Rarely does a presidential candidate focus a stump speech on an out-of-the box idea. But in his first appearance before a large Iowa audience on August 10, Andrew Yang devoted much of his time to the "Freedom Dividend," a proposal unlike anything I've heard on the caucus trail.
After the Iowa Democratic Wing Ding in Clear Lake, Yang spoke to Bleeding Heartland about how the U.S. could pay for a nationwide universal basic income plan. He also explained how he envisions selling the idea to voters who have heard politicians denigrate "hand-outs" and welfare for decades.
"THREE BIG IDEAS TO GET US THROUGH THE GREATEST ECONOMIC SHIFT IN HUMAN HISTORY"
Here's my recording of Yang's speech.
For those who prefer watching to listening, the introduction of Yang begins around 1:31:50 on the official video, and the candidate's speech starts around 1:34:00.
After sharing a bit about his background, Yang joked, "I'm an entrepreneur and a problem-solver who likes math. And I say that because people have told me that the opposite of Donald Trump is an Asian man who likes math."
He had studied the 2016 election to try to understand why Trump won Iowa by nearly 10 points and also carried Michigan, Ohio, Pennsylvania, Missouri, and even Wisconsin. Digging into the numbers, "the most direct correlation I found was that the more manufacturing jobs were lost in a voting district due to automation, the more blue turned to red in that district." Trump is president because "we've automated away 4 million manufacturing jobs," including "nearly 40,000 right here in Iowa," Yang asserted.
The bad news is economic hardship "is going to get worse before it gets better." Business leaders in Silicon Valley are devising more ways to replace workers (such as truck drivers and call center employees) with machines. "This is the greatest economic and technological transition in the history of mankind. Donald Trump is the manifestation of this transition, and our government has been decades behind in being honest about it and addressing it."
The retraining programs often touted by politicians are not effective, Yang warned. Data from Michigan and elsewhere show that too many people who lost manufacturing jobs never got back into the workforce. "We must fundamentally shift the way we perceive work and value in our society, and I have a three-part plan to make this happen and solve the greatest issue that threatens our way of life today."
THE FREEDOM DIVIDEND
Yang's campaign website asks and answers 21 questions about universal basic income. Here's how the candidate described the concept to the Wing Ding audience:
Now the first is the Freedom Dividend, where every American adult would receive one thousand dollars, free and clear, no questions asked, every month. To pay your bills, invest in your families, start new businesses, and do what you want to do, because you know how best you would use that money.
Already right now, 31 percent of Iowans are working full-time and cannot make ends meet, and 59 percent of our fellow Americans cannot pay an unexpected $500 bill. They are living paycheck to paycheck, week to week, and you know that is the reality for many of your friends and neighbors. And we can change that. We can give Americans a raise.
Yang acknowledged that his idea might sound "phenomenal" but "too good to be true." He noted that the U.S. House approved a similar proposal when Richard Nixon was president. At that time, Dr. Martin Luther King, Jr. and more than 1,000 economists supported the idea. (The U.S. Senate rejected the plan, because Republicans didn't want to expand the welfare state, and Democrats thought the bill didn't set the basic income high enough.) Furthermore, Alaska has had "a plan just like this" in place for 36 years, creating thousands of jobs, reducing income inequality, and improving children's nutrition.
Oil revenues finance Alaska's program. Yang's vision is to fund a national plan through "technology, the oil of today." The Freedom Dividend would put $16 billion into the hands of Iowans every year and "would create over 40,000 jobs in Iowa immediately." It's a very big idea, but it's achievable, he assured the crowd.
We need to build an economy that actually puts human goals and values front and center, invests in our people, and build a trickle-up economy. The Republicans have been selling that trickle-down garbage for decades, and we know it doesn't work at all. They even know it doesn't work. They know it's nonsense. So we're going to build a trickle-up economy, from our people up, our families up, and our communities up. And that's the first big move I'll make as president.
MEDICARE FOR ALL
The second part of Yang's plan was much more familiar to Iowa Democratic audiences: "we need to get health care costs off the backs of American families and businesses."
