Andrew Yang is Founder of Venture for America, a nonprofit organization dedicated to fostering economic opportunity, and was recognized as both a Champion of Change and a Presidential Ambassador for Global Entrepreneurship by the Obama White House. He is running for the 2020 Democratic presidential nomination on a universal basic income platform.
The Politic: Can you talk briefly about how your experience in VFA inspired your candidacy for president, or talk about how your background inspired you to run and adopt your policy beliefs and platform?
Andrew Yang: Well, spending six and a half years trying to help entrepreneurs creates jobs in Detroit, Cleveland, St. Louis, New Orleans, Birmingham, and thirteen other cities, I learned a lot about what the possibilities [are], but also the rate of change that automation is accelerating in different parts of the economy, and, frankly, the devastation it is wreaking in communities around the country. You don’t really think about it that much in the Northeast — in New Haven, there’s a bit of a post-industrial landscape — but going through the Midwest and seeing what happens when you automate away four million manufacturing jobs was extraordinarily eye-opening. And the fact is that even if all the entrepreneurs in these communities are successful, they will not employ thousands of high school graduates, as the industries of old — they will employ dozens, or perhaps hundreds, of recent college graduates and engineers.
So doing that work for six and a half years certainly helped lead me to the reality that we’re going through the greatest technological and economic shift in human history. And then when you start trying to figure out how to solve for that, you realize pretty quickly that the federal government needs to play a massive role — and right now it’s becoming all the more dysfunctional — and so that’s what we need to solve for to start preparing society to successfully transition through these changes in our economy.
Transitioning to policy, let’s start with your core platform point of the universal basic income. Could you really quickly explain this to our readers, who might not know much about it?
Sure, universal basic income is a government policy where every citizen of our country gets a certain amount of money every month to meet basic needs. And my plan, the Freedom Dividend, is to give every American adult between 18 and 64 $1000 per month, free and clear, regardless of their work status or income.
While many agree in the theory of the UBI, how do you intend to convince fiscal conservatives on the merits of your freedom dividend and the nearly $2 trillion in yearly federal spending, which might seem pretty daunting to many?
Well, what’s great is [the universal basic income] builds upon what the government is excellent at. But I do want to go through a little bit of history. The fact is, it actually passed the House of Representatives in 1971 under Richard Nixon. Martin Luther King was for it. Milton Friedman was for it. A thousand economists signed a letter saying that it would be great for the economy and society. So it was mainstream political wisdom not that long ago, and we need to come back to it as fast as possible, given that we’re automating away most of the major jobs in our economy. If you look at the numbers, the most common jobs in the economy are administrative and clerical jobs, including call centers; sales and retail, which is 10% of American workers; food service and food prep; truck driving and transportation; and manufacturing. So we’re heading in this direction, whether we like it or not, because of what’s happening to jobs in our economy.
And for those on the right, the one state that has something like universal basic income is Alaska, and it was passed by a Republican governor thirty-six years ago. It is now wildly popular in a deep red state. So universal basic income is part of American history, it’s been baked into our DNA, Thomas Paine was even for it back during the founding of our country, and we’ve lost our ambition as a society in terms of being able to solve big problems, but now we need to get it back and act as quickly as we can.
I know you’ve mentioned in a few interviews different ways to pay for this UBI. One of the things that was particularly interesting to me was the concept of a value-added tax. Can you go into detail about what that means for the economy in aggregate?
One of the big weaknesses of our current income tax-based regime is that it will not harvest or capture the revenue from software, artificial intelligence, robotics and the like, because the beneficiaries tend to be large, global technology companies that don’t pay a lot of tax. So we need to move to a value-added tax regime as fast as we can. Every other major industrialized country in the world except for us already has a VAT; if we were to adopt a VAT at half the European level, it would capture the gains from automation from companies like Amazon and Google, and would generate $800 billion in revenue because our economy is so vast — our economy is up to $19 trillion in GDP, up $4 trillion in the last ten years alone. This $800 billion, plus the five to six hundred billion we currently spend on various income support programs, like disability and welfare, would pay for two-third of the Freedom Dividend of $1000 a month per American adult. And then we would get the rest of the money from all the economic growth that would ensue from giving every American adult a thousand dollars a month. The Roosevelt Institute projected that this plan would grow the economy by two-and-a-half trillion dollars, or thirteen percent in perpetuity, and would create four and a half million new jobs, because we would all be patronizing businesses and starting companies at much, much higher levels.
Continuing on the financial aspect of [the UBI], how would you tie it in to existing programs within our welfare state? We read in some interviews that you would include things like Supplemental Security Income, food stamps, and the like all within a $1000 cap that an individual receive from the government. Where do you draw the line between what’s counted towards this $1000 cap? For example, would income tax credits that are usually given to middle class Americans be counted within the $1000?
