Andrew Yang, the United States presidential candidate for the 2020 elections who most notoriously pushed (his own version of) a basic income policy to public debate in the country, has dropped out of the campaign for the Democratic Party setup. This has been reported in severalnewsoutlets, some of which had allegedly been deliberately underreporting his activities as candidate. On this issue, Scott Santens, a prominent basic income activist, has written on social media (Facebook):
Amazing how the #YangMediaBlackout ended the moment Yang dropped out of the race. Suddenly every media outlet is falling over themselves to cover the candidate they worked so hard for so long to hide. Congrats. You got the outcome you wanted. But this fight is far from over. The #YangGang has awakened.
Thank you to all of you for everything you’ve done, pouring your heart and soul into this campaign which has become a movement. The Yang Gang is incredible and important and we will change the world. I hope you all will continue fighting for the economic justice we all so desperately need.
Fear is a weapon used against us to keep us in line, but hope is a shield.
(…)
It will take the effort we’ve all put in for Andrew Yang and more. It will even require us running for office. Everyone in the YG who runs for office, we will need to support as we have Andrew. What happens next is up to us.
One of my main takeaways from this campaign is every one of us is now equipped for life with the skills to forge a new path. Democracy requires active not passive engagement, and the we just learned everything we need to know. Those tools are now ours to wield. Watch out world.
The Yang Gang is only getting started.
Andrew Yang himself has also written a message on this occasion (transcript from a post by Michael Howard, another long-time basic income activist):
Thank you for your incredible support these past months. You all have uplifted me and inspired me and Evelyn and this campaign at every turn. Your passion and energy. Your donations and hundreds of thousands of hours of calling and volunteering. Your enthusiasm, dedication and commitment.
We have accomplished so much together. We have brought a message of Humanity First and a vision of an economy and society that works for us and our families to millions of our fellow Americans.
We went from a mailing list that started with just my Gmail contact list to receiving donations from over 430,000 people and support from millions more across the country.
One of the things I’m most proud of — we gave $1,000 a month for a year to 13 families across the country.
We highlighted the real problems in our communities as our economy is being transformed before our eyes by technology and automation. We stood on the debate stage and shifted our national conversation to include the fourth industrial revolution, a topic no one wanted to touch.
Our signature proposal, Universal Basic Income, has become part of the mainstream conversation. We increased the popular support for Universal Basic Income to 66% of Democrats and 72% among voters 18-34.
And without a doubt, we accelerated the eradication of poverty in our society by years, perhaps even generations.
And that is thanks to all of YOU!
Though thousands of voters came out for our campaign tonight in New Hampshire, it is not the outcome we fought so hard for. It is bitterly disappointing for many of us.
But it should not be.
Every single day I’ve had supporters say to me:
“Your campaign helped me out of a depression. Thank you.”
“Working on this campaign has made me a better human being.”
“I met my significant other because of you.”
“Your campaign brought my family together. Your campaign got me excited about politics for the first time.”
These are all things that people have said to me in the past days. I’m incredibly proud of this campaign. We have touched and improved millions of lives and moved this country we love so much in the right direction.
And while there is great work left to be done, I am the MATH guy. And it is clear tonight from the numbers that we are not going to win this race. I am not someone who wants to accept donations and support in a race that we will not win.
And so tonight, I am suspending my campaign for president.
This is not an easy decision. Endings are hard and I’ve always intended to stay in this race until the very end. But I have been convinced that the message of this campaign will not be strengthened by my staying in this race any longer.
Endings are hard. But this is not an ending.
This is a beginning.
This is the starting line. This campaign has awakened something fundamental in this country and ourselves.
We’ve outlasted over a dozen senators, governors, and members of Congress and become the most exciting force in this entire race.
The Yang Gang has fundamentally shifted the direction of this country and transformed our politics, and we are only continuing to grow.
My goal when I first started was always to solve the problems that got Donald Trump elected. And I know in order to do that, I will support whoever is the Democratic nominee. That said, I hope this campaign can be a message, and word of caution, to all of my Democratic colleagues.
Donald Trump is not the cause of all of our problems. He is a symptom. We must cure the disease that got him elected, and in order to do that we must address the real problems that affect our people and offer solutions to actually solve them.
