A case for Andrew Yang and his Freedom Dividend

Des Moines resident Jon Muller has worked in public policy analysis for 27 years. -promoted by Laura Belin

While I will be voting for whoever wins the Democratic nomination for president, Andrew Yang stands out among the nearly two dozen candidates.

There are two fundamental questions most Democrats are considering, broadly, and I’m not much different.

1. Which candidate has the best chance of winning in 2020?
2. Which candidate best conforms to my sense of the best direction for this nation?

In my view, Andrew Yang is the answer to both of those questions. Let’s take the second question first.

YANG’S VISION IS BEST AMONG THE FIELD

Andrew Yang’s vision and policy prescriptions align more with my own than any other candidate. Indeed, probably more than any candidate I’ve ever seen on a ballot for any office. My hope is that you will consider the efficacy of these views, even if they may sound a bit outlandish at first glance. It all starts with one simple quote from the candidate himself.

Capitalism has to be made to serve human ends and goals, rather than have our humanity subverted to serve the marketplace. We shape the system. We own it, not the other way around.

Two of Yang’s priorities are key to this critique. A Universal Basic Income, signaling the beginning of the end of poverty. And universal health care, a service for which capitalism inherently fails to provide a just and efficient outcome. Yang has dozens of policies, all driven by a solid algorithm for aligning solutions to the problems they seek to solve. But at the core, it’s about UBI and universal health care. That’s what human-centered capitalism is all about.

Systems are not virtuous. People are virtuous. Capitalism has features that make it especially good at creating the most amount of material output at the least cost. The least waste. Absent government edicts to redistribute its output, it will inevitably result in an ever increasing concentration of wealth and income, leaving significant numbers of people behind, generation after generation.

But we do not exist to serve the state, any more than we exist to serve the economy. Both the state and the economy exist to serve us. And that’s where elements on both the right and the left go astray. Capitalism is not a value. Neither is socialism, nor democratic socialism, nor communism nor any other system.

At the risk of projecting, we all want the same basic thing. The greatest amount of individual freedom and prosperity to enable us to reach our own sense of our greatest potential, with the least amount of interference in our decision making. Like Andrew Yang, I do not love capitalism. I love my family and friends.

But alas, the jury is in, and no system conceived of by our species generates material wealth as effectively as capitalism. If you listen to apologists for capitalism, it’s what they refer to as the goose who lays golden eggs. Where Andrew Yang gets it right, and where conservative apologists get it wrong, is to draw a clear distinction between the goose and the golden eggs. It doesn’t kill the goose to take her eggs and redistribute them. Taxes, applied neutrally and broadly, are not a threat to the goose. The goose thrives as long as individuals make individual decisions about what they want to buy and sell, with as little unnecessary intervention by the government as possible.

The choice in this election is about the age and relevance of the solutions to current and emerging problems. As Yang repeatedly points out, we are in the mess we’re in today ala Donald Trump because 3 million manufacturing jobs disappeared in a key political region of the country. We are on the precipice of another 3 million service jobs disappearing for largely the same reason. It’s not the Mexicans and the Chinese. The U.S. hit an all-time high output in manufacturing prior to the Great Recession, and has fully recovered from that setback.

It’s the robots. And it won’t just affect the millions of truckers who are about to be replaced by machines. It’s the entire economic infrastructure that serves them, from truck stops to restaurants to hotels, all scattered across the entire nation, disproportionately in rural areas. It won’t stop there, as innovation begins to challenge labor in relatively lucrative professions such as accounting, the law, and health care delivery.

We are about to hit a period of serious economic disruption. And while we emerged from the automation renaissance in manufacturing richer than before, even in terms of median wages which have more than kept pace with inflation (in spite of what some candidates like Trump would have had you believe), we didn’t address the people impacted by the disruption.

We all enjoy many of the promises of that early wave, from cheaper and better computers and TVs, the internet, cars that don’t hit the junk yard at 100,000 miles, and phones that replaced dozens of ad hoc services you used to have to buy.

But we took our eyes off the end game. Forgotten people in the Rust Belt reacted by disrupting the entire political landscape. Their cut was insufficient, as they saw coastal elites and local professionals gobble up the wealth the new economy offered.