That’s a great question. I’m not including tax expenditures within that, and there’s really no max of $1000: if someone is currently receiving $1300 a month in disability, they get to keep those benefits. I’m not trying to deprive or worsen any American’s current means of support, and many Americans right now are relying [on] disability or welfare benefits for their survival. My plan is to make the Freedom Dividend opt-in: if you prefer your current benefits, you can keep them, and then if you prefer $1000 in cash, you get that instead. So [the Freedom Dividend] is partially paid for [already] because if someone is currently receiving $1300 in disability, they would not receive an additional $1000. An opt-in allows everyone to make their own determination to keep their current benefits, if that’s what they want.
So going back to the question, where would you draw the line between what’s counted as a benefit?
What I’m saying is, welfare, food stamps, housing assistance, disability, things that where we essentially give you money to pay for things [are included], and then if we’re giving you a tax credit because of a mortgage interest deduction or things like that, then I would not include those. [However,] I would observe that the vast majority of the tax expenditures do benefit the rich, and we do need to make our income tax system more progressive, and so I would certainly be excited about doing so in various ways. But for the purposes of paying for universal basic income, the primary means are a VAT, our current spending on income support, new revenue from economic growth and the cost savings from existing federal spending on things like incarceration, healthcare, and homelessness services.
And going back to fiscal conservatives and policymakers from all across the aisle, in the past five to ten years there have increasing demands for reducing the overall welfare state (so reducing welfare spending). How do you see the UBI affecting net welfare spending and do you aim to cut other areas of spending?
Well, if you imagine the freedom dividend being opt-in, there are many, many people who currently receive welfare benefits [who] would opt-in, because if you’re receiving anything [less than] $1000 in benefits, you’re going to choose $1000 in cash [instead]. So this plan would reduce the size of the bureaucracy administering welfare a lot, because millions of Americans who are receiving $1000 or less would just be converted to the Freedom Dividend, which is much less administration because it’s simply giving you $1000 in cash. So we could shrink our bureaucracy a great deal even though an opt-in.
I think we’re going to shift a little bit over to automation and education. The way I see it, automation provides this broad opportunity for skilled labor at the expense of man-hour intensive work, which seems to place the onus on the currently abysmal American educational system to provide laborers pushed out by automation with a way of reentering the workforce. Why do you feel the UBI is a better way to combat the issue of job loss, rather than combating the issue at its root by furthering continued education and addressing K-12 in a different way?
We should certainly do all we can to improve and overhaul our education system, but you have to be realistic. Thirty-two percent of Americans graduate from college right now, the average indebtedness now is $38,000 per graduate, and the underemployment level of recent college graduates, according to the New York Fed, is 44%. So it’s not like if we get someone through college, even if we somehow made it free, that it’s going to be panacea, or a cure-all. The measured success [rates] of government-sponsored retraining programs are abysmal, between zero percent and thirty-seven percent on the high side. So if a politician were to say, hey, we’re gonna educate and retrain all Americans for jobs of the future, that’s a fantasy, and we have to be honest about that. I mean, taking truck drivers as an example, there are three and a half million of them — average age forty-nine, 94% male, average education high school or 1 year of college — and retraining them for software jobs or whatnot is again another fantasy.
So when you look at it, we should 100% overhaul our education system to the extent possible, and that would include heavily investing in technical, vocational, and apprenticeship programs. Right now only 6% of American high school students participate in technical education — in Germany, that proportion is 59% — and there are thirty million unfilled middle-skill jobs in the US, because we just don’t have the right people with the right training. So we need to invest very heavily in that. [But] there’s actually something deeply over-simplistic about people saying let’s retrain people, because you have to look at it across demographics, across education levels, across regions, and then have some sort of opportunity that you’re training them for, and in most cases, that opportunity does not exist.
Where and how would you see the people who are pushed out by automation re-enter the workforce, if at all?
Well that’s one of the things that, in my book, The War on Normal People, I went digging for — which is what more people should do. I studied economics in college, and classical economic theory would say that if you were to automate away the jobs of four million manufacturing workers, [then they] would get retrained, move, and find new opportunities. The economy would improve. But then when you look at what actually happened to the manufacturing workers of Michigan and Indiana, almost half of them left the workforce entirely and never found a new job. And even among those that left the workforce, nearly half of them applied for disability benefits.
Also, during this time, there was a massive surge in suicide rates amongst middle-aged americans, to the point where our life expectancy has declined for the last two years, and the rates of interstate relocation, instead of rising, have dropped to multi-decade lows. So, the reality of what happens when a factory or a mall closes, or, as soon will be the case, when the trucks start driving themselves, is not that people will, at the age of 49, go out and train for a job that doesn’t exist. The reality is that they are going to go home and drink themselves to death or kill themselves on opiates, which now seven Americans are dying [from] every hour. That is the reality that we have to come to grips with and [we have to] stop drinking the kool-aid of classical economic theory that’s going to lead us to ruins.
Right, because the assumptions almost never hold true..
Yeah, I studied it too man. We’re all conditioned by it. It is wild.
And even Milton Friedman, who is essentially the most influential economist of all time, was for a negative income tax which is essentially a variant of a universal basic income.
