The Freedom Dividend

Ramifications of the #YangGang’s Support for Universal Basic Income

by Alex Hentschel

A guaranteed stipend each month to meet basic needs and make ends meet, guaranteed for all citizens regardless of employment status? That’s the vision encapsulated in the term “universal basic income,” popularized by presidential hopeful Andrew Yang of the Democratic party.

Universal basic income (UBI) is a type of social security that guarantees a certain amount of money to every citizen within a given governed population, without having to pass a test or fulfill a work requirement. This policy would replace most welfare programs in the name of efficiency and “human rights capitalism.”

Yang is a political outsider, a savvy entrepreneur whose marketing includes hats with the slogan MATH (“Make America Think Harder”). His campaign began as a long-shot but has gained traction. According to RealClearPolitics, Yang is polling better than several of his establishment competitors.

Yang has termed his specific UBI recommendation “The Freedom Dividend” — defined on his campaign website as a set of guaranteed payments of $1,000 per month, or $12,000 per year, to all U.S. citizens over the age of 18 — “no questions asked.” His main reason for its implementation? Automation.

Oxford UK reports that over 47% of U.S. jobs are in a “high-risk” category for being fully automated in the next 10-20 years, and by 2015, automation had replaced four million manufacturing jobs. Yang’s campaign website, yang2020.com, puts it succinctly:

“Truck driving alone is the most common job in twenty-nine states with 3.5 million drivers – 94% of them male – and an additional 12 million workers supporting them in truck stops and motels across the country. What happens when the trucks start to drive themselves? … We are experiencing the greatest economic and technological shift in human history, and our institutions can’t keep up.”

The Freedom Dividend is Yang’s proposal to help America ride the transition through the automation wave without significant damage to the economy.

Perhaps wishing to spare himself from the vitriol Bernie Sanders received after advocating for free college tuition, Yang’s website includes a lengthy question-and-answer section which provides answers for nearly every possible objection to the Freedom Dividend. Questions such as “Won’t people just spend money on dumb things like drugs and alcohol?”; “I don’t see robots, isn’t this early?”; and “Isn’t this Communism/Socialism?” are answered with links to sociological studies, clear policy initiatives, and quick talking points.

Is this a post-modern liberalist pipe dream with no basis in reality? Actually, UBI as a policy proposal has been around for a while — as a conservative policy proposal in the vein of limited government. It dates back to the free-market economist Milton Friedman, who argued for “negative taxation” whereby the state would pay each of its constituents a predetermined amount of money each month. Friedman argued that if basic needs are met, citizens would be more likely to contribute to society in the form of charity and social work without being stressed about making ends meet, resulting in a reduction in crime and less governmental taxation.

UBI is not without its detractors, who are alarmed at the Freedom Dividend’s price tag of $2.8 trillion dollars per annum, noting that the country would plunge further into debt and taxes would rise substantially after its implementation. Conservative economists often argue that while incentives work, handouts do not, and the idea of “free money” has the potential to disincentivize work. There is also the tricky business that the money is guaranteed to every American, not just the ones who need it, meaning that the tax burden to sustain UBI will be felt more heavily on the lower- to middle-socioeconomic classes and the wealthy will receive a needless cash bonus.

Has UBI ever been tried?

The theory was tried with success in Dauphin, Canada, in the 1980s, seeing increased income security and higher rates of education. Right now, Stockton, California, is conducting an experiment in UBI. The city launched the Stockton Economic Empowerment Demonstration, whereby 125 people who live in census tracts at or below the city’s median household income receive $500 on a debit card on the 15th of each month. TIME Magazine profiled one of its recipients, who mentioned feeling “empowered” at being able to choose how she spends the money received. Over time, the benefits or detriments of the system will become clear.

With the thick of campaign season fast approaching, voters should pay significant attention to Yang. If implemented, his ideas will change the structure of our nation’s welfare system and revolutionize America’s approach to labor.

Alex Hentschel is a senior International Studies and Spanish double major and the Off-Campus News Editor for Cedars. She enjoys sociology, black coffee, and honest debate, preferably all at once.