Andrew Yang’s UBI Plan is No Breath of Fresh Air

Glenn Verasco | Thailand

If there’s one welfare state proposition that makes Libertarians reconsider their anti-government position, it might be UBI (Universal Basic Income). The concept of UBI is simple: every person in a given country gets cash from the government every month. Rather than rationing food, energy, or clothes like a purely Socialist society, a nation with UBI allows those on the receiving end to decide which of their needs should be met the same way people who earn their own money do.

Andrew Yang is a businessman running for the Democratic Party’s presidential nomination, and UBI is his signature issue. I hadn’t heard much from Yang until his recent appearance on the Joe Rogan Podcast, but have heard that he’s a refreshing voice in the Democratic field. While he seems like a nice enough guy, Andrew’s justifications for implementing UBI are easily discredited.

The Automation of Industries

The Manufacturing Industry

A phenomenon Yang hones in on to promote UBI is the supposed automation of jobs which, he says, is not only on the horizon but in its midst right now. There are many problems with this claim. The first is that manufacturing jobs, a main source of concern regarding automation, are on the rise and had been for several years even before Donald Trump was elected president:

Image result for manufacturing jobs by year

With Trump doing a laudable job of deregulating the domestic economy and signing corporate tax reductions into law, there is no reason to expect this trend to reverse in the near future.

The Trucking Industry

Another job Yang fears will be automated is trucking, one of the most common sources of occupation in the country. Yang is dead wrong here as well and on two counts. First, there is no shortage of trucking jobs. Conversely, there is a shortage of truckers to fill trucking jobs. As Mark Allen and Chris Spear wrote in May of last year:

“In the next decade, we’ll need 890,000 drivers to keep pace with growth and demand for freight transportation. Americans are used to getting what they want with the click of a button, but this expectation of door-to-door service will be increasingly difficult to fulfill if we can’t get more drivers behind the wheel.”

I have two cousins who are truck drivers. It’s not exactly a glamorous occupation. They spend weeks at a time away from their homes and families, and they sit at the helm of a big rig on the same wide-open roads day after day after day. Sitting idly for so long is detrimental to a person’s health, and 5,000 people die in trucking accidents every year.

The other problem with Yang’s trucking claim is that it is based upon the false premise that self-driving vehicles are in the fast lane and ready to run drivers off the road. On the contrary, self-driving technology is nowhere near ready to take over the world as it is developing at an even slower rate than predicted. And even when driverless cars and trucks are ready to hit the road, it’s not as if people are going to ditch their manually operated vehicles at the drop of a hat. People don’t trust AI, and they also love being in control of what they’re doing. Driverless vehicles will have to compete with traditional ones and winning that battle will be a traffic jam of a fight.

Even if we imagine that an earth-shattering breakthrough occurs tomorrow, and consumers widely decide they’re ready for an AI escort, trucking jobs are not only safe but might even reap unseen rewards. Self-driving vehicles are not exactly as the name suggests. For the most part, a human driver will need to be present in case of emergency or for any number of other reasons. This will be especially true of self-driving trucks, so at least one occupant will need to be inside the vehicle at all times.

The negative aspect of this is that the wages truck drivers earn could be diminished via the less demanding workload. But as mentioned earlier, driving a truck is a pain in the butt. Instead of being zeroed in on the road for so long, drivers will be able to stretch their legs, read a book, talk on the phone, or even search the web for a new or additional job. And since the labor will be so much less strenuous, many unskilled individuals looking for work may reconsider taking a stab at driving trucks. Young people still finding their way could spend a few years earning some money and getting an up close and personal look at the US of A. Driverless trucks would create jobs without killing them, and keep goods at the low prices every American desires.

The Joe Rogan Interview

In the portion of the two-hour interview I watched, Joe Rogan does a solid job of pushing back on Yang’s ideas. One of the most important questions Rogan asks is how much Universal Basic Income is going to cost and who is going to pay for it. Yang gives a straightforward answer, saying that UBI would cost $3 trillion a year. He then explains that it would not really amount to $3 trillion a year as individuals already receiving roughly $1,000 per month in government benefits would not be entitled to any more money. An individual getting $700 in benefits would get $300, and one receiving no benefits at all would receive the full $1,000. Yang estimates that the added cost would amount to under $2 trillion.

This is a seemingly moderate proposal with an extreme consequence built into it. On the bright side, Yang’s iteration of UBI could actually encourage people to get off the government breadlines and take care of themselves enough to get onto the government dole. In a perfect world, people would take more responsibility for themselves to such an extent that Medicare, Medicaid, Social Security, and unemployment benefits would wither away as a cost to taxpayers. This could be a boon to human capital while also making way for consumer-driven market forces to improve the conditions of healthcare, insurance, and job markets.

Milton Friedman, whom Yang calls a supporter of UBI in the interview, did indeed flirt with the idea. But unlike Yang, Friedman’s plan, dubbed the Negative Income Tax (NIT), would immediately replace the rest of the welfare state. Friedman did not want the NIT to become an addition to the alphabet soup of bureaucracy already in Washington, but rather a simpler, cheaper, and less intrusive way to provide a safety net to those unable to care for themselves. When Friedman realized support for his version of UBI was not what the rest of its promoters had in mind, he rightfully abandoned it.