I've been an entrepreneur and CEO, and I know it's harder to expand your business. It's harder to hire. It's harder to start a business. It's even harder to switch jobs. We spend twice as much as other industrialized countries on our health care than other countries because our system rewards activity and not healthfulness. And as president I will move us towards Medicare for All and get the incentives right.
U.S. Representative Dennis Kucinich was the only presidential contender to embrace single-payer health care before the 2004 and 2008 caucuses. Widely seen as a fringe candidate, he was viable in very few precincts. In contrast, Bernie Sanders battled Hillary Clinton to a virtual tie in Iowa, having made Medicare for All a major campaign theme. The limitations of the Affordable Care Act have also driven more Democrats to support an "everybody in, no one left out" approach.
Single-payer health care will likely be a mainstream position during the 2020 caucus campaign. Three of the four Wing Ding speakers who may run for president--Yang, U.S. Representative Tim Ryan of Ohio, and celebrity attorney Michael Avenatti--explicitly advocated for Medicare for All and drew applause. Only U.S. Representative John Delaney of Maryland, the first Democrat to enter the 2020 presidential race, is not on board with this approach. (Delaney supports a Medicare buy-in option for Americans over age 55 instead.)
A NEW ECONOMIC SCORECARD
The third part of Yang's plan is something I've never heard a presidential candidate discuss. I am curious to see whether this idea can gain traction among Iowans who have left the workforce, either permanently or temporarily, to care for their children, aging parents, or loved ones with disabilities.
"We have to change the way we measure progress in our economy. GDP [gross domestic product] is something we invented less than 100 years ago, during the Great Depression. And even the inventor said this is a terrible measurement for national well-being. So of course, what do we do? We start using it as a measurement for national well-being. [...]
Now, I'm running for president right now, and my wife is working much harder than I am. [...] My wife is at home with our young boys, who are 5 and 2, one of whom has special needs, and she is working much, much harder than I do. What does GDP value her work at right now? Zero.
And we all know that's nonsense. We know that she's contributing much more value than the average hedge fund investor or Silicon Valley programmer.
We need to shift to new measurements for our economic progress. Things that matter to us. Like childhood success rates. Mental health and freedom from substance abuse. Environmental quality. Median income and wealth. Proportion of elderly in quality care that can actually retire with dignity. These are the measurements that would actually tell us how we are doing. And as president I will establish the American Scorecard and present on how we are doing every year at the State of the Union.
Yang closed with an anecdote about someone in Washington, DC telling him he was "in the wrong town. This town is not a town of leaders. This is a town of laggards and followers." He needs to create a wave in other parts of the country to force DC politicians to act, the insider said. Yang asked Iowa Democrats for their help in building that wave and building an economy "from the ground up."
"WHEN A COMPANY DOES THAT, THAT'S CONSIDERED SMART MANAGEMENT"
While the concept of a universal basic income is accepted in some parts of the world, it's almost a cliche for U.S. politicians to say Americans "don't want a hand-out, they want a hand up." After the Wing Ding, I asked Yang how he would get past the negative connotations surrounding welfare and receiving a regular check from the government.
Well, that's one reason we call it the Freedom Dividend. Which is that we have to have people wake up to the fact that we are the owners and shareholders of the richest, most advanced society in the history of the world, that can easily afford a $1,000 dividend for its citizens.
And when a company does that, that's considered smart management. That's considered good use of capital. And the same is true for us. Where, by putting money into our own hands, we're going to be able to invest it in our families, in our communities, in growing businesses, in helping manage our finances for this future that's really rushing on us, faster than we'd like.
So that is the challenge, because historically welfare has been seen as this kludgy government program that's only given to people in certain circumstances. So if we can make it truly universal, and have people see it as a dividend for citizens, then we can hopefully frame that debate the right way.
Yang mentioned that the U.S. could fund this program through "tech." Could he be more concrete about how he would pay for it?
So there are four sources of money for a universal basic income. The first is current welfare spending, because if someone's already receiving a certain amount of money, then it would reduce the cost of them receiving $1,000 [per month].
The second is that we need to impose a value-added tax will help harvest the gains from Amazon and Google and other companies that have benefited most from automation. And because our economy is so vast now, a value-added tax at half the European level would generate $800 billion in revenue [annually] that we could return to the American people.