Those solutions are bold, and many think they are crazy. But I hope my campaign has made it a little less crazy to think we can lead our country to eradicate poverty. In fact, five candidates in this field have already supported it or expressed openness to supporting Universal Basic Income.
I stand before you today and say that while we did not win this election, we are just getting started.
This is the beginning.
This movement is the future of American politics.
This movement is the future of the Democratic party.
This wave is just beginning and it will continue to build until we rewrite the rules of this economy to work for us, the people of this country.
Thank you to each and every person who made this campaign possible, I love and appreciate you. Being your candidate has been the privilege of my life. We will continue to do the work and move this country forward.
Thank you all. God bless you. And God bless the United States of America.
As US presidential candidate Andrew Yang continues to outperform expectations, his signature policy proposal, the Freedom Dividend or Universal Basic Income (UBI), is receiving increased scrutiny. Some of the criticisms are well warranted, while others are misconceptions based on a flawed understanding of how basic income would operate.
The following addresses some of the primary misconceptions regarding Yang’s plan.
UBI is too expensive
The cost issue is one of the most persistent misconceptions about basic income.
A basic income system would have a built-in clawback through the tax system. In Yang’s case, a portion of the clawback comes through the opt-in system that would substitute cash-like welfare programs for the Freedom Dividend, such as food assistance. However, most of the burden of the clawback would be on the wealthiest families who would pay more in taxes than they could receive from basic income
As I have noted previously, the UBI clawback can be both direct and indirect. For example, the Affordable Care Act (ACA) requires families to pay back some or all of their healthcare subsidies at the end of the year if their yearly income exceeds a certain amount. A UBI system can similarly create a phase-out in the income tax system.
Considering Yang’s Freedom Dividend is opt-in, it is likely that many wealthy families would not opt to receive the dividend anyway.
Indirect clawback mechanisms could include Yang’s proposed Value Added Tax (VAT). The VAT is effectively a national sales tax, meaning even lower-income people would pay back a portion of their basic income depending on how much they spend their dividend on taxed goods.
Yang has said he would exclude many essential items from the VAT, though. Calculations show the VAT combined with UBI would have a net positive effect on purchasing power for low-income individuals.
Any taxes paid on the UBI would be used for the following year’s dividend, meaning much of the money is repeatedly recycled through the system. The additional amount that is redistributed to lower-income families is called the “net cost” or real cost of basic income. The net cost is the amount the government would actually redistribute every year under UBI.
Factoring the clawback, the real cost of basic income to the government would be approximately $539 billion annually, according to Georgetown Professor Karl Widerquist. This is less than 25 percent of existing entitlement spending.
UBI would have the same cost as a Negative Income Tax (NIT) when factoring the clawback, but the sticker price of the gross cost creates a false impression of a higher cost for UBI. NIT is not universal — it only provides the subsidy to those who qualify, making the cost appear lower than UBI. When I asked Yang whether he would support NIT to avoid the cost misconception, he said NIT would be a step in the right direction.
UBI would cause inflation
The inflation misconception has been around for many years, but it has become more convincingly debunked since I first wrote about it nearly three years ago.
It is essential to note that Yang’s plan is redistributing existing cash, not printing new cash. For every dollar spent, there must be a dollar taxed first, which would offset inflationary pressures.
As Karl Widerquist noted, basic income is no different than other welfare programs in terms of increasing demand for goods. Denmark has one of the most generous welfare states in the world, but they also consistently experience a low and stable inflation rate below two percent.
In the United States, food assistance, which can be freely spent like cash on most food items, has not produced inflation in food prices. On the contrary, research from the London School of Economics shows in states with higher take-up of food stamp assistance, prices have dropped and there is greater product variety relative to those areas with lower food assistance take-up. This is because suppliers respond to increased demand with more competition entering the market.
Thus, the guaranteed demand from basic income could generate higher levels of competition that brings down costs for low-income people.
In Alaska, which has a small Universal Basic Income funded by oil revenues, inflation has been lower than the U.S. average since the program started. Other research in Mexico demonstrates that directly giving cash does not produce inflation.
Since the United States is a globalized market, any short term demand spike creates an economic profit that is resolved by increased production, bringing the price down in the long-run.