Feeding their grievance, many of these disrupted human beings saw their rural towns decline with the exodus of their children and grandchildren. At the same time, they saw the government step up and provide welfare to people they perceived were different from themselves. In their minds, they saw immigrants and lazy people getting a handout they weren’t getting, often manifest in their minds as people of color. Or the urban middle class, whose kids were getting Pell grants and subsidized loans. They saw the rise of China, which ushered in the single fastest and most successful war on poverty the world has ever seen. These disrupted human beings once felt like they were on top, and they saw the world passing them by.

We forgot that capitalism is here to serve us, and not the other way around.

The next wave is going to be far worse than the previous one. The average truck driver in this country is 55 years old. There is no time to retrain them, and the jobs available will not pay as well as the ones they’re leaving behind. We have to find a way to ensure these families have access to high quality health care when they get sick, and adequate material resources as they seek to find a new way to productively occupy their time.

OTHER CANDIDATES’ PROPOSALS DON’T ADDRESS THE WHOLE PROBLEM

The old solutions proposed by the other candidates to greater or lesser degrees amount to little more than a Rube Goldberg contraption, a series of patches with singular solutions for each symptom, completely ignoring the disease.

These solutions are presented as one of two different types. The first type is a quixotic effort to stall the wave. Breaking up big tech companies. Pass regulations protecting taxi drivers. Spreading around internet memes telling people not to use the automatic checkout line.

The second type is a set of ad hoc solutions for individual symptoms. People can’t afford child care, so have the government provide it free of charge. College is too expensive, so provide it for free. Student loans are difficult to service, so forgive them. Housing is too expensive, so impose rent controls and provide Section 8 housing subsidies. Poor people can’t afford food, so give them food stamps. Wages are too low, so raise the minimum wage.

If you’re not a college student, or you’ve already paid off your loans, or you make more than $15/hour as most people do, or you live in a rural area where rent is already cheap, and you have no young children, you will be paying for all these things. That’s how people see it. Even when their taxes don’t increase. The mere presence of the categorical benefit breeds contempt.

The essence of Universal Basic Income is to recognize that all human beings, regardless of specific circumstance, are entitled by their franchise to have a decent standard of living and choose a path the economy may or may not reward. Andrew Yang calls it a Freedom Dividend, $1,000 a month to each adult under retirement age.

Would you rather have $12,000 a year per adult in your household, rising over time, or would you prefer to have the government pay your $30,000 student loan? In fact, you will find that many people would gladly trade $1,200 a month in categorical benefits like food stamps and Section 8 vouchers for $1,000 in cash a month with no accountability aside from their citizenship. Why? The latter doesn’t get reduced when your income grows. The average family on SNAP (food stamps) receives the benefit for less than ten months. The patchwork system doubling down on the 20th century labor party ideals amounts to a massive tax rate on people with rising incomes.

When the government gives you money for food, student loans, and housing, you will inherently consume more (or more expensive) food, college education, and housing than is your neutral preference. I’ve lived on food stamps. We ate much better and more expensive food than we would have if we had just been given the cash. We would have preferred to buy other things, like a pair of shoes with no holes, or the electric bill. And we would still have had plenty to eat.

Same with housing. A person will consume more housing and less of everything else than they would prefer with a cash payment rather than a categorical benefit. In many cases, people are creative enough to game some of these benefits, trading them at less than 100 cents on the dollar to free up the cash to serve their preferred consumption.

It all comes down to one very simple proposition. The easiest, least expensive, fairest, and most effective way to improve living standards is to give people cash.

ARGUMENTS AGAINST UBI

The three principle arguments against Andrew Yang’s solution are:
1. We cannot afford it. It’s too expensive.
2. It raises prices by taxing corporations to pay for it.
3. Some people will waste the money.

Let’s first address the expense. It’s expensive. Really expensive. Assuming 200 million eligible adults, it would be $2.4 trillion, about 12 percent of the economy. But it’s not quite that simple. We would save approximately $500 million in various welfare categorical funding appropriations. Possibly another $60 billion in Earned Income Tax Credits. There is evidence to suggest certainty of income improves all kinds of things related to health and well-being that would reduce the cost as well, but let’s think about it terms of pure redistribution. All told, with various other offsets, we’d require about $1.8 trillion.

For the lion’s share, Yang proposes a Value Added Tax (VAT), which is a tax system deployed in most western industrialized nations. One advantage of this system is the way it treats imports and exports. Anything we import is slapped with the tax, so the domestic economy has you indifferent between buying an import and a domestic product. With respect to exports, the corporations would not pay the VAT, but would pay it in the country into which they sell, as they do now.

