Andrew Yang on Universal Basic Income

President Barack Obama meets with Champions of Change alumni in the Map Room of the White House, April 26, 2012. (Official White House Photo by Pete Souza)

Andrew Yang is running for the Democratic nomination for president in 2020.

Andrew Yang is not going to win the Democratic nomination for president in 2020.

I guess I could leave it at that. But that’s no fun. Yang is drawing some media attention because he’s a Silicon Valley (note: “entrepreneurial/tech/startup industry”) guy who has too much time and money. And so he’s visiting the early caucus and primary states.

Yang’s background is in tech, as I noted. He was most recently the CEO of Venture for America, which connects young people with venture capitalists. Sometimes with sexy results. Previously he was a CEO in the standardized test prep industry.

But, you know, enough about Andrew Yang for now. I want to talk about his platform. His single issue platform. Because his single issue is universal basic income, the topic of my previous post.

Yang really loves UBI, and his proposal is rather detailed. He’s running as a Democrat, and he’s claiming some generic leftist cred. But, as any good tech utopian, Yang is running in the ‘post-ideological‘ lane.

As with everyone else, Yang has gotten around to writing a book. It’s about UBI, and it’s called The War on Normal People.

I’m going to evaluate Yang’s UBI proposal by the standards I laid out for a good leftist universal basic income. Is Yang’s proposal universal? Is it basic? Finally, is it feasible as a leftist plan?

The short answers to those three questions are: Not quite. No. Definitely not.

Andrew Yang and Universal Basic Income

Yang helpfully lays out his plan in great detail on his website.

The plan is relatively simple. The government pays all US citizens between the ages of 18 and 64 a UBI of $1,000 per month, or $12,000 per year. For citizens 65 and up, he would leave in place the existing Social Security system.

OK, how do we pay for it?

Yang wants to pay for this system using four sources: a.) eliminating existing social spending (e.g., food stamps, disability, WIC, unemployment insurance, et al.), generating $500-600 billion worth of savings; b.) A value-added tax (VAT) that he estimates will generate $800 billion per year; c.) $500-600 billion in new tax revenue from UBI-generated economic growth; b.) $100-200 billion per year in savings from UBI-generated crime reduction and health savings.

Fair enough. Even if we generously grant Yang’s assumptions about how those four things happen, will the payment plan work?

Probably. There are about 200 million US adults between the ages of 18 and 64. The 2010 census says 193 million, and I’m rounding up to account for population growth in the last 8 years. Based on those numbers, the Yang plan would cost $2.4 trillion per year. His revenue assumptions generate $1.9 trillion – $2.2 trillion per year.

That’s not bad. His payment plan falls short, but not by that much. The US could probably eat $300-500 billion per year through lowering defense spending, raising certain taxes on billionaires, etc. It’s a lift, but not an incredibly heavy one.

As I pointed out in my earlier post, one key problem with a leftist UBI is cost. Yang’s plan has no obvious cost problem. But let’s not get ahead of ourselves. This is not a good plan. There are several reasons why Yang’s plan is terrible, and I’ll lay them out individually.

Problem #1 – The Plan Doesn’t Pay People Nearly Enough

I discussed this in some detail last time. But a leftist universal basic income has to be both universal, i.e., it gives money to everyone, and basic, i.e., it gives enough money to people that they can afford basic necessities like housing, utilities, food, and transportation.

Yang’s plan doesn’t even come close. I estimated that a UBI that meets the basic necessities requirement would cost $3.9-4.9 trillion per year. And it would cost as much as $6-7 trillion per year to actually eliminate bureaucracy and provide people with an incentive not to take bullshit jobs.

I’ll set the bit about bullshit jobs aside, because Yang isn’t invested in that.

Yang’s plan falls well short of $3.9-$4.9 trillion per year because he skimps on cost. He doesn’t provide an income to anyone under the age of 18. That’s not necessarily a problem, but you can’t just take that income out of the plan. Not providing an income to people under 18 doesn’t magically mean that people over 18 don’t spend money to house, feed, clothe, and transport people under 18.

If your UBI doesn’t pay people under 18, it needs to pay more money to people over 18 to account for these caretaker roles! You have to pay it to someone. Yang’s plan doesn’t even come close to meeting the basic needs of households with children.

Problem #2 – The Payment Plan is Full of Magic Math and Pixie Dust

The last two methods of payment are tax revenues from economic growth and savings from reduced incarceration and healthcare costs. These are speculative. Andrew Yang gives us no reason to believe either of these things will happen. And he certainly gives us no reason to believe we can generate up to $800 billion on nothing but economic growth and savings.

Claiming that a program will generate new tax revenue is a classic cop-out in American politics when you don’t really have an answer to how to pay for something. Republicans do it repeatedly when they’re asked how they’ll pay for tax cuts. Surprise, surprise. It doesn’t work that way.

Yang’s first two payment methods, drastic social spending cuts and a VAT, don’t fare much better. Yang estimates $800 billion generated by a VAT, though Congressional Budget Office data suggest it would be $400-500 billion at most.

Yang’s social spending cuts highlight again how his proposed UBI payment is insufficient. If you cut people’s services, you have to pay them even more to meet basic necessities. If you use UBI as an excuse to eliminate social programs, your UBI payment will need to be very large to meet people’s basic needs. Probably more like $20,000 per person.

Therefore, Yang’s UBI doesn’t pay enough, and it takes away supplemental payments that would need to be increased because of the stingy UBI.

Problem #3 – Yang’s UBI Would Encourage Low Wage and Exploitative Labor

On his website, Andrew Yang raises and dismisses concerns that employers would pay less after the implementation of a UBI. He should’ve taken the concerns more seriously. Yang’s counter-argument is to say that people would have a voluntary choice whether or not to take jobs after the implementation of his plan.

They would have no such choice. The plan doesn’t pay enough for people to live. They’d have to work. But they’d be close enough to survival that taking highly exploitative contract work through, e.g., Amazon Mechanical Turk, Uber, Lyft, Airbnb, would be more attractive than it is now.

The plan thus creates a pipeline for more low wage, exploitative labor. This is in addition to the pipeline almost all UBI proposals create for more purchasing of commercial consumer products.

Conclusion

Andrew Yang’s universal basic income plan is a lousy idea that shouldn’t be getting any leftist support. It’s the sort of idea that sometimes comes from Silicon Valley: leftist on the surface, but right-wing in its underlying ideology and effects. Yang’s UBI would eliminate social programs, encourage low wage and exploitative labor practices, and put more money into the hands of companies who prey on low income Americans.

The plan doesn’t offer freedom from work. Rather, it offers people incentives to take particularly bad work.

A Promise to My Readers

Depending on how you look at it, Yang is running a vanity campaign for president or he’s just someone who really wants to talk about UBI. Possibly both. Either way, I don’t think he’s someone to take too seriously.

The reason I wrote about the Andrew Yang plan in this post is that I think it’s pretty representative of what an actual universal basic income in the United States would look like. If anything, it’s a bit more sunny and generous than what would likely flow through the US Congress. I suspect a real UBI proposal would cut the payment even lower than $1,000 per month.

My previous post on universal basic income was more theoretical. I hope this one was more practical.

And, with that, a promise. This is the last article I’ll write about Andrew Yang. I think his 15 minutes are running out.