Now to come back to your experiences and the fact that you’ve spent most of your time in the private sector: how does that affect your qualifications or ability to govern? How do you think your background gives you a unique perspective on government?
I was an appointee for Obama in the position of Presidential Ambassador of Global Entrepreneurship, and I’ve been part of government enough to truthfully know how hard it is to get things done. The reality that Americans have increasingly come to know to be true is that our government’s operating system is out of date and seizing up, which is causing massive dysfunction. We’re stuck with a 60’s bureaucracy to address the problems of the 2020’s and 2030’s. If someone believes that [an official] who’s been part of our dysfunctional government for many years is going to have the right experience to make the necessary changes, I would respectfully disagree. What happens is that in government, even good people – and I know many of them – become stuck like flies in amber.
There may be some people in America who really want someone who has been part of the government for 30+ years and believe that that’s what we need, but for me the lesson of Donald Trump’s election and Bernie Sanders’ success, and even to some extent Barack Obama’s election, is that the American people have been looking for change and real solutions to the growing problems of our society- and our government is failing them.
How do you think your unique educational background and experience in tech interact with the growing anti-intellectualism that we’ve seen crop up all across america? How do you convey your message to those across middle america who want to hear stories and not statistics about how our economy will improve? Basically, how do you bridge this divide?
I’ve spent years in these environments and most americans recognize the truth when they hear it. Right now, 70% of Americans agree with the statement that technology destroys more jobs than it creates. In my case, I’m suggesting that the government do one of the very few things it can do that will immediately improve lives on a day-to-day basis, which is to send every American adult a thousand dollars a month to do what they want with. That’s a message that, regardless of your stance on intellectualism, [addresses how the President will] improve their lives. And I have a very concrete and complete answer that they will appreciate from day one. Much more so than what any other politicians are going to offer – marginal policies that would do very little compared to the benefit of the Freedom Dividend providing an extra thousand dollars of purchasing power a month.
And is that the kind of response that you’ve gotten in the campaigning that you’ve done so far?
Yeah! It really is. When I go to people in New Hampshire or Rhode Island, they listen, they’re open, and [they’re] receptive to getting oriented around solutions. Most Americans just want a better life for themselves, their friends, their families, and a better [set of opportunities]. There isn’t a knee-jerk reaction – I show up and tell the truth and people say, “oh, that does seem correct.”
One of the issues is that our political figures have become so institutionalized that no one believes a word that anyone says. It’s one reason that, again, both Donald Trump and Bernie Sanders cut through the noise- because both of them seemed like they were telling at least a version of the truth. I mean, it’s unfortunate given that Donald Trump is a symbol to me of the accelerated decline of our civilization, and the fact that we elected a narcissist reality star to be our president shows just how desperate the American people are becoming.
RAPID FIRE
What have you enjoyed reading recently?
I just read a book by Henry Timms and Jeremy Heimans called New Power which you guys would love. It’s about how some collective action efforts have become far more powerful and possible because of the internet. It’s a powerful and informative read.
Where do you get your news?
I get it from the internet – I tend to read The NYT and Business Insider.
Did you happen to come across the NYT headline today about technocrats and our civil lives?
No, but it sounds right up my alley and [I] will go and check it out! I’d probably like it. I mean, one of the reasons why my platform is designed in this way is that there are a lot of things the government can and cannot do. We do have to start being more realistic about which is which.
One last question. What’s your advice for college students?
Try and find people whose work you admire and whose lives you would happily emulate and take as you own. If you find even one of those people and work with and support them, you will find yourself almost inevitably leading down a similar path.
If you’re in an organization in which there’s no one whose “life” you want, then you should keep moving and find those people. At the end of the day, we work with and for people over organizations and institutions. Just try and find even one person whose life and career you want, and work like mad to follow in their footsteps and accept whatever wisdom they’d like to pass on.
And who was that person for you?
Well in my case it was a series of entrepreneurs in the startups during the early phase of the internet. I met Mark Jacobstein in my early to mid 20’s. Ben Sun and Cecilia Pagkalinawan. They were entrepreneurs in the New York tech scene when I was a student, and I thought to myself: “They are so cool! Whatever they’re doing, I want to do it too.”
I think that’s all the time we have – thank you so much for speaking with us.
One thing I want to say too is that for people reading this, [my generation] has totally shafted your generation. We have left you a society in total shambles. You would be well within your rights to be disgusted, filled with despair, and angry – you deserve better and we certainly owed you more. One of my goals is to balance those scales as much as possible. It’s truly immoral – the economy and world that we are leaving you. I am a parent, and I can see it clear as day.
I’m sort of a bridge figure in that I’m 43 years old (and would be 46 on inauguration day if I were to win), and we need to do much more to give [your generation] the same paths and opportunities that mine enjoyed.
That’s truth, I really vibe with that sentiment. Thank you.
Totally true man, we really stuck it to you all. I personally had nothing to do with it but I’ll certainly try my best to help.