On Yang’s website, he makes a series of credible arguments for economic stimulus associated with UBI. If financed exclusively with debt, the economy would be 12 percent larger eight years out than it would otherwise be, according to a Roosevelt Institute paper.

I am dubious about some of these claims. It is almost impossible to know what sorts of feedback loops would make that a likely outcome. The Fed would almost certainly raise interest rates, which would act as a brake, even as more cash in poorer hands would be stimulative.

From a public policy perspective, it makes the most sense even if one considers the worst-case scenario: a pure wealth and income transfer. Even at 12 percent of the economy, that’s only five or six years worth of growth. Over that time, absent a solution to address the disease of rising concentrations rather than the symptoms, wealth and income will continue to concentrate in the top 10 percent (and especially the top one-tenth of one percent). An ad hoc system of benefits will give the government more and more control over our daily activities and decisions as we ask for additional benefits to solve specific symptoms.

This country has sufficient resources to provide a UBI starting at $1,000 per month, and growing from there.

Then there’s the issue of rising prices from the taxes imposed. Various studies have shown different results depending on how it’s implemented. If it’s truly a VAT, as Yang proposes, it would almost certainly raise prices, causing a preference shift to savings over consumption, on the margin. Consumption would still increase, but by less than the Freedom Dividend.

But there is a certain harmony to this approach. The primary benefit of free markets we’ve been experiencing is perpetually low inflation, more and better products and services without price increases. That’s our collective benefit from the free market system. It is a natural place to tax to redistribute to cure the deleterious effects of free markets, which is concentrating too much of the benefit at the top.

Alternatively, we could think of Yang’s proposal in terms of a straight redistribution of income from wealthy individuals and corporations. Fund it with corporate and individual income taxes. In that case, it would have little impact on prices. It would increase consumption from one group of individuals and decrease consumption of another group. On the margin, poor people spend a greater share of their income on goods and services than wealthy people, so we could expect some increase in aggregate demand. But there would also be a corresponding reduction in savings and investment on the margin, which plays itself out as a reduction in consumption for wealthy individuals and corporations over time.

The only way we would expect the Freedom Dividend to dramatically increase economic growth would be to provide it without taxation, funded with government debt to the extent there are not spending offsets. Even that would be preferable in my view to the current system, but that is not what Yang proposes, and there are good reasons for that. Reasons lost on Republicans who used that approach to cut taxes on corporations and wealthy people in 2017.

The last objection is the most common one, for reasons I can’t entirely explain. People will waste their Freedom Dividend. I’m not sure how someone wastes money, exactly, if they buy what they want to buy with the resources available to them. They could spend foolishly, of course, which many of us do now. Just as we can spend our food stamps foolishly or our subsidized student loans.

However, I’ve made a peculiar observation with respect to people who raise this objection. It’s always the other person who will spend it foolishly. Never they themselves. Our Indian pediatrician told me when we were concerned our baby wasn’t getting enough to eat, “I’ve never seen a child starve in a house with food.” Similarly, I’ve never seen a household with adequate cash fail to have food. I trust that human beings are capable of spending their money wisely enough to survive, even thrive. In any case, I encourage you to spend more time thinking about what you would do with your $1,000 a month and less about what others might do.

Andrew Yang is focused on creating a system where all of us will have sufficient resources to make decisions on how to serve our own needs. No one thinks the government should tell them how to spend their money, but far too many people seem consumed with using the government to tell others how to spend theirs. It’s unnecessary, wasteful, and demeaning.

UNIVERSAL HEALTH CARE

Not surprisingly, my reasons for supporting Andrew Yang have focused on the UBI, or Freedom Dividend. That is the primary separation between him and the field. He does, however, recognize the need for a universal health care system. His preferred model is a single-payer system, often described as Medicare for All.

While I suspect there are more efficient ways to reform the health care system, the distinctions are not a major issue for me, and not a focus of this post. Any candidate who is committed to universal health care for all Americans passes the test. Insofar as the entire Democratic field is committed to this ideal, it’s not an issue I am using to compare the candidates. Insofar as you believe universal health care is the single most important issue, or one of the most important issues, Andrew Yang fits the bill.

ELECTABILITY

The first question of electability laid out in the beginning is difficult for me to evaluate. The arguments for and against the major candidates are so ubiquitous they require virtually no mention. They generally follow two forms. Either a candidate is so far left as to turn off the median voter, or the candidate is so far right as to destroy the enthusiasm of the Democratic base or young voters.