The other thing is that if you put $1,000 into Americans' hands, it grows the consumer economy by about 12 percent, and we get back 25 percent of that growth in new tax revenue.
And the fourth thing is that if you put $1,000 in Americans' hands, it's going to reduce the trillion dollars-plus we spend on health care, incarceration, homelessness services. One study showed that alleviating child poverty in this country--which this would do in large part--would increase GDP by 700 billion dollars, due to better health outcomes, better educational outcomes, and greater productivity.
So this will pay for itself in large measure, but even conservatively, we have the money to do this, if we just put in an intelligent tax that will help harvest the gains from automation and advanced technologies.
Yang added that universal basic income would provide $16 billion a year to Iowans. People could use that money to "pay your bills, patronize local businesses, and make the regional economy stronger. It's the most direct thing that a government could do that will actually improve people's lives day to day."
"AT LEAST THAT STARTS TO RECOGNIZE AND REWARD PARENTS FOR THE WORK THAT THEY DO"
Last question: I was intrigued by Yang's idea of a new economic scorecard. How would he measure the input that goes into being a stay-at-home parent?
Well, the first thing is that if everyone receives a universal basic income, one of the net effects is that it compensates women and parents for the work they do that right now is totally unrecognized and uncompensated by the market. Because right now, the market says being a mother is zero. If we give everyone a universal basic income, at least that starts to recognize and reward parents for the work that they do, particularly mothers.
But bigger picture, if we have economic measurements around things like childhood success, and then if you are contributing to childhood success in your community, that actually hits the economic bottom line. And then there will be ways that you could be compensated for that.
So that is the very big move we have to make, but we have the sophistication now to be able do it. We invented GDP, this crude measurement, during the Great Depression, less than 100 years ago. And now with all of our abilities, we could actually create substantive metrics along lines like childhood success, that will help reward parents and caregivers.
The government "is dangerously behind and decades behind," Yang emphasized. "I know what we're capable of," having worked in technology companies. "The government's capable of much, much more, in ways that will actually improve people's lives."
Appendix 1: Literature Andrew Yang was distributing at the Wing Ding
Appendix 2: More background on Andrew Yang
Excerpts from the official bio on the Yang 2020 campaign website:
I’m not a career politician—I’m an entrepreneur who understands the economy. It’s clear to me, and to many of the nation’s best job creators, that we need to make an unprecedented change, and we need to make it now. But the establishment isn’t willing to take the necessary bold steps. As president, my first priority will be to implement Universal Basic Income for every American adult between the ages of 18 and 64: $1,000 a month, no strings attached, paid for by a new tax on the companies benefiting most from automation. UBI is just the beginning. A crisis is underway—we have to work together to stop it, or risk losing the heart of our country. The stakes have never been higher. [...]
I studied economics and political science at Brown and went to law school at Columbia. After a brief stint as a corporate lawyer, I realized it wasn’t for me. I launched a small company in the early days of the internet that didn’t work out, and then worked for a healthcare startup, where I learned how to build a business from more experienced entrepreneurs. In my thirties, I ran a national education company that grew to become #1 in the country. I also met my wife, Evelyn, and got married. My education company was acquired, and with Evelyn’s support, I decided to take my earnings and committed myself to creating jobs in cities hit hard by the financial crisis. By that time I understood the power of entrepreneurship to generate economic growth, so I founded Venture for America, an organization that helps entrepreneurs create jobs in cities like Baltimore, Detroit, Pittsburgh, and Cleveland.
VFA resonates with so many people because it’s clear there’s a growing problem in the U.S.: automation is destroying jobs and entire regions are being left behind. For years I believed new business formation was the answer—if we could train a new generation of entrepreneurs and create the right jobs in the right places, we could stop the downward spiral of growing income inequality, poverty, unemployment, and hopelessness. VFA created jobs by the thousands and continues to do amazing work across the country. But along the way, it became clear to me that job creation will not outpace the massive impending job loss due to automation. Those days are simply over.
Top image: Screen shot from the official video of the Iowa Democratic Wing Ding in Clear Lake on August 10.