Andrew Yang will become the next President of the United States, his candidacy has already been historical, by definitely sketching basic income on the public and political arena.
Yang’s contributions to the debate can be seen on this short video:
Andrew Yang, the only Democrat presidential candidate to the US elections in 2020 announcing a basic income policy in his platform, has been on CNN Presidential Town Hall, solo featured on the latest 14th of April.
At this televised campaign event, Yang was clear about his intentions to help Americans transition through these present times of great transformation and uncertainty. Central to his campaign is the Freedom Dividend policy (unconditional 1000$/month for every adult starting at 18) which, according to him, will be a key policy to help people to retrain, gain other skills and stay active in entering this new age of automation. He points out other potential benefits to be gained from the Freedom Dividend, such as deep reduction of bureaucracy, paternalism in social services, stigma for beneficiaries and social security running costs. He also referred the increased leverage power accruing to individual workers and unions, if they had such a thing as the Freedom Dividend to fall back onto.
In the show, he was faced with most of the important questions asked to any presidential candidate, namely related to policies in economy, employment, health, education, housing, drug use and possession and gun control. The environment was, however, a clear absence in this CNN’s Town Hall show, which could be an indication of what really are the priorities in the minds of American people. Specifically, speaking about the employment issue, Yang was direct to say that “the goal should not be to save jobs, the goal should be to make our lives better”, which is very different from what other Democratic candidates (e.g.: Bernie Sanders) are saying (Federal Jobs Guarantee). Nevertheless, Andrew Yang is certain that the Freedom Dividend “does not solve all problems for all people, but it will move us in the right direction”.
Faced with the inevitable question on how to pay for the Freedom Dividend, Yang underlines the importance of “we have to go where the money is”. As an experienced entrepreneur, and specifically one related to technology, Yang has an idea about how much money tech giants (e.g.: Facebook, Uber, Google, Amazon) have, and how much they owe in federal taxes. So, according to him, effectively taxing these companies will make up for the most part of the Freedom Dividend cost, plus any savings possible from eliminating obsolete social benefit schemes (due to the implementation of the dividend).
He also attributes the rise of hate ideologies (e.g.: white supremacy) as a result of a dysfunctional economy, because poor, stressed people are easier to scare into these hateful discourses. Removing, therefore, “the economic boot off people’s throats” will definitely help diminish these polarizing hate agendas which, according to him “have no place in our society”. Yang also believes the Freedom Dividend will improve people’s chances of getting better housing conditions (although refers municipal intervention as important, in order to provide for affordable housing) and better school performance. On the latter, he cites research that says 75% of kid’s performance at school depends on non-school factors, among which one of the most important is economic condition. Hence, the Freedom Dividend can also help kids learn more, and better.