Recent polling indicates any Democratic candidate is likely to fare well against the President, at least according to early indications. Yet we all know how much that can change when Trump unleashes a barrage of visual attacks, with a proven track record of success. Just ask Lyin’ Ted Cruz, Low Energy Jeb Bush, or Crooked Hillary Clinton. You have to admit, the guy’s got a knack.

I understand a reluctance to support a candidate with a platform that is out of step with the mainstream. This may not be the election to unleash major changes. And while I agree with that assessment in terms of the democratic socialists who are doubling and tripling down on government programs, I’m not sure it applies to Andrew Yang’s platform.

Consider one of the sources of the perceived grievance for so many Democrats who voted for Donald Trump, particularly in the rust belt. No such grievance is manufactured with the Freedom Dividend. Everyone gets one, and everyone knows everyone else gets one. No one is getting something you’re not getting.

All manner of misplaced anxiety over how the Chinese or the Mexicans are ripping us off (they’re not), or how immigrants are taking our jobs (they’re not), should dissipate when we all realize American citizens are getting something simply by virtue of their franchise. It is a freshly unique way of addressing the fundamental political dynamic that angry populists on both the Right and the Left exploit for votes. There’s no reason to be angry at the system. There’s no reason to go after the goose when we can simply appropriate her golden eggs. The more eggs she lays, the bigger our Freedom Dividend going forward.

Lastly on the issue of electability, I leave it to you to observe Mr. Yang to gauge his authenticity. From what I have observed, there appears to be some relationship between Trump’s ability to caricaturize an opponent with his opponent’s tendency to behave as someone they are not. This candidate says what he thinks, isn’t above a touch of self-deprecation, and he appears to be the person he purports to be. These traits won’t prevent the attacks, but they might serve to immunize him from their effectiveness.

I encourage you to check out all of Andrew Yang’s policy objectives on his campaign website. You can also read his story. He’s whip smart. He has a remarkable capacity for empathy and humor. And while he has less political experience than any other candidate, a fair criticism to be sure, that is now less of a consideration than it once was. I am supremely confident he would be capable of parsing information provided to his office to arrive at sensible decisions on all fronts.

With Andrew Yang, it’s more about the process and less about the experience. I prefer a candidate with a sound process for decision making and little direct experience to a candidate with a wealth of experience, whose process is less rational and rigorous.

There is one last issue I want to address. The notion of impossibility. It’s not the craziest thing to predict Andrew Yang can’t win. Probably won’t. Even Yang recognizes that. However, I would like to appeal to my Iowa friends in particular when it comes to this perceptual barrier.

Each of us, everyone, can only do what we can individually do. I’m going to show up on caucus night and support Yang. I’ll invite as many friends as possible to join me. We can have this if we want it. If we don’t want it, then we’ll get someone else who will in all likelihood will be just fine. We’ll hopefully get some solutions on health care, maybe make life a little easier for most working people. But Yang is the only candidate to emerge from the field who would clearly have a mandate for a policy, as that is the one thing separating him from the field.

It really is that simple.

I recall my Latino father-in-law saying to me in January 2008 there was zero chance a black man would be elected president that November. Indeed, it did seem highly unlikely.

Until it didn’t.

The difference between “zero chance” and “reasonably likely” was one single cold night in Iowa. Some 240,000 people, less than one-tenth of one percent of the nation, decided it wasn’t impossible. 30,000 people in Iowa is all it would likely to move the ball forward, to move Andrew Yang’s candidacy a little further away from zero chance, if not as far as reasonably likely.

I hope you watch the first round of debates hosted by NBC and give special attention to Andrew Yang. For many of you, it will be your first introduction. I hope you will consider supporting him during the primary phase, and that you’ll keep his ideas alive in the event he does not personally survive the challenge ahead.

Editor’s note: Bleeding Heartland welcomes guest posts related to the Iowa caucuses, including but not limited to candidate endorsements. Please read these guidelines and contact Laura Belin if you are interested in writing.

  • I went to the dozens of policies on his website and picked a topic almost at random...

    …and he seems to really understand wildfire issues, from the impacts of bad fire suppression policies to how local governments actually encourage development in fire-prone areas. I haven’t even come close to making up my mind about candidates, but I’ll remember that.

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