One of Friedman’s wittiest quotes is that there is “nothing so permanent as a temporary government program.” The problem with Yang’s intention to implement UBI without eliminating other programs is that all are bound to expand. Once the UBI can is opened, the worms will crawl. And there is nothing stopping the amount of money UBI recipients demand from reaching impossible depths. UBI would certainly be permanent and permeate.

Yang’s answer to the funding part of Rogan’s question is even worse. This is mainly because of Yang’s proposal to implement a Value Added Tax (VAT). The way a VAT tax works is by taxing exchanges at every level from production to wholesale to retail and everything in between. Simply put, a VAT tax is an all-encompassing sales tax.

While some Libertarians like me might jump at the idea of replacing the corporate and income taxes with something like a VAT tax, Yang’s VAT fails to relieve us of other taxes and contradicts an alleged benefit of his UBI plan. Yang, in a claim common among the anti-supply-side crowd, says that putting money in Americans’ pockets will be a boon to business and job creation because recipients will spend the money and keep the economy rolling. Regardless of whether or not this claim has any merit, the VAT tax would undermine consumer spending like nothing before. When a tax is levied, the cost of paying it is passed on to the next guy in line. If you tax bread sales at 10%, bakers will charge sandwich artists some of that rate by increasing bread prices. And consumers will see the price of their lunch go up at the deli counter too. The individuals who incur cash from UBI will not be as willing to put their money back into the economy when everything around them is becoming more expensive.

Yang is certainly not stupid and not all of his ideas and analyses are wrongheaded. He points out the futility of having the government tell displaced factory workers to #LearnToCode and also highlights current injustices taking place in our criminal justice system (though the way he ties this to UBI is far-fetched). But all-in-all, Yang’s plan for UBI is just as bad as any other government scheme to turn the race of life into a walk in the park. Our country will be far better off if Yang forgets about politics and goes back to creating jobs on his own.

***

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11 thoughts on “Andrew Yang’s UBI Plan is No Breath of Fresh Air”

  1. Yang will never become president (though I said that not too long ago… ….. ……). At least 40% of the country will be immediately against his payout idea, even though it would likely benefit 39.9% of that 40%.

    I want a candidate to recognize worth of each individual – every citizen’s potential value. I have way more respect for a candidate who wants to reinvest in citizens through education and health care, along with infrastructure projects (that are long overdue). The acceptance of current defense spending has to come to an end. The idea of continued policing of the world makes no sense with actual materials crumbling within our borders. The is so much we can do to help the citizens of this country, especially those at the bottom – and I am all for a smart person who wants to improve the standard of living across the board for everyone.

    I’d appreciate this article way more if it began with optimism regarding ideas – then critiqued them through analysis. But this article seems pretty old fashioned and not interested in change.

    1. I appreciate you commenting, but I think it’s unfair to say that my article is negative or lacks analysis. I use facts to disprove Yang’s primary justification for UBI (automation), and I provide analysis of the problems with his plan to fund it. At the same time, I share several potential benefits of UBI (“This could be a boon to human capital while also making way for consumer-driven market forces to improve the conditions of healthcare, insurance, and job markets”) and allude to a UBI plan that could actually be feasible, but ultimately conclude that Yang’s version is not a very good one.

      If you disagree with some of my claims, fine. Tell me where I’m wrong. But please don’t dismiss my article as negative or say that I am not doing analysis.

      1. You make some great points, but the part about trucking seems misguided and based much more in opinion than in fact. While automated trucking is not necessarily right around the corner, it is coming, and fast. We have no way of knowing what regulation will look like once the incident rate of an automated truck is brought below that of a human driver, and as you concede, at a minimum the barriers to entry will decrease, along with pay. On a grander scale, I would like to hear how you would refute his claim (supported by MIT & the Obama Administration) that something like 85% of <$20 jobs will be automated during the next ten years. I walked into a freakin pizza joint the other day and they had already automated the cashier, our Wal-Mart has 80% self checkout lanes and a lackluster cashier staff. You say he doesn't belong in politics, but you make no argument that solves any of these problems that anyone paying attention knows exist.

      2. Why is it opinion that trucking jobs are not going to be automated and fact that trucking jobs are going to be automated? Both are opinions. My opinion is based on the current trucking job market and all the recent reporting about self-driving vehicles. What is yours (it is coming, and fast) based on?

        There are all sorts of estimates about what percent of current jobs are at risk. But this is how it’s always been, and in the end there are always more jobs. You know what work was like in the 1920s? 1950s? 1980s? The world changes. It’s okay. People have a long time to adapt.

        It’s almost always better for the government to do nothing than to intervene. And if it’s going to do something, it better have a pretty gosh darn foolproof plan. Yang’s is not.

