Universal basic income faces skeptics, despite ‘Yang Gang’ fans

“The Yang Gang gets bigger every single day,” said Andrew Yang, his “MATH” hat advertising the same four-letter word as many of the signs hoisted in the crowd gathered in Washington, DC at the Lincoln Memorial. “The Yang Gang is about to go mainstream.”

On his Humanity First tour across the United States to promote a bold campaign platform, political newcomer Andrew Yang in April began an ambitious push to evangelise his big idea.

With a strong command of business data, the tech entrepreneur and US presidential candidate explains to eager crowds how the job market is shedding employment opportunities. He compares the economy to a bathtub into which companies pour jobs – despite the huge hole in the bottom.

The best bet for surviving beyond the “third inning of the automation wave,” Yang says, is to implement universal basic income (UBI) for all Americans. The concept he markets as the “freedom dividend” entails monthly cash payments of $1,000 to everyone, no questions asked.

“Thomas Paine, Martin Luther King Jr., and Milton Friedman were all for it,” Yang said during a podcast with Joe Rogan, whose show is popular with a young demographic that skews white, male, and politically libertarian. “The money doesn’t disappear. It goes right back into the economy.”

With five million manufacturing jobs already lost in the US, Yang argues that an acceleration in automation will push even more unskilled workers out of work – tens of millions during the next few decades.

From disappearing administrative office roles to retail cashier jobs in malls that are closing down, the enormous impact of technology replacing humans in many sectors is a compelling narrative for the 44-year-old startup maven. But he is most animated when describing how driverless vehicles will replace a half-million truck drivers by 2030, and how 2.5 million call-center jobs will be wiped out by artificial intelligence.

‘Neither apocalypse nor utopia’

The candidate concedes that the freedom dividend isn’t a silver bullet for job replacement, but says it sets the stage for a broader solution: “Will a [former] truck driver get up and move to Seattle to be graphic designer, coder or logistics manager? No!” declared Yang in March.

While many jobs are clearly at risk of being automated away, some critics say that Yang’s alarmism may be exaggerated. A report released earlier this year by the Metropolitan Policy Program at the Brookings Institution said, “Automation will bring neither apocalypse nor utopia, but instead both benefits and stresses alike.”

Regardless, Yang’s proposal would see each American receive $12,000 per year, although current government benefits received would be subtracted from the individual amounts. To put this sum in perspective, the median household incomein the US is over $60,000.

Yang envisions paying for this generous sum – around $1.8 trillion – by instituting a new value-added tax (VAT).

His calculations rely on the savings generated by many communities’ improved conditions, and less reliance on public funds for jails, homeless services and emergency-room visits. And he argues UBI is politically palatable because it requires little bureaucracy and would be applied equitably. For this reason, those on the populist right and progressive left have both shown support for the idea.

But Yang’s plan just is not practical, says Milton Ezrati, chief economist at Vested, a communications agency focusing on finance.

“People get a sense of worth from being self-reliant,” Ezrati said. “A handout bribing them to be quiet is not the way to accomplish this. That’s not economics.”

Ezrati also told Al Jazeera that there was no compelling reason to give UBI to high earners.

“The elderly and the infirm will share what the nation has with some of the wealthiest people in this country, who also will receive UBI.”

He added: “All the experiments with this have failed. I hate to sound data-driven, but the tests on negative income tax [show] it discourages work among people who can…I would rather have subsidised work.”

“Yang may be good at math, but it’s all based on assumptions that I’m skeptical of,” Ezrati said, explaining his preference for public-sector job creation.

UBI in progress

Yang’s UBI scheme is a much more ambitious version of local programmes being tested with private funds in Stockton, California, and Jackson, Mississippi, among other places.

Internationally, Finland largely failed at deploying the idea of UBI on a limited basis with unemployed citizens. In India, the opposition party has proposed the concept for poor people.

In the US, anti-poverty groups that historically have backed such schemes suggest Yang’s vision might be too broad – and they prefer instead to focus more on just the Americans who truly require basic economic assistance. Such groups are not as narrowly concerned with robots taking human jobs, and often question Yang’s libertarian affinities.

The Economic Security Project (ESP) is one organisation that advocates reducing poverty, strengthening the middle class, and rejecting policies that “make the rich richer”. The group supports cash stipends and a more robust social-safety net.

Reflecting divisions among the supporters of basic income, ESP’s orientation is towards achieving social justice, rather than forecasting the ominous impact of technology on the horizon. But the fundamental goal remains the same: offering regular government payments to individuals, irrespective of employment status.

ESP has thrown its weight behind the cost-of-living refund – also known as the Working Families Tax Credit – which aims to fight inequality and make the tax system fairer. Other Democratic presidential candidates, such as Kamala Harris and Cory Booker, have backed various cash-based policies.

Almaz Zelleke, a New York University Shanghai professor of political science who has studied cash transfers, says that Yang is on the right track.

While Zelleke thinks Yang’s ideas for how to fund and distribute the dividend are simplifications that would need to be vastly improved, she believes the candidate is doing the political heavy lifting to persuade a wider range of voters about the merits of UBI.

“We don’t want [Microsoft founder and billionaire] Bill Gates to get the basic income,” Zelleke said, arguing for a change in the “universality” of the stipend. “Also, the way he’s proposing to fund it – the VAT is essentially a sales tax, regressive because for the poor and middle class, it’s a higher percentage of their income.”

Still, Zelleke made clear her endorsement of Yang’s basic concept: “We cannot provide economic security to all Americans through jobs.”

“But I’m realistic about what it takes to [become] president, and get the Democratic nomination,” she continued. “By putting [UBI] out there, we can revise and iterate the idea.”

“Yang is going after not just core voters but also voters in the middle. His job is to get elected,” Zelleke said. “Then we can fine-tune the details of the policy we’re going to implement.”