In fact, the United States is experiencing unusually low levels of inflation. Contributing factors could include the Amazon.com effect, automation, immigration, and global trade. Basic income would not change these underlying factors keeping a hold on inflation.
The main area where there could be meaningful inflation in the medium term is the cost of rent because there is a fixed supply of land.
Basic income could empower more people to move and find other options. Renters would have a better bargaining position with their landlord if they had a guaranteed dividend than if they are desperately clinging to their job.
In the long-run, greater purchasing power from low-income people should induce more homebuilding and open up a greater share of unoccupied housing. That said, the high cost of rent exists now in many areas and should be addressed as a separate policy issue.
Nonetheless, it is unlikely that any inflation from UBI could completely wipe out the improved purchasing power from the dividend, let alone make people worse off.
UBI would cause laziness
The problem of laziness is one of the most thoroughly debunked misconceptions about UBI. Among those who closely study cash transfers, many no longer consider labor participation an interesting research question because the results consistently show no effect. Those who have read the relevant research and are still convinced that basic income causes laziness will likely never be persuaded otherwise.
As I reported in 2016, “The Overseas Development Institute just released the largest meta-analysis of cash transfer programs ever, spanning 15 years of data and 165 studies. The main takeaway is that studies show a consistent reduction in poverty measures. Perhaps an even more important conclusion is that most evidence showed an increase in work participation after receiving the basic income.”
Many specific examples from across the developmental spectrum corroborate the conclusion that basic income would not meaningfully reduce work. In Finland’s basic income experiment, there was no negative effect on work. Iran’s generous basic income did not reduce overall work but did cause some young people to substitute their time for more schooling. In Alaska, their partial basic income did not reduce overall work. On the contrary, Alaska’s basic income increased part-time work due to the increased demand generated by a basic income.
With a permanent basic income, there is reason to believe that a healthier and more productive labor market will emerge. For example, the Finland experiment showed basic income recipients were happier and more trusting overall. Many polls indicate that individuals would use the basic income to gain additional skills, spend time with family, volunteer, and engage in freelancing.
If the poor are no longer clinging to a job for survival, they can more freely find a job where they can be the most productive. They will also have more bargaining power to demand better working environments.
Most importantly, basic income would allow greater time and mental energy to be focused on the most important job in society: caregiving. Volunteering and caregiving provide enormous economic and societal benefits that are not recorded in GDP because they are typically unpaid.
Basic income gives people the right to say no to exploitation. But the most revolutionary aspect of UBI is that it finally gives everyone the opportunity to yes to their passions.
Conrad Shaw wants America to know about Universal Basic Income, and he has two big projects to help make it happen.
Shaw’s documentary project is filming 21 Americans across 10 states who are receiving a basic income for two years. The documentary series will be released throughout 2020.
More recently, Shaw created the UBI Calculator to show individuals how much they would gain (or lose) from various basic income proposals.
The goal behind these two projects was to “answer the two main questions you get when you’re having a discussion about UBI.” That is, what would people do with the money and how do you pay for it.
The UBI Podcast spoke with Shaw about the UBI Calculator and what it could mean for the basic income movement.
Many people are worried that basic income “is just going to be taxing the middle class.” The UBI Calculator helps answer this concern about whether the middle class would be taxed more or would gain more under a basic income program.
With the calculator, an individual can type their own household income, social assistance, and other information to see how basic income plans would affect them, including Andrew Yang’s plan.
Shaw spent “hundreds” of hours on Google Spreadsheets developing the math behind the calculator, along with an intern who spent ten weeks assisting the development. He said he made the calculator based on “conservative” assumptions so that individuals can see the “worst-case scenarios” rather than paint a more rosy picture of each plan.
“I think credibility comes from not only the depth of the analysis when you’re talking about web tools I think it also comes from the ease of use and just the ease of functionality,” he said.
To build the calculator, Shaw raised $70,000 USD “to make the version of it that I thought it needed to be.”
For the future, Shaw plans to make a “policymaker mode” where individuals can “go in and play with the actual economics themselves.”
“Maybe they’re against you know taking money from the military and flat taxes and so they really want to have a carbon tax and see how much can be made from that and a land value tax,” he said.