      3. There’s definitely analysis in the article but overall it left me with the feeling that you didn’t research Yang’s plan very well and also the feeling that you’re simply trying the dismiss the idea of UBI in general. Firstly, you failed to present how he plans to pay for UBI coherently. Instead of explaining the actually numbers we spend on our current welfare programs, you just simply say that Yang claims the savings here would bring the price down under $2 trillion. You could have referenced his campaign website which includes his detailed plan on how to pay for it (https://www.yang2020.com/what-is-ubi/). You also could have included the link to his website at the end of your article for your readers to be able to go see his plan for themselves. He also laid out these numbers clearly in the Joe Rogan interview, so you could have gone back and reviewed that segment to make sure you were explaining his plan correctly and coherently.

        Also in the Joe Rogan interview, I can remember Yang saying, not that there’s a shortage of trucking jobs currently, but actually conceding the fact that the trucking industry is struggling to find drivers. He also explained that this has a lot to do with trucking being tough on your body and keeps you away from you family and people also know that this job isn’t going to be there for much longer. There might not be automated trucks on the roads yet but it’s definitely a possibility in the near future and we need to be prepared for that. Whether or not this is going to be a problem soon, in the next decade, or later than that, jobs are going to be automated quickly and we have to start talking about what we’re going to do.

        Friedman’s plan to get rid of the existing welfare system in favor of UBI may be a better option. I also agree that a VAT has the potential of discouraging consumers from spending their money but paying for Yang’s UBI plan is a lot more feasible than you make it sound and I feel you’re doing a major disservice by dismissing it entirely. You end your article by saying, “But all-in-all, Yang’s plan for UBI is just as bad as any other government scheme to turn the race of life into a walk in the park. Our country will be far better off if Yang forgets about politics and goes back to creating jobs on his own.” It sounds to me like your trying real hard to scare any anti-government readers away from the idea of UBI entirely.

        I’m not a politician or an economist and I don’t know whether or not UBI is going to work for us but I think it’s worth discussing. I don’t think we should dismiss it as just another “government scheme” and I feel like one should do their due diligence in researching a plan they’re going to criticize and present it fairly. It was nice that you alluded to Friedman’s plan for UBI but you ended that part with how he abandoned that plan. It would have been nice it you included another section expanding on other feasible ideas for UBI. This would have made the article sound less negative and more balanced.

      4. First off, it’s an opinion piece. I’m giving my opinion. I’m not gonna waste my time giving your opinion. That’s your job. I also don’t like to treat my readers like idiots. I am fully confident in their ability to find Yang’s website if they want to. And I did provide a hyperlink to the Joe Rogan interview.

        But by the way, I was generous to other side in admitting that there are potential benefits to Yang’s UBI and that a more Friedman-esque system could be something I might get behind. But I think the risks of Yang’s plan outweigh the rewards.

        I think I did a solid job in my critique of the VAT (which drives up prices and cancels out new spending) as you noted. I very quickly alluded to his point about prisons. While I didn’t articulate it, I didn’t articulate my disagreement either. I just said that I find his argument “far-fetched.” My readers can look it up on their own if they want. I called his overall spending plan “moderate,” which, coming from a Libertarian, is flattering. I then explained that my main disagreement is that it opens a can of worms of unlimited spending on UBI and existing welfare programs.

        If you wanna refute my points, go for it. But your critique of my writing is based in your biases, not legitimate reasons.

      5. Glenn, my comment wasn’t to refute your points. As I said, I am not a politician or an economist and I feel we might agree on a lot of those points anyway. My critique is in your writing and how you present Yang’s points and I have every right to critique your writing.

        Yes, it is your opinion piece and you have every right to those opinions but my comment was aimed towards your response to urthpainter in which you try to paint a picture of balance in your article. I simply pointed out that you presented his side lazily and incoherently and only briefly mentioned the pros of UBI. Again, this is your opinion piece and you have the right to present your bias but your reply to urthpainter came off as disingenuous. Your opinion of Yang’s plan is negative, and the article is about your negative opinion of Yang’s plan, so why respond to urthpainter questioning the negativity of your article? But now, after I threw in my two cents, your response is that it’s your opinion piece and it’s you’re allowed to include your bias. I agree with that but I feel you should have included that in your response to urthpainter instead of pretending like you wrote a fair and balanced opinion piece.

        I listened to the Joe Rogan interview too. I also went to Yang’s website after doing so and his website clearly laid out his plan. Given how incoherently you presented his plan in your article, indicates that you either didn’t visit his website or didn’t spend enough time reading the details of his plan. That’s my main gripe with your article and again I have every right to critique your writing. There’s a clear indication of your lack of research into Yang’s plan.

        Also, I feel you paint an unfair picture of Yang when you say things like, “Yang is dead wrong here as well and on two counts. First, there is no shortage of trucking jobs.” and then continue to provide facts on how there are a surplus of trucking jobs available. It’s unfair because he never said that. Like I said in my last comment, he actually conceded in the Joe Rogan interview that there is currently a surplus in trucking jobs due to a multitude of factors. To put words into someone’s mouth and try to paint a picture that they’re clueless is unfair and you should expect readers to criticize you for that.

      6. Obviously, no one is talking about who has a right to say what. You have the right to type the letter b 40 times if you’d like.

        I appreciate relevant criticism, but I’m sorry to say that I haven’t gotten any of that from your comments. We’ll have to agree to disagree.

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