Another area to explore is the “dynamic effects” of basic income, which looks at how UBI might affect the broader economy.
“We can have windfalls from the reduction in costs of poverty crime and health emergencies we can have a windfall from the economic stimulus of just putting money in the hands of consumers which creates jobs and creates extra revenue,” he said.
Building this calculator and preparing his documentary was meant to have an “impact on the national discussion in time for the 2020 election,” Shaw said.
“Right now it is a very powerful moment in the UBI movement,” he said. “UBI needs to be more of a grassroots movement if it’s going to get something legislated.”
It seems that it is no longer just Presidential Candidate Andrew Yang who is speaking about basic income (his version of it) at Democratic Party Debates. And although basic income is still a minor issue debated at these events, it is relevant to acknowledge that other candidates are also casting their support for the idea. That has been the case of Tulsi Gabbard, and Julián Castro, both present at the latest forth debate. Gabbard has stated that “I think universal basic income is a good idea (…) Universal basic income is a good idea to help provide that security so people can make choices that they want to see”, and Castro has shown openness to conducting basic income pilots in the United States territory.
Meanwhile, Andrew Yang’s campaign has been rising exponentially, even though being actively ignored by major news outlets. The list of public figure endorsements has been gaining weight, including names such as Elon Musk (Tesla, Space X), Sam Altman (Y Combinator), Scott Santens, Andy Stern (ESP, SEIU ex-president) and even Nicholas Cage. Fundraising has also been rising steeply, from 1,7 million US$ up to 10 million US$ within 2019 alone (almost a 6-fold increase), 99% of which comes from small donors (200 US$ or less, averaging 30 US$). Also, Yang has qualified for all four Democratic Party Presidential debates so far, and is already setup for the fifth one (on November 20th 2019), and has been attributed the responsibility for introducing basic income into the American wider political discussion.
With an article on medium, Scott Santens, long time Universal Basic Income (UBI) advocate, has explored in depth Andrew Yang’s proposal of a Freedom Dividend (FD).
The Freedom Dividend, one of the pillars of Andre Yang’s campaign for the democratic nomination for the 2020 American presidential election, is a $1,000 UBI for every American. Santen’s article discusses in detail the implications the proposal would have if introduced, and defends it against claims that it would end up increasing inequality or destroying the safety net. In Santen’s words, “The freedom dividend would be the single most progressive policy advance ever signed into law in America history”.
In order to clarify how and why the Freedom Dividend would work as a progressive measure to enhance freedom and as an instrument against poverty and inequality, Santens provides answers to two questions regarding its design:
1) Why to provide people with a choice between existing programs and the Freedom Dividend and not let people keep everything?
People would need to voluntarily opt out from some assistance programs, based on low income, whilst other contribution-based programs would continue to exist on top of the FD (health care remaining a separated issue, not connected with the FD). Santens’ article points out that this is done in order to maximize unconditionality and the incentive to work by avoiding welfare traps.
2) Wouldn’t the funding of the FD through a 10% value added tax –as proposed by Andrew Yang- make it a regressive measure, thus disproportionately disadvantaging the poor?
Even though a tax on consumption is usually considered regressive, as those with lower incomes tend to spend more of it in consumption when compared with those having higher incomes, the VAT-UBI design ends up making it a progressive instrument. That is, those on the lower part of the distribution would end up receiving more than what they lose because of the VAT, which would be rebated by the FD. Santens quotes a distributional analysis by The UBI Center, that concludes “that the bottom 10% (of the income distribution) would see their disposable incomes increased by almost 120% while the top 10% would see their disposable incomes reduced by 4%.”
Moreover, Santens says, the FD would strongly reduce poverty with “74% fewer households would have disposable incomes that fall under the federal poverty line” and impact heavily on inequality, causing a drop of 15% in the American Gini index.
UBI would fill the holes in the existing safety net, a “welfare mess” that leaves many people behind, and which design is far too complex, inhumane and not efficient, as Santens explores in depth in his article.
“Is it progressive to not support the greatest reduction of poverty and inequality — and greatest increase in freedom and dignity — ever proposed in American history, because you insist upon preserving paternalistically neoliberal conditionality?”
